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Global Economic Headwinds Affecting Industrial User Patterns in the Eurozone

According to Jones Lang LaSalle's latest EMEA Corporate Occupier Conditions Industrial research survey, absorption of industrial space increased by 14% in the year to September 2011 compared to the same timeframe the previous year, as occupiers continue to adapt to new distribution and manufacturing environments. qatar property

In the third quarter, take-up reached 3.6 million sq m, placing take-up on track to reach 14 million sq m by the end of 2011 - slightly higher than the ten-year average of 9.2 million sq m, but still short of the peak amount of 14.8 million sq m seen in 2010.

However, as concerns about the Eurozone's current economic climate and the global slowdown in economic growth have grown, occupiers have become more cautious in recent months. This was reflected in lower take-up in Q3, which was down 19% from the previous quarter.

Vincent Lottefier of Jones Lang LaSalle tells the World Property Channel, "We believe that demand from logistics operators, retailers, and manufacturers as they adjust to changing retail trends is driving take-up rates across the EMEA area. Increased online retailing, especially in Western Europe, has led to occupiers seeking better-located, higher-quality space to better serve their distribution networks."


Occupants are examining their real-estate holdings and taking measures to improve their performance. Supply chains must remain effective, but there is little incentive for occupiers to upgrade due to a scarcity of good product. There will be more options for industrial occupiers seeking to grow outside of core Western Europe markets, though we expect vacancy levels to tighten over the next 12 months."

Jones Lang LaSalle's Alexandra Tornow, Head of EMEA Industrial and Logistics Research, said, "In Q3 2011, modern available supply fell to its lowest level in two years. Future supply will be limited as well, as we expect low completions relative to historical levels in the coming 12 months. This will allow prime rents to rise, despite the fact that quarter-on-quarter rental growth in prime warehousing across Europe was restricted to 0.1 percent in Q3 2011, compared to 0.7 percent in Q2 2011 "growth in the second quarter."

The vast majority of the 4.7 million sq meters of floor space built in the year to date has been pre-let, resulting in dropping supply levels and intensified competition for high-quality space across EMEA in 2012. As a result, occupiers seeking massive modern floor space would have to adapt the "build-to-suit" approach.

Tornow continued by saying, "In the United Kingdom, for example, due to its excellent access to the national motorway network, the highest demand for prime properties will continue to be concentrated in the south-east and greater London in particular around the M25 in 2012. As a major supply hub for the north of England, competition for vast logistics facilities along major motorway corridors such as the M6 and M62 is likely to be fierce."

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