Growing industrial confidence, but new supply scarce – JLL
Jones Lang LaSalle says industrial occupiers across the EMEA region are continuing to grow in confidence, which is starting to lead to new flows of corporate investment. The firm says occupiers are still mainly focused on space upgrades and network optimisation strategies, which is sustaining demand for modern industrial space, but also adding to the churn of older, secondhand stock.
JLL’s new research into conditions for industrial occupiers in the EMEA region shows that the returning confidence among occupiers and new investment flows are having a positive influence on activity levels within the property market, but the firm says that expansion strategies for industrial occupiers are only gradually starting to return to the corporate agenda.
Vincent Lottefier, head of JLL’s Corporate Solutions EMEA team, expects to see continued moderate growth in demand in selected markets, particularly in Western Europe, compared with 2010. New sectors such as e-retailing and ‘new energy’ are expected to contribute to future demand for industrial property across the EMEA region.
But there are still some downside risks. There is a shortage of modern industrial property, as new completions and the supply pipeline are at historic lows. JLL forecasts that completions in Western Europe over the next year will be below the five-year annual average, and notes that most future supply is pre-let or built-to-suit. This reduced choice for occupiers and the strong competition for space are expected to lead to reduced incentives for occupiers and rising rents in most European markets by the end of this year, the firm adds.
