Take up in France's industrial warehouse market rose 61.5% from Q109 to Q110 and, according to international real estate advisor Savills, will exceed 700,000 m² by end H110. This is in line with H109 take up.
The report states that take up activity has been focused on the Paris region with demand exceeding 292,000 m² (3,143,061 ft²) in Q109. This figure is 73.8% higher than the average quarterly volume for the last five years. Savills however predicts that in comparison to Q110 there will be a decline in take up during Q210 as firms continue to exercise cost cutting constraints, favouring renegotiation of current leases to relocation.
Gregoire Lecomte, director of industrial and logistics, says: "In the absence of any speculative developments, the Grade A warehouses located on the North/South axis will be occupied at a steady rate. The prime rental values should consequently be maintained."
Savills finds that warehouse supply in the Paris region has decreased for the first time since 2007 and now stands at 1.1 million m² from its peak at 1.3 million m². The firm predicts that there will be a decline in vacant stock, due to a forecast absence of speculative developments and that availability will come from occupiers who are relocating to built-to-suit premises signed in 2009. Future supply is anticipated to peak at 4 million m² across the country.
The report states that prime rental values have been resistant in the main logistics hubs, spread from 44 m²/year to 52 m²/year but that values have slightly weakened in secondary locations where there is less demand. This is perhaps reflected in investment yields which have declined in the main markets by circa 50 basis points quarter on quarter and 100 basis points year on year. Average prime yields in these markets are 7.50% in the Paris Basin compared to 8% on the North/South Axis.