PROPERTY REPORT THE EUROPEAN LOGISTICS MARKETPROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012 5€/m2/year Prime and secondary rents in Q4 2011 - Warehouses over 5,000

PROPERTY REPORT

THE EUROPEAN LOGISTICS MARKET

Q4 2011

CONTACTSEUROPEAN LOGISTICS GROUP

FRANCEChristophe Prioux [email protected] Tel.: +33 (0)1 46 48 44 51

GERMANYOliver Wissel [email protected] Tel.: +49 30 88465 171

SPAINThierry Bougeard [email protected] Tel.: +34 93 3012010

Alberto Larrazabal [email protected] Tel.: +34 91 4549990

UNITED KINGDOMPaul Rixon [email protected] Tel.: +44 (0)121 237 1280

Ranjit Gill [email protected] Tel.: +44 (0)121 2371235

POLANDJohn Palmer [email protected] Tel.: +48 501 203821

IRELANDPeter Flanagan [email protected] Tel.: +353 1 6611233

AUSTRIAWalter Huber [email protected] Tel.: +436 7 63900419

NETHERLANDSPeter Sagius [email protected] Tel.: +31 20 3059720

SLOVAKIATom England [email protected] Tel.: +421 2 32408888

Sebastian Scheufele [email protected] Tel.: +43 1 513293922

RESEARCH

Christophe PineauHead of International Research [email protected]

Vincent RobionSenior Analyst [email protected]

The European logistics market returned to growth in 2011. Germany even achieved a record year in take-up. Yet, take-up remained below the volumes achieved during 2006 and 2007 in most countries. Supply remained high throughout Europe even though every single market experienced a shortage of new warehouses, which in turn impacted marginally on prime rents and prime yields.

Logistics providers and retailers drove the market in 2011

recovery in H1 2011 contributed to the return of logistics providers after two years of slow activity.

The scarcity of new warehouses does not conceal the overall abundance of supply

and marginally generated rental growth.

turnkey deals.

been emerging: second hand grade A warehouses.

The investment market was held back by the debt crisis

THE LOGISTICS MARKET IN EUROPE REGAINED SOME VIGOUR DURING 2011

March 2012

3PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012

Recently released data showed that, amidst a challenging period,

The main driver for the slowdown has been the increased uncertainty

deteriorated sharply, across all sectors of the European economy, in the later part of 2011. As reported by the European commission, consumer and business sentiments fell in November 2011 to

particularly discretionary type, continued to remain weak.

Sentiment indicators, thus far in 2012, have shown signs of

persist in most troubled economies such as Italy, Spain and Ireland. Even in the core countries, sentiment has merely reached a plateau.

Q1 and no variation in Q2. As such, we expect growth in H1 2012 to continue to be challenging.

The timing of the slowdown indicates that 2012 as a whole is likely

market conditions are unlikely to improve, materially, until 2014.

outside Europe has shown resilience, with net trade providing

Although yearly growth in export slowed somewhat in the last

export order books are improving. A recent survey, by the European

saw a turning point in falling export orders. This implies that going

positive backdrop for the European logistics market.

A WEAKER EURO TO SUPPORT EUROPEAN EXPORTS

00 01 02 03 04 05 06 07 08 09 10 11

Exports on selected European countries (year on year change)

%

-30

-20

-10

0

10

20

30

Source: Eurostat

France Germany Italy Spain United Kingdom

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12*13*

Distributive trade in EU 15

%

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

* ForecastSource: Oxford Economics / BNP Paribas

00 01 02 03 04 05 06 07 08 09 10 11

Imports on selected European countries(year on year change)

%

-30

-20

-10

0

10

20

30

40

Source: Eurostat

France Germany Italy Spain United Kingdom

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12* 13*

GDP and employment growth in EU 15

%

-5

-4

-3

-2

-1

0

1

2

3

4

5

GDP growth

* ForecastSource: Eurostat; BNP Paribas Real Estate

Employment Growth

4 PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012

PLENTY OF SUPPLY BUT SHORTAGE OF NEW WAREHOUSESThe logistics market recorded a remarkably strong activity in

they faced during the year. Take-up for warehouses over 5,000 m²

Demand is centred on modern units in prime locations which are typically close to the main consumption and manufacturing areas with skilled labour available and served by strong multimodal transport networks (road, rail and ports).

