Property Report H1 2016

Transcription

1 EUROPEAN LOGISTICS MARKET Property Report H1 216 RESEARCH Real Estate for a changing world

2 CONTACTS PROPERTY REPORT - EUROPEAN LOGISTICS MARKET - SEPTEMBER 216 EUROPEAN LOGISTICS COVERAGE Logan SMITH Head of Logistics logan.smith@bnpparibas.com FRANCE Christophe Prioux christophe.prioux@bnpparibas.com GERMANY Oliver Wissel oliver.wissel@bnpparibas.com UNITED KINGDOM Jonjo Lyles jonjo.lyles@bnpparibas.com SPAIN Thierry Bougeard thierry.bougeard@bnpparibas.com Jean-Bernard Gaudin jean-bernard.gaudin@bnpparibas.com NETHERLANDS Joost Merkx joost.merkx@bnpparibas.com POLAND / CEE Katarzyna Pyś-Fabiańczyk katarzyna.pys-fabianczyk@bnpparibas.com IRELAND Danielle Rocca Devine danielle.roccadevine@bnpparibas.com OTHER LOCATIONS Austria Baltic countries Denmark Greece Finland Hungary Norway Portugal Serbia Sweden Switzerland USA Please contact Florence Hesse florence.hesse@bnpparibas.com EXECUTIVE SUMMARY European logistics has been particularly resilient despite some signs of economic slowdown and uncertainties around the Brexit referendum vote. Germany has reached yet another midyear record volume of transactions and the UK maintained a strong level of investment well above its 5-year average. After a strong compression throughout Europe in 215, prime yields have stabilised at their lowest levels. The occupier market is slowing down, back to average levels Take-up declined by 22% in Europe (22 cities) compared to the outstanding results recorded in 215. The activity remained strong in most countries. Germany broke yet again another record level of transaction in H Design and build solutions are a strong alternative to the low availability of large units. Few changes in prime rents. Sustained investor demand and yield stabilisation The investment market for logistics and industrial premises reached 1.bn in H The UK dropped 13% to 3.5bn in industrial and logistics investment in H The market represents more than one third of the European volumes. Germany increased by 1% in H1 216 and prime yields stabilised. Spain and the Netherlands maintained strong activity following an outstanding year 215. After major compression last year, prime yields have stabilised in most European markets. Vincent Robion September 216 RESEARCH Christophe Pineau Global Head of Research christophe.pineau@bnpparibas.com Vincent Robion Head of European Logistics Research vincent.robion@bnpparibas.com 2

3 MARKET IMPACT OF BREXIT HAS BEEN LIMITED Eurozone economic growth slowed in the second quarter of 216 to.3%, from.5% growth in the first quarter. Germany s economy grew at.4% for the quarter, while the Spanish economy grew by.%. There was continued vulnerability in France and Italy. Italy which is struggling with a banking crisis and whose prime minister has called a referendum on constitution reform in November registered zero growth over the quarter. France, which will hold presidential elections next year, also stagnated, following.7% growth in the first quarter. No Eurozone economy reported a GDP contraction for the quarter, with even Greece in positive territory. Looking ahead, although Eurozone recovery remains largely on track we expect that this pace of expansion is unsustainable. Recent Eurozone survey data have softened, with the final reading of the composite PMI for August revised down by.4 points to 52.9, unwinding the limited gains since April. Recent country business surveys for August have also largely surprised to the downside. This is consistent with our expectation that growth should moderate in the second half of this year, as tail winds from low energy prices and fiscal stimulus fade. Softer growth in the UK should also have some impact. There will be further demands for fiscal policy to be relaxed over the next few months to support overall demand conditions and alleviate pressure on monetary policy. The European Central Bank (ECB) is likely to prolong its asset purchases to September 217 from the currently scheduled end-date of March 217 due to the following reasons. First, the risks to growth remain to the downside, ranging from the high level of uncertainty surrounding the global outlook to the asyet-unknown effects of Brexit. Second, Eurozone inflation remains exceptionally low while marketbased inflation expectations continue to hover around historical lows. Third, the muted market reaction to Brexit has probably been also due to expectations of more ECB asset buying. While the Eurozone economy has shown some resilience to the Brexit shock, the ECB will be eagerly awaiting additional information before drawing a conclusion on the implications for growth. GDP and employment growth in the EU 15 % GDP Employment 5 Distributive trade and manufacturing output in the EU % Manufacturing Wholesale and Retail Trade Transportation & Storage Imports (year-on-year change) % % 1.% *17* * Forecast Source: Oxford Economics, BNP Paribas UK Germany Spain France Netherlands BNP Paribas Real Estate - Research - September 216 BNP Paribas Real Estate - Research - September Exports (year-on-year change) % * 17* * Forecast Source: Oxford Economics, BNP Paribas UK Germany Spain France Netherlands BNP Paribas Real Estate - Research - September 216 BNP Paribas Real Estate - Research - September 216 Source: Oxford Economics, BNP Paribas Source: Oxford Economics, BNP Paribas 3

