United Kingdom Commerce Tender

2021 saw record 62bn of investment into logistics and industrial assets across Europe marking a 79 increase on the previous five year average The UK recorded volumes of 19.5bn 99 above the five year averageTake up levels for the sector reached a record 38m sqm 28 ahead of the previous five year averageUndersupply continues to drive demand with record vacancy rates in Dublin 1.1 the Netherlands 3.3 the UK 2.9 and Denmark 1.9According to Savills the e-commerce boom is continuing to drive demand for industrial and logistics assets across Europe as new records were set for both levels of investment and leasing activity in 2021. Some 62bn was invested into industrial real estate across Europe marking a 79 increase on the previous five year average. The UK 19.5bn outperformed the rest of the continent and accounted for 31 of total investment activity. Germany 8.6bn France 6.5bn and Sweden 5.8bn and the Netherlands 5.7bn also recorded strong levels.Savills research also noted that investment into industrial assets accounted for 66 of European omnichannel investment in 2021 up from 47 in 2019 as investors were willing to pay premiums to gain exposure to the sector.The trend for customers shifting to online shopping throughout the pandemic triggered the e-commerce boom which has been a major catalyst for this sectors growth comments Mike Barnes Savills European Research. So far it has shown little sign of slowing even as restrictions have lifted and as a result the significant weight of capital targeting these assets has compressed prime yields by an average of 27bps to 4.20 over the last six months. Portugal Spain and Finland have hardened by 50 bps each.This demand is clearly represented by the unprecedented levels of leasing activity in the industrial sector across Europe last year with take up reaching 38m sq m 28 ahead of the previous five year average. Germany 8.6m sq m the Netherlands 6.9m sq m and the UK 5.1m sq m drove the lions share of leasing activity whilst Romania 63 France 63 and Spain 62 performed the strongest above their five year averages.Savills has observed that the record shortage of prime stock has driven upward pressure on rents rising an average of 5 year on year. London 25 Dublin 17 and Prague 12 were the fastest growing markets in 2021.Marcus de Minckwitz Head of Industrial Logistics Savills EMEA suggests Market fundamentals have been hugely favourable for the sector in recent years and they will continue to underpin another strong performance for the year ahead. Our European Logistics Census last year indicated that 46 of occupiers anticipate that they will increase their warehouse floor space over the next 12 months among the highest in the online retail sector. With such constrained supply we expect to see increased development in the sector despite rising construction costs as well as appetite for assets in non-core locations as investors move up the risk curve in search of higher returns.