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Strong growth in European Logistics and Industrial investment in H1 2013

Highest half-year since 2007; sector on course for €10 billion in 2013 according to Jones Lang LaSalle

  • Direct investment volumes reached €6.0 billion in H1 2013, a 57% increase on the equivalent period last year
  • Europe’s most active markets, the UK, France and Germany, accounted for over 60% of investment – but strong growth across a broader geography outside those core markets confirms increased investor interest in other countries
  • First European yield compression after three quarters of no change driven by inward movements in the UK, France, Germany and Russia.
  • Full year 2013 investment in logistics and industrial assets is expected to exceed €10 billion.​


European logistics and industrial assets remained firmly in favour with investors in Q2 2013.  Direct investment for the quarter reached €2.8 billion, an increase of 17% in comparison with the equivalent period last year. Excluding the exceptional €1.2 billion portfolio deal of Prologis/Norges Bank in Q1, investment rose 40% over the quarter.

Half year investment volumes, at €6.0 billion, marked a substantial 57% increase on H1 2012 and were 54% higher than the five year H1 average (H1 08 – H1 12). Meanwhile, logistics and industrial investment represented 10% of the overall commercial real estate investment in the first half of 2013 – up from an 8% average over the last five years (2008 - 2012), providing further evidence of the attractiveness of the sector.
“Over the last eighteen months, we have seen sustained growth in investor appetite for logistics and industrial investment opportunities thanks to healthy income returns. We are now seeing this interest starting to translate into meaningful increased transaction activity and investment volume. This is still driven by the current trend towards joint venture and platform deals, while direct transaction volumes is on the rise as well as investors continue to seek exposure to the sector” says Tom Waite, Director European Capital Markets in Jones Lang LaSalle. “Location remains fundamental but availability of prime product continues to be limited which, together with increasing demand, is putting prime yields under pressure in certain markets” he adds.

Europe’s most liquid markets - the UK, France and Germany – saw further growing investment in H1 year-on-year, up 21% on H1 2012. However, volumes were flat over the quarter as we are witnessing investors broadening their definition of core.
Investment increased more than four-fold in Benelux over the quarter whilst it was up also almost four fold across the Nordic Countries, with Norway making the strongest contribution. In Poland volumes were more than three-fold albeit they were still contained. Still no significant investment activity was recorded in Southern Europe despite renewed interest particularly in Spanish assets.
The investor base is becoming increasingly diversified and capital sourced outside Europe or globally continued to rise over the quarter, up 40%. Over the first half year it amounted to over €1 billion, up 37% on the equivalent period last year and 21% higher than the five year H1 average (H1 09 – H1 12). Investors sourcing capital outside Europe or globally continue to target prime assets in core markets and in the first half of 2013 have invested mainly in the UK, France and Germany.
“The weight of capital targeting European logistics and industrial assets remains significant albeit transaction activity remains constrained by a lack of prime opportunities. This has upheld pressure on pricing and in Q2 led to the first European yield compression after three consecutive quarters of no change. However, there is now gradually more investible stock coming onto the market as continued healthy occupier demand is leading to new development. As a result, we now expect full year 2013 investment to break the €10 billion barrier – which would be the third strongest  result ever recorded” comments Alexandra Tornow, Associate Director EMEA Logistics & Industrial Research in Jones Lang LaSalle.

Prime logistics yields have compressed in a number of markets, including Birmingham (-25bps), London (-25bsp) and Moscow (-25bps) as well as across several French and Germany markets at a softer rate of 10bps in most locations, 20bps in Munich and 5bps in Lyon. Consequently, the European logistics yield moved in by 10bps in Q2 2013.