4 TAKE-UP SLOWDOWN IN EUROPE AFTER A RECORD YEAR In the 22 cities regularly followed by BNP Paribas Real Estate the market for warehouses over 5, sqm declined by 22% during the first half of 216 compared to H This trend comes after a strong market growth during 215. The volume of transactions just returned to the average levels recorded in 213 and 214. Supply is just barely keeping pace with demand, especially for large units. Speculative projects remain limited and are not sufficient to offset the demand for new warehouse space. As a result, demand for owner-occupier deals is high in most countries and the favourable financing conditions and low interest rates are encouraging occupiers to consider this alternative solution. Rents remained fairly stable in most countries. Only marginal changes have been recorded in some markets but overall rents for warehouses have not evolved dramatically since the beginning of the year. One of the main reasons lies in the low margins achieved in the logistics industry which in turn constrain tenants who can t afford higher rents. Demand from the retail sector is still strong in France and the UK where retailers and distributors accounted for half of the volume of warehouses taken up in H In Germany they represented nearly 4%. In France, online retailing remains a strong market driver along with demand from food distributors. In the UK, Amazon alone accounted for nearly half of the market as they continue to roll out an ever-expanding range of products with increasingly quicker delivery times. In France, the market for warehouses over 5, sqm slowed down in H1 216 (-6%) compared to H After a good start to the year, the volume of transactions dropped in Q2, particularly in Greater Paris. Demand for large units is faced with a lack of available product and occupiers have turned to build-to-suit solutions, especially in the French regions outside of the main traditional hubs. Prime rents stayed fairly stable, still ranging from 42 and 4 in the regional cities and 55 in Greater Paris. In the UK, take-up decreased by 26% but this is compared to the record volumes achieved in H The occupational market remains driven by changes brought about by the continuing development of online retailing and despite growth in speculative development, the majority of UK regions remains undersupplied in Big Boxes. The strong rental growth environment that has prevailed over the past year is expected to adjust. In Spain and the Netherlands, demand remained strong despite a significant drop in take-up. After an excellent year in 215, both countries are returning to their average market activity although now with speculative developments. Rents just increased slightly to 72 in Barcelona and 6 in Amsterdam and Rotterdam. Low vacancy rates in Poland (5.3%) and the Czech Republic (4.3%) have been a motivator for new development schemes. In the Czech Republic, speculative development represented more than one third of the new buildings under construction stimulated by strong demand. After reaching a record level of take-up in 215, the volume of transactions in Germany continued to increase by 6% in the first half of 216 compared to H1 215, despite the tight situation on the supply side. This can be attributed to the growing demand from owner-occupiers for build-to-suit solutions, representing half of total take-up, as speculative developments remained low. Rents have been stable in most markets, increasing only slightly in Berlin, Munich and Leipzig. Demand remains strong and the second half of the year is expected to remain lively. Take-up - Warehouses over 5, sqm sqm 7 H1 215 H Birmingham Greater Paris Bristol Frankfurt Barcelona Manchester Madrid Lyon London & South East Hamburg Leeds Berlin Leipzig Lille Marseille Düsseldorf Munich Rotterdam Newcastle Cologne Lisbon Amsterdam BNP Paribas Real Estate - Research - September 216 4

