Whilst Western Europe markets of Manchester, Dublin, Berlin and Stuttgart performed positively, London’s Heathrow area reported 20.8 per cent rental growth year-on-year. Venlo in the Netherlands reported the second largest rental increase in Europe with 19.9 per cent, followed by Minsk in Belarus with 14.3 per cent.
Brussels, as well as leading Dutch logistics centres, Amsterdam and Rotterdam, saw rental growth in Benelux, where the lack of high quality logistics supply has also put pressure on rents.
Paris saw the biggest drop in prime logistics rents, down 13 per cent in 2013, with Bucharest and Budapest reporting similar declines of 12.5 per cent apiece. A decline was also recorded in the first half of the year in Lisbon and Madrid as the occupier market in Southern Europe remains sluggish, and the major Eastern European markets which also reported a fall, with the exception of Moscow where strong demand, combined with extremely low vacancy levels, continued to drive rents upwards.
Erik Barnekow, Head of EMEA Industrial and Logistics, at Colliers International, said: “Improving economic conditions, stable demand and a shortage of high quality space resulted in y-o-y rental growth in core Western European markets. With gradual improvement expected in manufacturing and consumer spending, we anticipate take-up levels to remain similar over the first half of 2014, driven largely by retailers and 3PLs. Further rental growth is expected in London, Dublin and Stuttgart.”
The situation in the Nordics was stable, with no changes in prime rent levels recorded over the last three quarters.
In the investment market, prime yields hardened across UK markets as well as in Berlin, Munich and Dusseldorf. In Central and Eastern Europe, the major markets of Warsaw and Moscow saw annual yield compression while the rest of the region remained widely flat. Scandinavian markets have seen no changes, while there has been some inward yield movement in the Baltics in the second half of the year.
Erik Barnekow, continued, “In the investment market, the lack of prime assets secured with long-term income will continue to be the main obstacle. Some investors might be willing to increase their exposure to peripheral markets. We believe yields, in general, will remain unchanged in the majority of locations although further downward movement of yields might be seen.”