Western European warehouses will see 5% take up as GDP growth is forecast (EU)

International real estate advisor Savills has reported that the Western European distribution hubs will see 5% take up during 2010 as GDP growth rises to +1.0% from -4.2% last year in the EU 27.

The activity will, according to Savills, be concentrated around the largest European hubs with demand driven by operating cost reductions and the food sector predominately. Areas such as Greater London, Oslo, Schiphol and Stockholm have recorded the highest prime rents, with Greater London in the lead at €140/m²/year registering a 4.5% year-on-year rental growth rise. Despite this, average prime rents for warehouses have fallen 7.9% year-on-year across Europe and although development activity remains frozen or very limited, the increasing number of vacated warehouses means supply is still rising.

Lydia Brissy of Savills European research says: "Occupier demand is slowly improving but the level of take-up remains often insufficient to absorb the significant number of vacated warehouses. Rents will continue to be under downward pressure until the end of the year in most locations."

In terms of investment, activity shrank significantly but after seven years of consecutive increase, the average European prime yield moved down by 6bps to 7.6%. Savills indicates the opportunities for investment in this sector will be in sustainable warehouses as the market looks to create 'green corridors' to address the OECD (Organization for Economic Co-operation and Development) countries finding that the transport sector represents 30% of total CO2 emissions.

The research provides a report with a summary of warehousing activity in each of the 15 countries surveyed.

Source: Savills

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