5 NET PRIME RENTS IN Q WAREHOUSES OVER 5, SQM Helsinki 19 Stockholm 94 6 Tallinn Riga 4 Vilnius Glasgow 75 Edinburgh 52 Dublin 75 Newcastle Manchester Hamburg Leeds Amsterdam (Schiphol) 59 Birmingham 9 6 Berlin Rotterdam Düsseldorf Antwerp Leipzig Bristol London 6 Heathrow 46 4 Cologne 76 Le Havre Lille Brussels Frankfurt 45 Airport Munich 55 Greater Paris 1 Paris 51 Poznan 41 Katowice Prague 72 Vienna Gdansk 6 3 Lodz 46 Warsaw Krakow 43 4 Bratislava 5 Budapest 43 Nantes 45 Bucharest 46 Bordeaux Lyon 45 Milan 5 Istanbul 66 Toulouse Marseille 52 Rome 42 Lisbon 66 Madrid 72 Barcelona Rents in /sqm/year km BNPPRE Research <5 Prime rents - Warehouses over 5, sqm /sqm/year Prime Rent Secondary Rent London & South East Helsinki Stockholm Birmingham Munich Manchester Frankfurt Leeds Newcastle Barcelona Vienna Bristol Hamburg Istanbul Madrid Düsseldorf Amsterdam Cologne Rotterdam Tallinn Warsaw Berlin Greater Paris Leipzig Rome Vilnius Prague Budapest Milan Krakow Riga BNP Paribas Real Estate - Research - September 216 5

6 GOOD RESILIENCE IN TIMES OF UNCERTAINTY Industrial and logistics investment reached 1.bn in H1 216 in Europe, a 3% increase compared to H The market has been slowing down since the beginning of the year, in line with the economic backdrop, but remained resilient given the uncertainties surrounding the Brexit vote. By accounting for more than one third of total industrial and logistics investment, the UK volume of investment weighs on the overall trend in Europe. Whilst declining during H1 216 to 3.5bn, it remained well above its average volume measured between 211 and 215. The little availability of prime products in the UK maintained yields at low levels: 4.5% Manchester, 4.75% in Birmingham and in London & the South East. In Germany, industrial and logistics investment already reached 1.7bn at mid-year 216, rising by 1% compared to H This is the second best mid-year recorded in Germany thus confirming the interest for logistics properties, not only from pure players. Foreign investors have been particularly active especially in the portfolio segment. The market is expected to reach the 4bn threshold once again by the end of 216 unless the lack of large units holds demand back. Following a strong compression last year, yields have stabilized, Munich remaining the most expensive at 5.2%. In France, the return of speculative investment and the affluence of liquidity stimulated the market and enabled a prime yield at 5.7% in Greater Paris. The volume of industrial and logistics investment reached 773 million, regaining momentum in H1 216 (+27% compared to H1 215). Unlike 215, few pan-european portfolios changed hands. Nevertheless, H1 was boosted by the purchase of several medium-sized portfolios by Anglo-Saxon funds. In the Netherlands, the industrial and logistics market further rose to 757 million, representing 1% of the total volume of commercial real estate. The prime yield was recorded at 5.% in Amsterdam. In Spain, the market continued to be thriving following the massive rebound in 215. The volume of industrial and logistics investment grew even further by 19% to a mid-year record of 4 million. Strong investor demand continued to push yields down to 6.5 in Madrid and Barcelona. In Poland industrial and logistics investment nearly doubled in H1 216 compared to H1 215 to reach 23 million. Industrial* investment volume in Europe bn Average Commercial real estate investment volume in H1 216 Western Europe* 7% % Industrial* investment volume Western Europe bn *Industrial premises and warehouses United Kingdom Q2 216 (rolling year) Germany * Industrial premises and warehouses France average Norway Netherlands BNP Paribas Real Estate - Research - September 216 BNP Paribas Real Estate - Research - September 216 Industrial* investment volume Western Europe bn % Sweden 23% Q2 216 (rolling year) Spain Finland Italy * Industrial premises and warehouses Denmark 5% Portugal average Belgium Offices Retail Industrial Hotels Other * Austria, Belgium, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, Norway, Portugal, Spain, Sweden, Netherlands, UK Ireland Austria BNP Paribas Real Estate - Research - September 216 BNP Paribas Real Estate - Research - September 216 6

