EUROPEAN LOGISTICS INVESTMENT BRIEFING Property EU, 28 th January 2014
AGENDA – Investment activity & pricing – Rents and occupier demand – Occupier market issues – Conclusions 2 CBRE | JANUARY 2014
INVESTMENT ACTIVITY & PRICING
“IN EUROPE, WHICH SECTOR IS THE MOST ATTRACTIVE FOR INVESTMENT PURCHASES?” Office Logistics Shopping Centres Residential 2012 Retail High St 2013 Light Industrial Retail Warehouses Hotels Other 0 5 10 15 20 25 30 35 40 % Source: CBRE Research 4 CBRE | JANUARY 2014
INDUSTRIAL PROPERTY INVESTMENT, EUROPE Highest annual total since 2007 Billion € 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* Source: CBRE Research Note: * Provisional and may be subject to small revision 5 CBRE | JANUARY 2014
CHANGE IN INVESTMENT (%), 2013* VS 2012 Southern Europe > 200% CEE Sweden Netherlands/Belgium All industrial UK France Germany All property All office All retail 0 25 50 75 100 125 150 Source: CBRE Research Note: * Provisional and may be subject to small revision 6 CBRE | JANUARY 2014
CBRE EMEA PRIME YIELD INDICES Weighted Average Prime Yield (%) Retail Industrial Office German 10Y Bund 12.0 10.0 8.0 6.0 580 BPs 4.0 2.0 0.0 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Source: CBRE Research 7 CBRE | JANUARY 2014
PRIME YIELD SHIFTS (BPS), 2013 Barcelona Budapest Amsterdam Rotterdam Moscow Brussels Warsaw Munich Lisbon Frankfurt Hamburg Milan Madrid Stockholm Lyon Paris Manchester London Dublin -150 -125 -100 -75 -50 -25 0 25 50 Source: CBRE Research 8 CBRE | JANUARY 2014
PRIME WAREHOUSE/LOGISTICS YIELDS Present yield relative to high and low of current cycle (%) Current yield Cyclical low Cyclical peak 10.00 9.00 8.00 7.00 6.00 5.00 4.00 London Frankfurt Hamburg Munich Paris Warsaw Prague Dublin Milan Madrid Lisbon Budapest Stockholm Amsterdam Rotterdam Brussels Manchester Barcelona Source: CBRE Research 9 CBRE | JANUARY 2014
INDUSTRIAL CAPITAL VALUE GROWTH, EMEA Change per Annum (%) Rental Growth Yield Impact 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Source: CBRE Research 10 CBRE | JANUARY 2014
EVM EUROPEAN VALUE INDICES Industrial ex-UK (sub-Sectors) Q4 2007 = 100 110 Industrial ex-UK 100 Logistics Light 90 Industrial 80 70 60 50 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Source: CBRE Valuation 11 CBRE | JANUARY 2014
RENTS AND OCCUPIER DEMAND
EMEA PRIME RENT INDICES Y-O-Y Change (%) Retail Index Industrial Index Office Index All Property Index 20.0 15.0 10.0 5.0 0.0 +5% Year-on-Year -5.0 +1% -10.0 -7% -15.0 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Source: CBRE Research 13 CBRE | JANUARY 2014
PRIME RENTAL GROWTH, 2013 Y-O-Y Change (%) Oslo Amsterdam Gothenburg Zurich Birmingham Glasgow Marseille Helsinki Milan Valencia -15 -10 -5 0 5 10 15 20 25 Source: CBRE Research 14 CBRE | JANUARY 2014
TAKE-UP: BIG POSITIVES, BIG NEGATIVES Industrial / logistics take-up % chg 2013 vs 2012 Dublin Lisbon Bratislava Prague UK Europe Frankfurt Rotterdam Paris Budapest Amsterdam Warsaw Milan -80% -60% -40% -20% 0% 20% 40% 60% 15 Source: CBRE Research CBRE | JANUARY 2014
KEY ECONOMIC INDICATORS % Change 15.0% 10.0% 5.0% 0.0% EU Exports -5.0% World Industrial Production -10.0% EU Imports -15.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Oxford Economics 16 CBRE | JANUARY 2014
RECOVERY BUILDING..... Real GDP Growth, 2013 – 2015 2013-2015 4.0% 3.0% 2.0% 2013 1.0% 2014 0.0% 2015 -1.0% -2.0% -3.0% Italy Spain Europe France Germany UK USA World Source: Oxford Economics 17 CBRE | JANUARY 2014
…..AND SHRINKING SUPPLY UK Logistics Availability, 2009 – 2013 50 40 -71% million sq ft 30 20 10 0 2009 2010 2011 2012 2013 Secondhand New / Early Marketed Source: CBRE Research CBRE Logistics data covers units of 100,000 sq ft only 18 CBRE | JANUARY 2014
OCCUPIER MARKET ISSUES
SUPPLY CHAIN CHALLENGES – Supply chain efficiencies vital in a slow upturn – ...and to deal with growth in online retailing – Capex decisions: systems, equipment, people, buildings.... – Innovation in order fulfilment – More orders, more combinations, more complexity – Centralisation of systems for inventory control: big data – Same-day delivery: can’t afford to, can’t afford not to – Absorbing returns – Quest for seamless omni-channel supply chain – Premium on accessibility, handling capability, throughput, process complexity 20 CBRE | JANUARY 2014
THE DEMAND “DUMBBELL” XXL warehouse platforms in strategic locations Urban logistics & parcel delivery centres 21 CBRE | JANUARY 2014
MAIN ADVANTAGES TO AN OCCUPIER OF OPERATING FROM AN XXL-WAREHOUSE Image/profile Reduction in unit storage costs Reduced transport Economies of scale Centralisation of operations 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 22 CBRE | JANUARY 2014
XXL WAREHOUSES – 14% of the market and rising – Centralisation of inventory – More efficient network footprint – Accommodate value-add services – Simpler information control and order fulfilment – Reduce pressure on storage space in stores – Integral part of supply chain > longer leases – Long production cycle / BTS – Unusual locations – Large lot size / single asset risk 23 CBRE | JANUARY 2014
PARCEL DELIVERY CENTRES 24 CBRE | JANUARY 2014
PARCEL DELIVERY CENTRES – Rapid transfer of goods; minimal or no storage – Reduction in inventory holding and handling costs – Faster process speed through the supply chain – Enhanced customer service – “Final mile” solution close to end point of consumption – Site requirements compete with other uses – Low site coverage (30-35%) – Market unconvinced by evidence of rental premia – Limited scale of capital market: opportunity or risk ? 25 CBRE | JANUARY 2014
CONCLUSIONS
CONCLUSIONS AND ISSUES – Strong investment tilt towards logistics last year – Yields narrowed but spreads still large – Rental growth starting to emerge in the stronger markets – Far-reaching and rapid supply chain challenges – Understanding occupiers in a moderate upturn – Emerging investment niches – Pricing specialisation / single asset risk – First mover advantage: opportunity or risk? 27 CBRE | JANUARY 2014
EUROPEAN LOGISTICS INVESTMENT BRIEFING Property EU, 28 th January 2014
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