Garbe Industrial Real Estate’s head of fund management and capital markets Peter Bartholomäus explained where the firm is currently seeing opportunities in the European logistics markets.
“We see opportunities in almost every market in Europe where we’re active,” he told Real Asset Insight’s Richard Betts.
The UK is always the fastest market to go down and now Bartholomäus says it is the fastest to return.
“We think the UK is back in the market. Although there’s a lot of competition, we see a lot of development opportunities.” Even core money is back for speculative financing and the occupier market is resuming, he said.
But the UK is different to other larger European markets and, for example, Spain is still suffering from high interest rates nd there are rising vacancies even in the Barcelona area, formerly a hotspot.
“We are still confident that that it is going up, but compared to the UK they’re a bit slower.”
In some smaller markets such as Czech Republic and Slovakia there is almost no vacancy at 1%. However, to develop, 50% to 70% pre-lets are needed which hinders the market.
After the UK, France is potentially the second market to recover more quickly than the European average. Germany saw a strong decline last year. “Even in Germany occupier demand is slowing down a bit, occupiers are hesitating because there’s some uncertainty when interest rates will go down and the economy will come up, so discussions in Germany are a bit slower than the UK.”
There is still tenant demand, he added, but decisions take longer than in the past.
In Italy, internet penetration is around 5% so there is still plenty of potential. However, tenant demand is slowing although the situation is not as difficult as in Spain
Netherlands is still ‘The Hub’ with twice the square meters of warehousing than inhabitants he said.
“All in all, we are positive. The biggest question in the market is when interest rates will begin going down and when capital will be back,” Bartholomäus said. “However, the positive thing for logistics is you don’t have to sell, you can keep it so there’s still a developer profit in the market.”
And logistics has the advantage of being a typical inflation-hedged investment with lot sizes smaller large CBD offices, “so it does make sense to start buying now,” he said.
“We will see rental growth. It maybe will not be as massive as we’ve seen in the past, but we still think that it’s at least in line with inflation and maybe a bit above.”