7 NET PRIME YIELDS IN Q WAREHOUSES OVER 5, SQM Helsinki 7.% Oslo 5.5% Stockholm 5.75%.5% Tallinn.75% Riga Edinburgh Glasgow 6.% Vilnius.5% 5.5% Newcastle Manchester Warsaw Dublin Hamburg Poznan 6.5% 4.5% 5.25% 5.5% 5.75% Leeds 5.5% 7.% Amsterdam 5.4% 4.75% 5.% Berlin Lodz Birmingham Düsseldorf Rotterdam 6.5% Krakow 5.15% 4.75% 5.25% 5.9% Antwerp Katowice 6.% 6.5% 7.5% Leipzig Bristol 6.5% London 5.25% 6.25% 6.75% 6.5% Prague Heathrow Cologne 5.25% Le Havre Lille Brussels Airport Frankfurt Bratislava 7.75% Munich 6.4% 7.5% 5.7% Greater Paris 5.2% Vienna.5% Budapest Paris 7.5% Nantes Bucharest.75% 7.% Bordeaux Lyon 6.25% Milan 6.5% Istanbul 7.5% 7.3% Toulouse 6.25% Marseille Rome 6.75% Lisbon 7.% 6.5% Madrid 6.5% Barcelona Yields < 6% 6% - 7% km BNPPRE Research 216 7% - % >% Net prime yields - warehouses over 5, sqm % Q2 215 Q2 216 Range since UK Germany Norway Poland France Sweden Netherlands Austria Ireland Spain Italy Czech Republic Belgium Finland Portugal Turkey Slovakia Romania BNP Paribas Real Estate - Research - September 216 7

8 OCCUPIER LOGISTICS MARKET - WAREHOUSES OVER 5, SQM City Take-up ( m ² ) H1 216 H1 215 Variation y-o-y (%) Prime Rents ( /sqm/year) July 216 July 215 Variation y-o-y (%) Birmingham % Greater Paris % Bristol % % Frankfurt % Barcelona % % Manchester % Madrid % Lyon % % London & South East % Hamburg % Leeds % % Leipzig % % Berlin % % Lille % % Marseille % Düsseldorf % Munich % % Rotterdam % % Newcastle % % Cologne % Lisbon % % Amsterdam % 6 5 3% BNP Paribas Real Estate - Research - September 216 REAL ESTATE INVESTMENT MARKET IN EUROPE Country Commercial real estate investment ( million) H1 216 H1 215 Variation y-o-y (%) Industrial & logistics investment ( million) H1 216 H1 215 Variation y-o-y (%) UK 2,573 44,646-36% 3,49 4,433-13% Germany 1,376 24,329-24% 1,73 1,55 1% France 9,749 1,5-3% % Sweden 7,17 4,91 45% 524 1,4-52% Spain 4,219 6,147-31% % Netherlands 3,774 3,54 6% % Finland 3,77 2,72 39% % Norway 3,756 3,139 2% % Italy 3,37 3,716-9% % Ireland 2,715 1,653 64% % Belgium 1,49 1,6 32% % Austria 1,3 9 44% 15-1% Portugal 1,262 1,9 16% % Luxembourg % 1-1% BNP Paribas Real Estate - Research - September 216

9 NET PRIME YIELDS - WAREHOUSES OVER 5, SQM City Net prime yields July 216 July 215 Variation y-o-y (bp) Amsterdam 5.% 6.2% -4 Barcelona 6.5% 7.5% -1 Berlin 5.4% 5.65% -25 Birmingham 4.75% 4.75% Bordeaux 7.% 7.% Bratislava 7.5% 7.9% -4 Bristol 5.15% 5.5% -35 Brussels 6.75% 7.% -25 Bucharest.75% 9.75% -1 Budapest.5% 9.% -5 Cologne 5.25% 5.6% -35 Dublin 6.5% 6.75% -25 Düsseldorf 5.25% 5.6% -35 Frankfurt 5.25% 5.6% -35 Greater Paris 5.7% 6.35% -65 Hamburg 5.25% 5.6% -35 Helsinki 7.% 7.% Istanbul 7.5% 7.5% Katowice 6.% 7.% -1 Krakow 7.5% 7.5% Leeds 5.75% 6.% -25 Leipzig 5.9% 6.1% -2 Lille 6.25% 6.35% -1 Lisbon 7.% 7.5% -5 Lodz 7.% 7.% London & South East 4.75% 4.75% Lyon 6.25% 6.35% -1 Madrid 6.5% 7.5% -1 Manchester 4.5% 5.1% -6 Marseille 6.25% 6.35% -1 Milan 6.5% 7.% -5 Munich 5.2% 5.55% -35 Newcastle 5.5% 6.% -15 Oslo 5.5% 5.75% -25 Poznan 5.5% 7.% -15 Prague 6.5% 6.75% -25 Riga.75%.75% Rome 6.75% 7.5% -75 Rotterdam 6.5% 6.7% -2 Stockholm 5.75% 5.9% -15 Tallinn.5%.5% Vienna 6.4% 7.% -6 Vilnius.5%.5% Warsaw 5.5% 7.% -15 BNP Paribas Real Estate - Research - September 216 9

