MIPIM: Capital market volatility means less spec development
The mood in the industrial and logistics market across Europe is one of improving sentiment, said Savills’ Kevin Mofid, speaking to Real Assset Media during MIPIM.
Mofid, the firm’s head of EMEA industrial and logistics research, said that in the occupier market, take-up remains very strong following a good start to the year, with new leases being signed across the continent.
As a consequence, he said vacancy remains low although is starting to trend upwards in some markets.
“But I don’t expect that vacancy rate to head close to even the 10-year average of around seven percent,” he added.
Occupiers are from a diverse mix of backgrounds with online retailers still active, “but not necessarily in the same quantum as they have been over the last two to three years”.
However, logistics companies and 3PLs are also in evidence, increasingly with demand related to nearshoring and reshoring.
The UK, for example, saw the most manufacturing-related take-up ever in 2022, at 11.5 million sq ft.
“So it’s really interesting to see these actual property data points come through now. Whereas, particularly over the last three years, it’s all been about surveys saying ‘yes this is something we’re going to look to do’.”
He said that on the capital market side, after a volatile second half of 2022, sentiment is definitely improving because of relatively good economic news.
“Obviously we’re all looking at how that’s going to play out over the course of this year and how, ultimately, that affects pricing.”
He said that one knock-on consequence of the volatility in the capital markets will probably be less speculative development in 2023.
“Arguably that’s a good thing, because it will keep the vacancy rates constrained much lower than we would ordinarily expect in these conditions.”
The consequence will be continued upward pressure on rents.
“Overall, the long-term strategic drivers for the logistics sector remain in place, but I suspect we’ll see a more volatile 2023.”
Please click on the video above to watch the full interview or listen to the podcast below.