RECORD TAKE UP IN GERMANY ACCORDING TO SAVILLS EUROPEAN WAREHOUSE MARKET REPORT

The firm notes that all cities have seen double digit growth in the first three quarters of 2011 compared with the same period in 2010. By year end Savills also expects total take up in Sweden, Poland, UK and the Netherlands’ warehouse markets to exceed 2010 levels.

Savills notes that prime rental values have remained stable across many of Europe’s key markets in 2011, standing at €52/sqm/year in Isle de France, ranging from €56-€75/sqm/year across German markets and at €153/sqm/year in Greater London. The firm attributes this stability to a low level of new developments and the market being driven by owner-occupiers and built-to-suit developments with pre-letting agreements.

Eri Mitsostergiou, director of European research, says: “Speculative development has virtually disappeared from markets due to the difficulties of acquiring financing and a risk-averse developer attitude, hence developments are mostly built-to-suit with pre-letting agreements. For example in Sweden we expect just over 400,000 sqm of new developments to be completed by year end, all of which are pre-let.”

According to Savills prime industrial yields have remained stable in most locations, at approximately 7.5%, but the warehouse sector remains a less popular choice for many investors. The gap between prime industrial and prime office or retail properties has widened, standing at 160 and 119bps respectively. This Savills argues could create some potential opportunities in markets with good fundamentals.

Mitsostergiou comments: “Overall demand for warehousing space in European markets has improved over the last 12 months with take-up levels rising in markets with comparatively more stable economic conditions such as Germany, Poland and Sweden.”