In response to the economic slowdown in 2009 and 2010, speculative development was cut down almost everywhere in

evident in most markets. This situation led to a genuine interest for turnkey solutions. The scarcity of new products also induced customers to turn to second hand grade A warehouses, which is becoming a growing submarket. Supply levels remained high and

of 2006 and 2007.

Rentstwo years of reduced activity in most logistics markets and high volumes of supply available, the increase in take-up in 2011 did not necessarily materialise in rental growth. A robust demand combined with low supply for new high grade warehouses led to some increase

The French market returned to growth in 2011 recording its highest level of take up in three years.

The market was stimulated by the positive economic signs at the beginning of the year, encouraging logistics providers, highly sensitive to the economic climate, to regain a large part in the market. Retailers also strongly contributed to market buoyancy

In Germany, the market set a new record year, boosted by large deals due to the restructuring measures in the retail industry and the growth of the online shopping sector. The availability of new space stayed limited since there had been hardly any new speculative schemes built in 2011.

In the UK, take-up for warehouses over 5,000 m² has been stable for

scarce. This has resulted in the emergence of the design and build in the large unit market. Like in most European countries, retailers and logistics providers have been driving the market in 2011.

In the Eastern & Central European countries

its European counterparts, speculative developments are almost nonexistent. A shortage of new space available kept vacancy rates low and rentals strong.

In Spainwarehouses over 5,000 m² taken up was far below the volumes registered in 2007 and 2008. Larger deals were closed in Madrid, Barcelona and Valencia, pulling up take-up. However, pre-lets and turn-key projects were important in Madrid and Barcelona, leaving untouched the vacancy rate. Levels of supply remain high and the release of second hand units onto the market is still expected in the

000 m2

Take-up - Warehouses over 5,000 m²2010 2011

n.a. n.a.

0

200

400

600

800

1,000

1,200

1,400

Paris

Birm

ingh

am

Lond

on &

Sou

th E

ast

Ham

burg

Man

ches

ter

Fran

kfur

t

Lyon

Barc

elon

a

Berl

in

Shef

field

Antw

erp

Leip

zig

Mad

rid Lille

Mun

ich

Mar

seill

e

Card

iff

Bris

tol

Düss

eldo

rf

Dubl

in

Colo

gne

New

cast

le

Rott

erda

m

Vale

ncia

Amst

erda

m

Lisb

on

Sout

ham

pton


€/m2/year

Prime and secondary rents in Q4 2011 - Warehouses over 5,000 m²

Prime Rent Secondary Rent

0

20

40

60

80

100

120

140

160

180

Lond

on

Sout

ham

pton

Amst

erda

m

Bris

tol

Edin

burg

h

Gla

sgow

Birm

ingh

am

Dubl

in

Fran

kfur

t

Mun

ich

Rom

e

Ham

burg

Mad

rid

Man

ches

ter

New

cast

le

Barc

elon

a

Rott

erda

m

Card

iff

Shef

field

Düss

eldo

rf

Lisb

on

Mila

n

War

saw

Colo

gne

Berl

in

Krak

ow

Paris

Leip

zig

Sevi

lle

Lyon

Antw

erp

Brus

sels

Lille

Brat

isla

va

Mar

seill

e

Vale

ncia

Prime rents in Q4 2011 - Warehouses over 5,000 m2

Edinburgh

DublinManchester

Birmingham

Sheffield

Lille

Paris

Lyon

Marseille

Barcelona

Madrid

Lisbon

Milan

Bratislava

Warsaw

Krakow

Berlin

Hamburg

BrusselsCologne

Düsseldorf

FrankfurtMunich

EdinburghGlasgow

Cardiff

London(Heathrow)

Bristol

Newcastle

Amsterdam(Schiphol)

Southampton

Glasgow

DublinManchester

Birmingham

Cardiff

London(Heathrow)

Bristol

Sheffield

Newcastle

Lille

Paris

Lyon

Marseille

Valencia

Rome

Barcelona

Madrid

Seville

Lisbon

Milan

Bratislava

Warsaw

Krakow

Berlin

Hamburg

Amsterdam(Schiphol)

Brussels

AntwerpAntwerp

RotterdamRotterdam

Southampton Cologne

Düsseldorf

Frankfurt

Strasbourg

Leipzig

Munich

16391

90

82

8282

75

75

74

74

70

67

66

48

66

66

63

6363

63

61

60

60

60

58

56

54

53 49

51

44

43

4343

42

42

36

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arke

ting

2012

Rents in €/m²/year

>= 100

70 - 99

50 - 69

40 - 49< 40


THE INVESTMENT MARKET STABILISED IN 2011 : INVESTORS ARE LOOKING FOR SECURED ASSETS

2007 2008 2009 2010 2011Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Industrial* investment volume Western Europe

