Logistics rents surging

Strong online retail sales growth coupled with automation, digital alignment of distribution processes and the need for new city logistics networks continues to propel robust occupier demand.

U.S. industrial rents reach all-time high

National vacancy in the U.S. declined again during the second quarter while rents increased by nearly 6.5% on an annualised basis to reach US$5.35 per square foot, an all-time high. We anticipate that rents will continue on their strong upward track through the rest of 2017.

The construction pipeline continues to expand, although pre-leasing rates were more robust than the previous quarter. In particular, e-commerce and logistics distribution companies have signed more leases for buildings under construction, an indication of a growing sector with a need for new functional warehouse space.

Europe expected to maintain record occupier activity in 2017

JLL's latest Supply Chain Activity Index suggests that the upward trajectory in European occupational demand will continue through 2017, with total take-up likely to exceed last years' record.

As new warehousing demand continues to outpace construction the European vacancy rate is expected to edge down further to reach around 5% at the end of the year. Meanwhile, high levels of demand in and around major cities should push available supply in these locations down even further. As a result, we see rising upward pressure on rents with the majority of European markets anticipated to record rent increases over 2017.

Third-party logistics and e-commerce firms lead demand in
Asia Pacific

Leasing activity in Asia Pacific mainly involved third-party logistics (3PLs) and e-commerce firms. Take-up accelerated in Shanghai, Hong Kong and Singapore, supported by the recent uplift in manufacturing and trade figures. Occupier demand in Sydney and Melbourne was robust with broad-based demand from 3PLs, manufacturing, retail goods and wholesale goods traders.

Rents edged up in most markets across the region. Melbourne recorded the strongest increase, while Singapore’s logistics rents eased further under continued supply pressure, but at a slower pace following the pick-up in leasing momentum.

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