Global Industrial Highlights | Second Half 2010
Europe, Middle East, Africa (EMEA)
European, Middle Eastern and African warehouse leasing markets only managed to register modest growth in the second half of 2010. Greece, Hungary, Ireland, Norway, Spain, and the Baltic states in particular remained key areas of weakness. Even though signs of recovery were evident in some parts of the region, various markets were still characterized by sluggish leasing activity and little expansion. Warehouse rents again held steady during the second half of 2010, repeating a pattern witnessed during the first six months of the year. Noticeable declines, however, were recorded in Ireland, Austria, Italy, Northern Ireland and the Ukraine. Europe is home to some of the most expensive warehouse rents in the world, with London’s Heathrow submarket holding the title for the third most expensive warehouse space in the world at $20.11 USD/£12.96 GBP per square foot per year.
Within the EMEA region, industrial land values in London’s Heathrow submarket remain far in excess of any other market in the region. At year-end, Heathrow land values averaged $56.82/£36.73 GBP per square foot, an increase of 10.3% during the second half of 2010 (local currency).
U.S. and Canadian warehouse markets registered a noticeable pick-up in leasing activity in the second half of 2010. Warehouse users, sensing a sustainable recovery, began to wade cautiously back into the market. U.S. demand for warehouse space was concentrated in a number of port-related markets, while in Canada most markets enjoyed a fairly brisk six-month period. With a return of demand, and continued drop-off in both Canadian and U.S. construction, vacancies in both countries moved lower.
With both the U.S. and Canadian economies showing signs of recovery, industrial leasing markets are expected to remain relatively robust with a noticeable improvement in fundamentals by the second half of 2011. Occupancy gains are expected to be sizeable, given healthy gains in manufacturing and a continued bounce-back in consumer spending. Although fundamentals will improve as the year unfolds, rents are expected to remain largely directionless for the balance of 2011. During the second half of 2010 U.S. rents fell 2.9% while Canadian rents increased just 0.2%. No North American markets ranked in the top ten highest rents, although Honolulu did come in at number 11 at $11.88 USD per square foot, per annum.
Asia Pacific remained the most robust region in the world, with exports posting healthy growth rates in many countries. With the region registering healthy economic growth, and exporters boosting sales both within the region and globally, rents were steady or up in most markets. At press time, we cannot gauge the effects of the March 11 earthquake and tsunami on Japan’s economy in 2011. However, it is safe to assume Japanese growth, and more importantly trade, will be adversely affected. Trade across the region will feel the effects of Japan’s devastating earthquake and tsunami; as a result, demand for warehouse space is expected to be sluggish relative to 2010. Tokyo, Hong Kong and Singapore warehouse rents all ranked in the top ten, with Tokyo lease rates the most expensive in the world at $22.56 USD per square foot, per annum /¥1,650.00 JPY per square meter, per month.