Despite a likely switch from tailwinds to headwinds, the resultant reduction in speculative development in the logistics sector is likely to maintain rental growth.
So says Kevin Mofid, Director, Head of EMEA Industrial and Logistics Research, Savills, who says the robust occupier picture will drive the capital markets at least into 2023.
“Historically we’ve been talking about the tailwinds that have propelled our sector forwards, whereas now we’re talking about headwinds on the horizon,” Mofid said.
But currently the logistics market is defying expectations with record take-up for the first half of 2022 – over 20 million sq m – alongside a historically low vacancy rate of 3%.
“One of the knock-on impacts is that we may see less speculative development because of rising construction costs and the rising cost of debt,” said Mofid. “If we see less speculative development but also reasonable take-up that suggests to me that vacancy will continue to remain low.”
He added that there is an element of re-pricing in the market as investors and vendors work out where things are going to settle.
“But the data I have at my disposal still points to a very robust occupier picture.”
Please click on the video above to watch the full interview or listen to the podcast below.