Industrial commercial property markets in Central and Eastern Europe (CEE) and South America were the best performing globally in 2008 according to the new edition of Industrial Space Across the World from global real estate adviser Cushman & Wakefield.
The occupational market for industrial property deteriorated throughout the world in all but a handful of markets in 2008 and global rental growth slowed to 2.4% down from 6.1% in 2007. The more mature markets of North America and Western Europe were the first to underperform early in 2008 but by year end all regions of the world had been affected by the global economic downturn.
Annual rental growth in CEE, however, was 6.7% in 2008 which was almost the same level as 2007. The Polish and Ukrainian markets were both very active over the year, for example, with considerable demand for a relative shortage of quality accommodation. Rents increased in Poland by 28% in 2008 and in Kiev, Ukraine by 25%.
In South America, industrial rents rose by 12.4% over the year with the Rio de Janeiro, Brazil market recording the highest global rise in rents of 46%. The strong performance of South American markets offset the -0.4% decline in rental growth in the US and Canada.
Heathrow, London was for the 8th year the world's most expensive industrial location with an occupancy cost of 185/m²/year followed by Tokyo, Japan at 179. Dublin, Ireland fell to third place from second with annual occupancy costs of 157/m²/year.
Ferdinand Hlobil, Head of Industrial, Cushman & Wakefield CEE said; "The CEE region has been outperforming its 'old' European neighbours for the last decade, in terms of both growth in construction and take up of industrial space. The shift of production and distribution from the West to the East has been the main driver over recent years. This is expected to continue, primarily due to the fact that about 40 per cent of the European population is located in Central and Eastern Europe. The large potential consumer market in CEE is still very much under-developed, and even when taking into account the present global crisis, we expect the growth of the industrial market to continue in the medium term."
Barrie David, Senior Research Analyst, Cushman & Wakefield, comments: "Although Western Europe still has the most expensive industrial location in the world, London - Heathrow, performance in terms of rental growth has been subdued during 2008. Most Western European countries saw rents hold firm in 2008 as occupier demand steadily declined over the year. In fact, the global downturn in rents is really demand led, as many industrial markets remain undersupplied in terms of modern space. Falling take-up is a trend evident across most global industrial markets and one that is expected to continue well into 2009. "
Mário Sérgio S. Gurgueira, Cushman & Wakefield, Brazil comments: "Brazil performed well in the industrial and warehouses market because of an improving domestic economy over the year. This has seen consumer demand rise and has consequently resulted in more sales, more warehousing and more transportation. The outlook for the market indicates lower demand but there is still evidence of schemes going ahead at the moment, because demand for high quality buildings is still evident."
Source: Cushman & Wakefield