Europe, Middle East & Africa (EMEA)
European, Middle Eastern and African warehouse markets again registered sluggish growth in the first half of 2009. In particular, the United Kingdom, Hungary, Ireland and Spain remained key areas of weakness. Most markets were characterized by little leasing activity and a tendency my many warehouse tenants to sit tight until business conditions show further signs of improvement. For the first six months of 2009, warehouse rents across the region fell on average 6% (local currency). Noticeable declines were recorded in the Czech Republic, Spain, Turkey, Ireland, Serbia, Poland, Sweden, Germany, Denmark, Ukraine, Russia and the Baltic states. For the rest of the EMEA region, rents either held steady or posted only modest declines.
Europe is also home to some of the most expensive warehouse rents in the world, with London’s Heathrow submarket holding the title for the second-most expensive warehouse space in the world at $20.64 per square foot per year. Not surprisingly, London’s Heathrow submarket also registered the most expensive land in the EMEA region at $60.66 per square foot. Indeed, land values fell in many European markets, with the UK, Hungary, Poland, Russia, Slovakia Serbia, Ukraine, Romania, Ireland and the Baltic states all registring substantial declines.
As anticipated, the U.S. and Canadian warehouse markets registered very weak results during the first half of 2009, with tenants returning substantial amounts of space in both countries. Even though construction continued to wane, vacancies in both countries moved up significantly in the first six months of the year, with further increases anticipated in the latter half. Even though the U.S. economy is beginning to show signs of bottoming, and even expansion, leasing activity is expected to remain very lethargic for the balance of 2009 and well into 2010. With weakening fundamentals, most North American markets will see rents drift lower after already falling 6.9% year-to-date in the U.S. and 2.2% in Canada.
Asia Pacific continued to be the most robust region in the world: however, the global downturn did not leave the region unscathed. Almost every country in the region registered a substantial drop in rents, with Singapore and India in particular registering double-digit declines. With the global economy showing signs of life and global trade on the upswing, most of the region’s warehouse markets are expected to firm up in the latter half of the year. Despite the recent downturn, Tokyo, Hong Kong and Seoul warehouse rents all ranked in the top ten, with Tokyo lease rates the most expensive in the world at $22.18 per square foot. Asia Pacific also took the top spot land values, with Hong Kong at $680 per square foot, Seoul $506 per square foot and Tokyo at $471 per square foot. As in the other two main regions, though, most countries in the Asia Pacific reported falling land prices.
Download a copy of the report here: Colliers Midyear 2009 Global Industrial Highlights