THE EUROPEAN LOGISTICS MARKET - BNP Paribas Real Estate

PROPERTY REPORT
THE EUROPEAN
LOGISTICS MARKET
Q4 2011

CONTACTS
EUROPEAN LOGISTICS GROUP
FRANCE
Christophe Prioux
christophe.prioux@bnpparibas.com
Tel.: +33 (0)1 46 48 44 51
GERMANY
Oliver Wissel
oliver.wissel@bnpparibas.com
Tel.: +49 30 88465 171
SPAIN
Thierry Bougeard
thierry.bougeard@bnpparibas.com
Tel.: +34 93 3012010
Alberto Larrazabal
alberto.larrazabal@bnpparibas.com
Tel.: +34 91 4549990
UNITED KINGDOM
Paul Rixon
paul.rixon@bnpparibas.com
Tel.: +44 (0)121 237 1280
Ranjit Gill
ranjit.gill@bnpparibas.com
Tel.: +44 (0)121 2371235
POLAND
John Palmer
john.palmer@bnpparibas.com
Tel.: +48 501 203821
IRELAND
Peter Flanagan
peter.flanagan@bnpparibas.com
Tel.: +353 1 6611233
AUSTRIA
Walter Huber
huber@dpcreal.at
Tel.: +436 7 63900419
NETHERLANDS
Peter Sagius
psagius@hollandrealtypartners.com
Tel.: +31 20 3059720
SLOVAKIA
Tom England
tom.england@modestagroup.com
Tel.: +421 2 32408888
Sebastian Scheufele
scheufele@dmhpartner.at
Tel.: +43 1 513293922
RESEARCH
Christophe Pineau
Head of International Research
christophe.pineau@bnpparibas.com
Vincent Robion
Senior Analyst
vincent.robion@bnpparibas.com
THE LOGISTICS MARKET IN EUROPE
REGAINED SOME VIGOUR DURING 2011
The European logistics market returned to growth in 2011. Germany
even achieved a record year in take-up. Yet, take-up remained below
the volumes achieved during 2006 and 2007 in most countries.
Supply remained high throughout Europe even though every single
market experienced a shortage of new warehouses, which in turn
impacted marginally on prime rents and prime yields.
Logistics providers and retailers drove the market in 2011
recovery in H1 2011 contributed to the return of logistics providers
after two years of slow activity.
The scarcity of new warehouses does not conceal the overall
abundance of supply
and marginally generated rental growth.
turnkey deals.
been emerging: second hand grade A warehouses.
The investment market was held back by the debt crisis
March 2012

A WEAKER EURO TO SUPPORT EUROPEAN EXPORTS
Recently released data showed that, amidst a challenging period,
The main driver for the slowdown has been the increased uncertainty
deteriorated sharply, across all sectors of the European economy,
in the later part of 2011. As reported by the European commission,
consumer and business sentiments fell in November 2011 to
particularly discretionary type, continued to remain weak.
Sentiment indicators, thus far in 2012, have shown signs of
persist in most troubled economies such as Italy, Spain and Ireland.
Even in the core countries, sentiment has merely reached a plateau.
Q1 and no variation in Q2. As such, we expect growth in H1 2012 to
continue to be challenging.
GDP and employment growth in EU 15
5
4
3
2
1
0
-1
-2
-3
-4
-5
Imports on selected European countries
(year on year change)
40
30
20
10
0
-10
-20
-30
%
%
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12* 13*
* Forecast
Source: Eurostat; BNP Paribas Real Estate
00 01 02 03 04 05 06 07 08 09 10 11
Source: Eurostat
GDP growth
Employment Growth
France Germany Italy Spain United Kingdom
PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
The timing of the slowdown indicates that 2012 as a whole is likely
market conditions are unlikely to improve, materially, until 2014.
outside Europe has shown resilience, with net trade providing
Although yearly growth in export slowed somewhat in the last
export order books are improving. A recent survey, by the European
saw a turning point in falling export orders. This implies that going
positive backdrop for the European logistics market.
Distributive trade in EU 15
2,5
2,0
1,5
1,0
0,5
0,0
-0,5
-1,0
-1,5
-2,0
-2,5
Exports on selected European countries
(year on year change)
30
20
10
0
-10
-20
-30
%
%
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12*13*
* Forecast
Source: Oxford Economics / BNP Paribas
00 01 02 03 04 05 06 07 08 09 10 11
Source: Eurostat
France Germany Italy Spain United Kingdom
3

