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Covid spares Logistics – 2021 take up growth could be 14%

Expected prime net yields in European logistics market 2021 versus 2020
[Source: Buck Consultants International]

Emerging figures confirm that European logistics real estate markets did not suffer from the Covid-19 pandemic in 2020.

The rapid growth of e-commerce and higher inventory levels adopted by producers pushed the total expected 2020 take-up in 11 European countries to 23.6 million sq m, just 3% down on 2019, itself a record year according to Buck Consultants International.

In major markets like Germany and the UK last year’s figures “were certainly not bad”, said Rene Buck of Buck Consultants International. Forecasts for this year are even better, he added, with expected take-up of 27 million sq m, a 14% increase.

Large logistics real estate markets including Germany, France, the Netherlands and Poland are expected to grow substantially, he added.

Rents are expected to be stable or increase to a limited extent. Yields are falling, but are still attractive in Central and Eastern Europe.

Compared with 2020, the expectations for the establishment of new mega distribution centres in Europe in 2021 are positive, said Buck. Of the experts interviewed, 70% believe that the establishment of new mega distribution centres will show strong growth.

Germany, the Netherlands and Poland are the favoured destinations for the establishment of such large centres however, across the European region, lack of development land is the fear among real estate developers and investors.

Compared to 2020, expectations for 2021 for the establishment of new city distribution centres in Europe are very positive and nobody expects a decrease, Buck said. About 80% of leading logistics developers and investors expect growth of 10% to 25% for the establishment of city distribution centres, while 20% expect growth of more than 25%. London and Paris are the favoured destinations.