JLL has confirmed that growth in the EMEA logistics and industrial investment market was maintained in Q1 2014. At €4.9 billion, volumes were 25 percent ahead on the equivalent quarter last year. The overall share of the logistics and industrial sector in the commercial real estate market also continued to expand, rising to 13 percent in Q1 2014 from 10 percent in 2013 as a whole, providing further evidence of the rising appeal of the sector.
Whilst volumes were up across all sub-regions in Q1 2014 year-on-year, the majority of activity continued to remain focused on the traditional core markets. Both the UK and Germany recorded significant growth in Q1 year-on-year (UK: +46 percent to €1.5 billion; Germany: +140 percent to €1.3 billion) propelled by further portfolio transactions. Meanwhile, a lack of prime product in France, traditionally Europe’s third largest core market, saw investment declining compared to an exceptionally strong Q1 2013 to €230 million (-60 percent).
Nevertheless, strong competition for assets and portfolios together with further growing confidence means that the sector is attracting a broader spectrum of investors including those from the Middle East and Asia. Furthermore, investors are increasingly seeking opportunities further up the risk curve. In total €1.9 billion was invested outside the three traditional core markets (the UK, Germany and France) in Q1 2014, 9 percent more than during the equivalent quarter last year, albeit the share remained stable at around 40 percent.
Tom Waite, Director European Capital Markets at JLL, said: “This further growth in logistics and industrial investment continues to be fuelled by a high volume of capital targeting the sector. As the trend towards agglomeration continues we still see high demand for portfolio and platform opportunities, however, there remains a healthy appetite for single asset transactions, the volume for which was up 80 percent compared to Q1 2013. Key trends which have emerged at the start of 2014 include an increasing average deal size, rising global capital inflows and opportunities continuing to emerge outside the traditional three core markets, notably in CEE.”
Alexandra Tornow, Head of EMEA Logistics & Industrial Research at JLL, added: “Further improving global economic sentiment and continued structural change in supply chains are supporting healthy market fundamentals. This combined with greater inflows of capital from outside Europe targeting logistics and industrial assets means we can expect 2014 to be another year of transactional growth, although a scarcity of prime product may temper exceptionally high volumes in some markets.”
