Investment managers and even some agents could well be underestimating the full extent of imminent rental growth for logistics property, according to Tom Kinsley, executive director, European logistics investment, CBRE.
“I think there’s been a bit of a culture in continental Europe in the last 10 to 15-plus years of seeing little to no rental growth per annum or at best people then assuming that it will be around inflation,” he told Real Asset Insight’s Richard Betts.
He said that because there is a huge structural undersupply of space and the value of warehouses to occupiers is significantly more linked to their ebitda growth than it used to be, “people are missing the point if they’re thinking it will be a maximum four or five percent rental growth”.
“I think it could be significantly more, the likes of which Europe has never seen.”
Kinsley says growth will not happen at the same rate everywhere or at the same time. Growth “will be a bit jagged”.
“But if you look at what’s been going on in the US in the last few years ,they’ve had huge rental growth 10 to 15 to 20% plus in different markets.”
And he said this should be considered in the context of the fact that the US has significantly higher amounts of warehouse space per capita than is the case in continental Europe.
“Logic and maths would suggest there will be a lot of rental growth to come.”
Click on the video above to see the whole interview or listen to the podcast below.