€ million

0

1,000

2,000

3,000

4,000

5,000

6,000

*industrial premises and warehouses

United Kingdom

German

yFra

nce

The Neth

erlan

ds

Sweden


€ million

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


2011 3-year average

Norway

Finlan

dSpain

Portuga

l

BelgiumIta

ly

DenmarkAus

tria


€ million

0

100

200

300

400

500


2011 3-year average

which includes light industrial premises and warehousing, stabilised in 2011 after a strong increase during the previous year. Yet, it did not reach half of the industrial investment recorded in 2007.

The proportional importance of industrial investment increased

in particular.

The industrial investment market showed some signs of recovery notably in France and Sweden but decreased in the UK, Germany and Spain despite the upturn of the rental logistics market in some of these countries. The shortage of core products with long term

Investors continue to be on the lookout for logistics products but are

with long term leases.

The same caution applies in the Eastern & Central European countries where investors have been focusing on established prime

by opportunistic investors.

where the shortage of new warehouses impacted on prices. In the

the scarcity of new products may also bring yields down in some of these markets during 2012.

Real estate investment volume in 2011Western Europe

Offices

Retail

Industrial

Other

45%

32%

9%

14%


%

Net prime yields - Warehouses over 5,000 m²

4

5

6

7

8

9

10

11

Lond

on

Fran

kfur

t

Birm

ingh

am

Mun

ich

Ham

burg

Edin

burg

h

Düss

eldo

rf

Colo

gne

Berl

in

Amst

erda

m

Man

ches

ter

Rott

erda

m

Paris

Lyon

Lille

Mar

seill

e

Brus

sels

Antw

erp

Mila

n

Rom

e

Mad

rid

Lisb

on

Gla

sgow

Barc

elon

a

War

saw

Brat

isla

va

Dubl

inHigh point (2006-2011) Q4 2011

Net prime yields in Q4 2011 - Warehouses over 5,000 m2

6.0%

6.5%

6.5%

6.5%

6.6%

6.6%

6.75%

6.8%6.8%

6.85%7%

7%7%

7%

7.1%7.1%

7.15%

7.15%

7.15%

7.15%

7.25%

7.25%

7.25%

7.25%

7.5%

7.75%

7.75%

7.75%

7.75%

8%

8.0%

8.0%

8.5%

10%

Edinburgh

DublinManchester

Birmingham

Lille

Paris

Lyon

Marseille

Barcelona

Madrid

Lisbon

Milan

Bratislava

Warsaw

Berlin

Hamburg

Amsterdam

BrusselsCologne

Düsseldorf

FrankfurtMunich

Edinburgh

Newcastle

Sheffield

Glasgow

AntwerpBristol

Cardiff

SouthamptonLondon

(Heathrow)

Newcastle

SheffieldDublin

Manchester

Glasgow

Birmingham

Lille

Paris

Lyon

Marseille Rome

Barcelona

Madrid

Lisbon

Milan

Bratislava

Warsaw

Krakow

Berlin

Leipzig

Hamburg

Amsterdam

Brussels

Antwerp

Cologne

Düsseldorf

FrankfurtMunich

RotterdamRotterdam

Bristol

Cardiff

SouthamptonLondon

(Heathrow)

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Yields


Occupier logistics market - Warehouses over 5,000 m²

CitiesTake-up (m2) Prime Rents (€/m2/year)

2011 2010 % change Q4 2011 Q4 2010 % change

Paris 1,167,000 842,600 53 52

Birmingham 784,194 873,660 75 69

London & South East 599,689 637,965 163 163

Hamburg 446,000 405,000 67 66

Manchester 436,737 456,154 66 66

Frankfurt 402,000 233,000 74 66

Lyon 332,400 197,700 44 44

Barcelona 320,100 227,848 63 78

Berlin 303,000 292,000 56 56

Sheffield 288,835 315,684 63 63

Antwerp 281,137 192,751 43 n.a. n.a.

