Expensive rent for logistics space. The biggest increase in rates in the CEE.

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Expensive rent for logistics space. The biggest increase in rates in the CEE.

In the second quarter of this year, rents in the European logistics real estate sector increased significantly. This is the highest year-on-year increase in over 10 years, according to the latest report “DNA of Real Estate Q2 2019” by Cushman & Wakefield. 

Between March and June this year, logistics real estate rents increased by 0.6% compared to the first quarter of this year and by 2.8% compared to the same period of 2018. As the authors of the report underline, this is the highest y/y growth rate since March 2008. 

Prices in Central and Eastern Europe increased the most – in Warsaw by 2.7%, and in Budapest by as much as 4.4%. A 3.4% increase was also recorded in Hamburg due to insufficient supply and strong demand resulting from the optimisation of the distribution network, according to the authors of the report. 

“High tenant demand caused yields for premium logistics properties in Europe to fall by 2 basis points, resulting in a weighted average yield (key measure of commercial property valuation – editorial note) for premium properties reaching a new record low of 5.66%,” comments Nigel Almond, Head of Data Analysis at Cushman & Wakefield.

In most regions, led by the CEE countries with the highest rental growth rates, yields declined slightly over the quarter. We expect to see further declines by the end of the year in one-third of markets where low financing costs and favourable rental conditions are contributing to higher rents and yield compression,” adds Almond.

Photo: Ciech Group

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