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Industrial occupier-friendly conditions emerge in Central & Eastern Europe

New research highlights variances across EMEA markets for leasing and building logistics and industrial facilities

London, 3rd July 2013 – European occupiers looking to lease or build logistics and industrial facilities should consider the opportunities across the Central and Eastern European (CEE) countries, according to new Industrial Occupiers Conditions analysis by Jones Lang LaSalle.

According to a review of occupier conditions, CEE countries offer the most favourable environment for both leasehold and freehold solutions. Abundant choice of available stock and positive economic sentiment means occupiers can negotiate favourable lease terms. Middle East and Africa markets also offer occupiers favourable conditions, backed up by economic growth and a strong development pipeline.

Countries such as Croatia, Romania, Serbia and Ukraine are also attractive to occupiers seeking to construct their own facilities due to a combination of low land values and construction costs.

Vincent Lottefier, Global Director & Chief Executive Officer, EMEA Corporate Solutions at Jones Lang LaSalle said: “Average land values and warehouse construction costs are substantially lower in Croatia, Czech Republic, Poland, Romania, Serbia and Slovakia than they are for Western Europe. For example, land values and warehousing constructions costs in Poland are €125 sqm and €300 sqm respectively, compared to €400 and €425 in Germany. This presents value opportunities for those willing to become owner-occupiers.”

Contrasting land values and construction costs

The lowest land values that have planning consent for industrial properties are in Ukraine (€27 sqm), Serbia (€30 sqm), Romania (€35 sqm),Croatia (€50 sqm) and France (€75 sqm), with the highest land values found in Spain (€450 sqm), Turkey (€455 sqm) and the UK (€440 sqm).

The lowest construction costs are in Slovakia (€300 sqm), Spain (€300 sqm), Czech Republic, France, Hungary and the Netherlands (all €350 sqm), with the highest in Finland (€900 sqm) and Sweden (€900 sqm).

Generous incentives available

Strong existing supply means that France offers occupiers the highest incentives. Rent free periods of up to four months rent free per annum are achievable, thus providing a significant rental discount. Spanish markets follow with rent free periods of two months per annum the norm.

Alexandra Tornow, Associate Director, EMEA Logistics & Industrial Research, Jones Lang LaSalle added: “Increasing strong competition means occupiers looking to rent industrial real estate space are confronted with reducing modern choice. Companies able to accommodate their operations in lower quality facilities outside prime locations will find secondary units at rents 30% lower than prime stock. Meanwhile, for those companies that need to locate their operations closer to the higher priced large Western European markets – to achieve lead time advantages or be closer to supplier and/or innovation clusters – build-to-suit options remain a viable alternative in the majority of markets.” 

Notes to Editors:

European Industrial Land Values

Source: Jones Lang LaSalle, June 2013