Industrial markets across the globe are now in recovery mode, albeit at very different stages, with Asia leading the rental recovery according to a new MarketView report from CB Richard Ellis Group, Inc. (CBRE). CBRE's first global analysis of both the occupational and investor aspects of the industrial logistics sector, shows that Tokyo has emerged as the most expensive location in the world for distribution/logistics centers, followed by London and Sao Paulo in Brazil.
Richard Holberton, Director of EMEA Research, CBRE, said: "Once the path to recovery becomes more robust across EMEA, demand for prime industrial and logistics properties will increase throughout Europe. Overall rents across the region are expected to fall by -2.2% in 2010, albeit easing to 0.6% in 2011. In line with the anticipated constraint on prime flexible accommodation for modern industrial and logistics companies in the medium term, rents could increase up by 2% moving into 2012.
The contraction in demand for industrial and logistics properties in 2008 and 2009 led to a more than 10% decline in our Global Rent Index, bringing rents back to 2003-2005 levels. The US and EMEA had the most significant reduction in rents during the period, with declines of 14% and 12%, respectively, while the Pacific Region and Asia weathered the storm better with rental declines of 5% in both regions."
The decline in industrial rents eased throughout EMEA, the Americas and the Pacific region in 2Q 2010. Rent growth is now well underway across Asia, with rents having increased by over 6% since the end of 2009.
CBRE's analysis covers 55 of the leading industrial and logistics markets across the world. It shows that, as of 2Q 2010, Tokyo was the most expensive industrial market with an average rental of US$237.77/m², followed by London (US$210/sq m), Sao Paulo (US$140/m²) and Singapore (US$122.38/ft²). Five of the top 10 most expensive markets are in the Asia Pacific region, with four in the EMEA. Only one country in the Americas, Sao Paulo, features in the top 10, with Los Angeles ranking as the most expensive US market at 18th position with a rental of $74/m².
"The Hungarian industrial market and especially pricing shall continue to attract investors. The performance of industrial and logistics sector responded the most sensible way to the recession, the demand fell intensely that followed a drop of rental levels. It is, however, this sector where the signs of the recovery are also the most spectacular, the demand is getting stronger and the vacancy rate is decreasing. Rental remains at low level since most of the developers still have spare capacity." - Gábor Borbély, CEE regional analyst commented on the Hungarian market.