Activity in EMEA and Asia Pacific continued to be broadly level with last year while a lack of portfolio opportunities contributed to a 30% fall in the United States.
Demand for multifamily units in the US remains robust, pushing the national vacancy rate down to 4.4%, according to JLL, a new low for the current cycle. With the vacancy rate compressing, effective rental growth in Q2 stayed above 4% on a year-on-year basis, well above inflation.
Jeremy Kelly, Director, Global Research at JLL, explains:
“Robust market fundamentals continue to incentivise new development, swelling the new construction pipeline. Increasing supply coupled with slowing demand as the economy cools should cause fundamentals to moderate but remain strong through the rest of 2019.
“Investment activity in the institutional residential market in Europe was lower in several markets during the first half of the year following an exceptionally active 2018. Volumes were lower in Germany, France, the Netherlands and Sweden, while the UK saw activity double from the same period last year despite uncertainty impacting the wider residential market. Rent control regulation introduced in several markets so far in 2019 has contributed to investor caution in some locations, though it remains too early to assess the impact of these policies.
“In Asia Pacific, buyers were cautious in many markets during the second quarter given broader macroeconomic uncertainty, while mixed leasing demand kept rental growth on a relatively flat trajectory across the region.”
Momentum golds up in global logistics markets
Structural demand drivers including e-commerce and the restructuring of supply chains continue to support global logistics markets, with elevated take-up holding vacancy rates near record lows, says JLL.
Leasing momentum is expected to remain strong, albeit decelerating from recent record levels, which should continue to propel rents higher for the rest of 2019.
In the US, JLL reports that net absorption rebounded slightly in the second quarter while secondary markets posted the highest rental increases, indicative of widespread strength in market fundamentals.
Limited speculative development in Europe is keeping vacancy at historically low levels and contributing to above average rental growth. In Asia Pacific, leasing demand is still solid, despite trade tensions, contributing to generally modest rental growth across the region.