Leipzig 281,000 67,000 51 51

Madrid 254,700 262,969 66 60

Lille 225,000 166,900 43 43

Munich 207,000 153,000 74 74

Marseille 194,200 81,300 42 45

Cardiff 189,708 98,291 63 69

Bristol 158,957 175,865 82 82

Düsseldorf 157,000 80,000 61 59

Cologne 137,000 94,000 58 55

Newcastle 115,943 106,838 66 66

Lisbon 44,750 115,325 60 60

Constant Exchange rates £/€ = 1,166

Investment market - Western Europe

CitiesTotal investment (€ million) Industrial* investment (€ million)

2011 2010 2011 2010 % change

United Kingdom 35,511 40,088 4,082 4,331

Germany 23,521 19,573 1,166 1,240

France 17,211 13,657 973 782

Sweden 6,008 4,442 1,263 705

The Netherlands 5,305 5,960 729 749

Italy 4,286 4,277 160 173

Spain 2,542 4,674 213 224

Norway 2,191 1,810 210 422

Austria 1,610 1,800 70 55

Belgium 1,599 1,163 145 59

Denmark 1,280 977 80 77

Finland 1,225 1,304 210 145

Luxembourg 368 345 2 20

Portugal 248 727 27 250

Total 102,904 100,796 9,329 8,482 +10%

Constant Exchange rates £/€ = 1,166* Light industrial premises and warehousing


Net prime yields - Warehouses over 5,000 m²

CitiesNet prime yields

Q4 2011 Q4 2010 Bp variation

London & South East -25

Birmingham -50

Frankfurt -10

Bristol -25

Hamburg 0

Munich 0

Düsseldorf 0

Cologne 0

Berlin 0

Amsterdam -40

Manchester -50

Cardiff -50

Rotterdam n.a. n.a.

Leipzig n.a. n.a.

Paris +2

Lyon +2

Lille +2

Marseille +2

Sheffield -25

Antwerp n.a. n.a.

Newcastle -25

Milan -25

Madrid 0

Lisbon +25

Rome 0

Glasgow +25

Barcelona +25

Krakow n.a. n.a.

Warsaw n.a. n.a.

Bratislava -50

Dublin -90


Design & Build: construction of a bespoke building for an occupier.Owner-occupier development: construction of a building for an occupier who has signed a bill of sale on a property still to be built. Lease turnkey: construction of a building for an occupier who has signed a lease on a property still to be built.

Distributive trade: distribution of material goods to consumers via retailing and wholesale trade.

Light industrial buildings: individual buildings intended for production or small-scale distribution and able to accommodate all the company departments under one roof.

Logistics: the process of planning, implementing, and controlling procedures

related information from the point of origin to the point of consumption. Includes inbound, outbound, internal, and external movements.

New supply: all building restructuring that adds to the existing stock. These are analysed according to progress.

Completed new supply:Under construction: buildings on which construction has effectively begun.

Planning permission granted: authorisation to build obtained, generally booked after settlement of third party claims. Planning permission submitted:processed. Projects:

Portfolio: group of several assets located in different places.

Rent:and excluding taxes and charges. Prime rent: represents the top open-market rent at the survey date for a real estate unit:

Secondary rent: represents a market rent at the survey date for a real estate unit:

Second hand premises: premises that have been previously occupied by an

Speculative / Non speculative operation: Speculative: construction launched without prior rental or sale to the occupier. Non-speculative: construction launched after partial or complete sale or rental to an occupier.

Supply chain: all the elements in the process of supplying a product to a customer. The chain begins with the sourcing of raw materials and ends with

manufacturing facilities, logistics service providers, distribution centres, distributors, wholesalers, other intermediaries, etc.

Supply chain management: Encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.

Transaction (Take-up): rental or sale to an occupier of a real estate asset, sealed by the signature of a lease or deed, including turnkey and owner-occupier operations. The transaction is only taken into account once any existing conditional clauses have been lifted.

stage

signed

occupation

Vacant Space: all completed buildings actively seeking rental or sale to occupiers.

Warehouses: buildings intended for storage, distribution or packaging.

Yield: Net yield: ratio between net income (excl. operating costs) and the

Initial yield: ratio between the net rent before taxes and charges on the date of sale and the selling price (all costs included). Prime yield:- of standard size,

- in the best location in each market.

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the information contained in the present report turns out to be inaccurate

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Definitions

GLOSSARY


NOTES

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Please contact

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PROPERTY REPORT THE EUROPEAN LOGISTICS MARKETPROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012 5€/m2/year Prime and secondary rents in Q4 2011 - Warehouses over 5,000