Occupational Overview

Colliers International’s latest research on the industrial property market in EMEA shows that prime rents will remain stable over the next 12 months. A thin development pipeline and lack of quality 21st century space are helping to keep prime rents steady, despite the uncertain economic outlook and soft demand levels.

Erik Barnekow, head of Industrial & Logistics, EMEA at Colliers International said:

“It is the strategic locations in the emerging industrial markets of Central and Eastern Europe, the Baltics and Turkey where we could see some uplift in prime rents. We believe that hubs such as Prague, Warsaw, Bratislava, Istanbul and St Petersburg could experience an increase over the next year.
“In Western Europe, it is those locations with limited availability of space, such as London Heathrow, Antwerp and Brussels which are best placed to also see a rise in rental values.”

The Colliers report does, however, state that with no obvious solution emerging for Europe’s troubled peripheral economies, there may well be further declines in prime rents in Athens, Lisbon and Madrid.

Investment Overview

On the investment side, Colliers predicts that industrial prime yields across most of the markets monitored, will remain unchanged.

Ewen Hill, director of Investment, EMEA at Colliers commented:
“There have been concerns over the occupational market, but at the top end it has remained steady and extremely low government bond yields in perceived safe havens, such as Germany and the UK, continue to support pricing. However, there will be a further widening of prime warehouse yields in Sweden as debt availability is limited and impacts investor demand. We also expect prime yields to continue to move out in Athens, where there is no end in sight for declining rental values.”

The report also notes that a marginal compression of prime yields is expected in some Western European markets, notably Frankfurt and Vienna.