In 2013, investments in European logistics and industrial markets totaled €15.2 billion, a 73 percent increase over the previous year and the second biggest volume in the last ten years. Cars
According to a research from Jones Lang LaSalle, the share of logistics and industrial investment climbed to 10% of all commercial real estate volumes, up from a five-year average of 8%.
"An improving macroeconomic landscape, falling vacancy levels, a tightening of supply, and occupational demand driven by factors such as the continued growth of e-commerce and changing shape of retail markets" fueled the increase in volumes, according to Tom Waite, Director European Capital Markets at JLL. "As a result, a number of markets have seen lower yield moves, which we expect to continue in 2014."
Mr. Waite noted that the capacity to establish scale across the region, the return of finance availability, and the opportunity of capturing rental and capital growth continue to entice investors.
As the number of overseas investors seeking additional exposure expands, platform and portfolio agreements accounted for over half of the entire volume in 2013, up 130 percent year over year.
Inter-regional capital flows, on the other hand, grew by 77% from 2012 to €6.2 billion.
The traditional European markets of the United Kingdom, Germany, and France continued to dominate in 2013. Due to a dearth of excellent product and persistent yield compression in the top markets, investors looked for opportunities elsewhere.
Outside of the top three markets, investment volumes accounted for 45 percent of all volumes in 2013, up from 30 percent in 2012.
The Nordic countries and the Benelux raised their investment volumes by a significant 84 percent and 44 percent, respectively, for the full year. Russia, on the other hand, saw €800 million in deals last year, with a small number of domestic investors dominating.
Strong investor demand in the fourth quarter of 2013 pushed the weighted European average yield up 10 basis points to 7.30 percent.
Occupier demand for logistics units is expected to exceed the 2006 peak of €16 billion this year, according to the business, with structural change in supply networks driving occupier demand for logistics facilities.
"In the short term, this shift will be led by evolving e-commerce marketplaces, as retailers are increasingly required to provide an omni-channel retail experience to their customers in order to remain competitive," said Alexandra Tornow, JLL's Head of EMEA Logistics & Industrial Research. "In addition, we are already seeing numerous other trends emerge in the medium term that will have an increasing impact on logistics real estate plans, such as 3D printing and climate change."