The large warehouses market has seen a fall of close to 30% compared to Q1, 2011 and Q1, 2012 with the sale or rent of 420,000 sq. m to occupiers in Q1, 2013. This poor performance reflects the deterioration of the economic climate but nevertheless allows for the possibility of relative stability in take up, for the whole of 2013, compared to 2012.
Activity remains sustained mainly by big transactions initiated by distribution companies looking to reduce their supply chain, echoing last year’s trends. This is seen by the fact that they account for nearly 30% of the total take up in Q1, 2013. “Following the 130,000 sq. m let by Amazon in 2012, the start of the year confirmed the more decisive role of e-commerce, with 2 transactions of more than 20,000 sq. m in the Parisian region”, explains Jean-Paul Deheeger, Director of the Industrial and Logistics Department in Cushman & Wakefield.
The four principal markets of the North/South axis (Lille, Paris, Lyon, and Marseille) make up ‘barely’ 57% of the total take-up volume in Q1, 2013 compared to 76% one year ago. Linked to the concretization of some large-scale trends in secondary divisions, this decline is also representative of the Ile-de-France region market, where hardly 157,000 sq. m have been let; a drop of 42% in one year. The Lyon market (where less than 10,000 sq. m have been let and the Marseille market (counting 30,000 sq. m let) reveal disappointing results, even if take up in the South-East of France should soon bounce back from the expected concretization of big turnkey schemes. The Lille market has been able to emerge relatively unscathed, even if the Lidl site in La Chappelle d’Armentières represents 70% of its take up.
The flow of second hand, well located and standard-compliant assets or recently vacated properties after some difficult months, is continuing, reflecting the conscious efforts of landlords. Good quality property stocks have not stopped from becoming increasingly rare owing to the lack of speculative schemes and current opportunities are being supplied by the vacancy of assets that are not up to date with the most recent performance and safety standards.
Premium rent is just above 50 €/sq. m/year in the Ile-de-France region. However, occupiers’ demands, above all else are to reduce their real estate costs, and they continue to weigh heavily on the progression of negotiation terms with landlords. The most recent of which have included important incentives, mainly in the form of rent-free periods. Widening the gap of economic values, the resort to incentives consequently remains the condition of a general stability of headline market values.
With a sum of 190 million Euros, the quantities invested in industrial real estate in France in Q1, 2013 are almost equal to those seen in the same period of 2012 (+3%). Logistics assets form 62% of this total volume, or 5% of the total amount invested in commercial real estate since the start of 2013. Activity in Q1, 2013 remains contained, sustained by some individual sales of assets where the sum has been above similar transactions seen in the same period of 2012. Like last year, activity should intensify over each month thanks to the sale of logistic portfolios but also due to the growing interest of general investors, and adding to them, as always, pure-players.