A banner year for global logistics markets

Global logistics markets ended 2017 on a high, with robust demand and vacancy at historic lows propelling further rental growth. With buoyant demand and a lack of modern vacant space, we expect continued rental growth momentum in 2018.

U.S. rents continue to rise to record levels

The U.S. industrial market registered its best fourth quarter of net absorption on record in the final quarter of 2017, driving vacancy to an all-time low and spurring additional rental growth. Overall, leasing sentiment remains stable going into 2018. The industrial market has seen positive growth for over seven years and, while the Class A market continues to be hot, there is increased competition between Class B and Class C product.

European warehousing markets set for continued strong performance in 2018

In Europe the regional vacancy rate has also fallen to a new low with 2017 take-up well above the long-term average. Driving this activity was robust demand for large warehouse facilities, along with urban sorting, distribution and fulfilment centres to support the continued growth in online sales.

There are no signs of an imminent slowdown in activity and, with a strong economic outlook, we expect occupier demand to maintain its momentum in 2018. Given strong demand and low levels of vacancy, rental growth, which has been quite patchy, should become more widespread.

3PLs and e-commerce firms drive demand for logistics space in Asia Pacific

Rents continued to edge up in most markets across Asia Pacific, supported by the uplift in global trade. E-commerce and 3PLs were the most active occupiers in Tokyo and the China Tier 1 markets in the fourth quarter, with rents reaching a record high in Shanghai. After declining for the last 10 quarters rents for Singapore’s logistics premises held flat on improved sentiment, while overall rents in Hong Kong dropped slightly as landlords facing high vacancy continued to provide longer rent-free periods.

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