10 GLOSSARY The numerical data used by BNP Paribas Real Estate for its statistics feature all the information at the group s disposal when compiling them. These statistics may change according to new information brought to our knowledge that is often confidential to begin with. Definitions from A to Z 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: it is measuring the volume of material goods to consumers distributed through 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 for the efficient and effective transportation and storage of goods, and 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: buildings on which construction work is finished. Under construction: buildings on which construction has effectively begun. Prior demolition work is not taken into account. Planning permission granted: authorisation to build obtained, generally booked after settlement of third party claims. Planning permission submitted: planning permission requested, being processed. Projects: identified intention of a building operation for which no request has been filed. Portfolio: group of several assets located in different places. Rent: common annual headline rent, expressed per square metre per year, and excluding taxes and charges. Prime rent: represents the top open-market rent at the survey date for a real estate unit: Over 5, m² suitable for logistics uses Of the highest quality and specification In the best location in a market Secondary rent: represents a market rent at the survey date for a real estate unit: Over 5, m² suitable for logistics uses Of good quality and specification In a good location in a market Second hand premises: premises that have been previously occupied by an occupier or vacant for more than five years. 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 the delivery of finished merchandise to the end-user. It embraces vendors, 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 owneroccupier operations. The transaction is only taken into account once any existing conditional clauses have been lifted. Pre-let refers to take-up that was either in the planning or construction stage All deals (including pre-lets) are recorded in the period in which they are signed Contract renewals are not included Sales and leasebacks are not included as there had been no change in 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 acquisition price including all acquisition costs. 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: net lowest yield obtained for the acquisition of a unit: - of standard size, - of the highest quality and specification, - in the best location in each market. BNP Paribas Real Estate Disclaimer clause BNP Paribas Real Estate cannot be held responsible if, despite its best efforts, the information contained in the present report turns out to be inaccurate or incomplete. This report is released by BNP Paribas Real Estate and the information in it is dedicated to the exclusive use of its clients. The report and the information contained in it may not be copied or reproduced without prior permission from BNP Paribas Real Estate. Should you no longer wish to receive this report, or wish to modify the conditions of reception of this report, please send an to: unsubscribe.mailing@bnpparibas.com 1

11 6 in Europe A 36 vision BUSINESS LINES Main locations EUROPE FRANCE 9267 Issy-les-Moulineaux Tel.: GERMANY 6311 Frankfurt Tel.: BELGIUM 14 Brussels Tel.: SPAIN 24 Madrid Tel.: HUNGARY 113 Budapest Tel.: IRELAND Dublin 4 Tel.: ITALY 2143 Milan Tel.: JERSEY St Helier, Jersey JE4 RD Tel.: +44 () LUXEMBOURG 155 Luxembourg Tél.: Investment Management Tel.: NETHERLANDS 13 HP - Amsterdam Tel.: POLAND -54 Warsaw Tel.: CZECH REPUBLIC 16 Prague Tel.: ROMANIA Bucharest Tel.: UNITED KINGDOM London EC2V 7BP Tel.: MIDDLE EAST / ASIA ABU DHABI P.O. Box 2742 Abu Dhabi Tel.: DUBAI P.O. Box 7233 Dubaï Tel.: HONG KONG Center - Connaught Place Central Hong Kong Tel.: Alliances* ALGERIA** AUSTRIA CYPRUS DENMARK ESTONIA FINLAND GREECE HUNGARY*** IVORY COAST** LATVIA LITHUANIA Contacts MOROCCO NORTHERN IRELAND NORWAY PORTUGAL SERBIA SWEDEN SWITZERLAND TUNISIA** USA * October 216 ** Coverage via our alliance in Morocco *** In Transaction, Consulting & Valuation Alliances Florence Hesse Tel.: +33 () florence.hesse@bnpparibas.com Research Christophe Pineau Tel.: +33 () PROPERTY DEVELOPMENT TRANSACTION CONSULTING VALUATION PROPERTY MANAGEMENT INVESTMENT MANAGEMENT Non contractual document - Research department September 216 BNP Paribas Real Estate: Simplified joint stock company with capital of RCS Nanterre - Code NAF 71 Z - CE identification number FR Headquarters: 167, Quai de la Bataille de Stalingrad Issy Les Moulineaux Cedex - BNP Paribas Real Estate is part of the BNP Paribas Banking Group Real Estate for a changing world