According to Jones Lang LaSalle's yearly 'Belgian Warehousing Report', the warehousing amd distribution market proved to be quite resilient in Q1 2009, despite the economic downturn.
In total 973,000 m² of logistics and distribution space was transacted in 2008 which is 26% above the yearly average. Of the 973,000 m² of logistics space taken up, no less than 705,000 m² was done in the second half of the year, despite the tightening economic climate. The same can be said about the semi-industrial market where some 325 transactions totalling 545,000 m² were registered in 2008, of which 36% in the last quarter
It is clear that as of the of end 2008, demand is decreasing and deals take longer to be finalised, but the demands that remain are already thoroughly studied and have a high probability of resulting in an actual deal. A discrepancy is being noticed between the number of outstanding demands and tenders, and the number of deals concluded.
Despite decreasing demand, the high activity rate continued in Q1 2009 and already 249,000m² of logistics space and 119,000 m² of semi-industrial space has been transacted. On the logistics side, the large take-up was driven by no less than five deals of above 20,000 m². First of all there was Colruyt that is building for own occupation a DC of 80,000 m² in Ghislenghien, secondly Dow Corning will occupy 35,000 m² in Séneffe, also Sany Logistics acquired 22,000 m² in Essen and in the Port of Antwerp Boortmalt signed for 25,000 m² and Tabak Natie for 20,000 m². For what semi-industrial space is concerned 74 deals were concluded, of which 30 between 1,000 m² and 6,000 m², representing a very healthy take-up.
Following the economic crisis, market conditions for 2009 and 2010 are expected to tighten further. Nevertheless there are still some markets and companies that remain fairly unaffected by the crisis and which will still need to expand. Although some companies will be forced to scale down their activities, or to dispose of inefficient business lines or activities, the market is nonetheless expected to remain buoyant as regroupment, rationalisation and outsourcing of logistic operations is becoming ever more important in an economic climate where financial liquidity and cost savings rule.
There is a huge amount of projects totalling around 1,500,000 m², but these won't be built unless presold or prelet. The speculative pipeline thus remains limited. After 333,000 m² has been delivered in 2006 and 417,000m² in 2007, no less then 627,000 m² has been completed in 2008 of which almost 70% was already occupied upon completion. Where possible, developers are anticipating the negative impact of the economic crisis and the global recession and are postponing projects that were scheduled for end 2009. Already 140,000 m² in around six projects have been pushed back to a later time or are officially put 'on hold'. The relative short building time for logistic buildings combined with the strong financial position of most of the involved developers makes the logistics market much more self-regulating than for example the office market. By this the risk of a structural over-supply is much smaller.
Canal Logistics in Brussels with a potential of 50,000 m² and where Leasinvest plans the first 25,000 m² to be delivered speculatively in Q4 2009. Concerto that delivered 10,000 m² speculatively in Vilvoorde in Q1 2009. ProLogis that delivered 15,000 m² in Willebroek in Q4 2008.
For the moment, the increase in supply has had no immediate impact on rents in Q1 2009. The quoted asking rents are already quite conservative at around 45/m²/yr on the Brussels-Antwerp axis and 43/m²/yr in the Limburg Liège area. Moreover, even with these projects vacancy remains under control.
On the investor side, the story is not any different. At the beginning of 2009 debt finance remains very limited either through bank's inability or lack of willingness to lend. A number of equity rich investors remains however, and they are actively sourcing p