4 PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
PLENTY OF SUPPLY BUT SHORTAGE OF NEW WAREHOUSES
The logistics market recorded a remarkably strong activity in
they faced during the year. Take-up for warehouses over 5,000 m²
Demand is centred on modern units in prime locations which are
typically close to the main consumption and manufacturing areas
with skilled labour available and served by strong multimodal
transport networks (road, rail and ports).
In response to the economic slowdown in 2009 and 2010,
speculative development was cut down almost everywhere in
evident in most markets. This situation led to a genuine interest
for turnkey solutions. The scarcity of new products also induced
customers to turn to second hand grade A warehouses, which is
becoming a growing submarket. Supply levels remained high and
of 2006 and 2007.
Rents
two years of reduced activity in most logistics markets and high
volumes of supply available, the increase in take-up in 2011 did not
necessarily materialise in rental growth. A robust demand combined
with low supply for new high grade warehouses led to some increase
The French market returned to growth in 2011 recording its highest
level of take up in three years.
Take-up - Warehouses over 5,000 m²
000 m 2
1,400
1,200
1,000
800
600
400
200
0
Paris
Birmingham
London & South East
Hamburg
Manchester
Frankfurt
Lyon
Barcelona
Berlin
Sheffield
Antwerp
Leipzig
Madrid
The market was stimulated by the positive economic signs at
the beginning of the year, encouraging logistics providers, highly
sensitive to the economic climate, to regain a large part in the
market. Retailers also strongly contributed to market buoyancy
In Germany, the market set a new record year, boosted by large
deals due to the restructuring measures in the retail industry and the
growth of the online shopping sector. The availability of new space
stayed limited since there had been hardly any new speculative
schemes built in 2011.
In the UK, take-up for warehouses over 5,000 m² has been stable for
scarce. This has resulted in the emergence of the design and build in
the large unit market. Like in most European countries, retailers and
logistics providers have been driving the market in 2011.
In the Eastern & Central European countries
its European counterparts, speculative developments are almost
nonexistent. A shortage of new space available kept vacancy rates
low and rentals strong.
In Spain
warehouses over 5,000 m² taken up was far below the volumes
registered in 2007 and 2008. Larger deals were closed in Madrid,
Barcelona and Valencia, pulling up take-up. However, pre-lets and
turn-key projects were important in Madrid and Barcelona, leaving
untouched the vacancy rate. Levels of supply remain high and the
release of second hand units onto the market is still expected in the
Lille
Munich
Marseille
Cardiff
Bristol
Düsseldorf
Dublin
Cologne
2010 2011
Newcastle
n.a. n.a.
Rotterdam
Valencia
Amsterdam
Lisbon
Southampton

Prime rents in Q4 2011 - Warehouses over 5,000 m 2
Lisbon
60
Prime and secondary rents in Q4 2011 - Warehouses over 5,000 m²
€/m 2 /year
180
160
140
120
100
80
60
40
20
0
London
Glasgow
82 82
Edinburgh
66 Newcastle
Dublin
Manchester
75 66
63
Birmingham
75
Sheffield
90
67
Amsterdam
(Schiphol)
Düsseldorf
Hamburg
Berlin 56
Cardiff
63 82
Bristol 91
Southampton Rotterdam 63
163
61
Antwerp
43
London
58
(Heathrow) 43 43 Cologne
Lille Brussels
51
Leipzig
74
Frankfurt
53 Paris
49
Strasbourg
Munich
74
48
Southampton
Seville
Amsterdam
66
Bristol
Madrid
Edinburgh
36
Valencia
Glasgow
Birmingham
Dublin
Frankfurt
63
Munich
Lyon
Barcelona
Rome
44
Hamburg
42
Marseille
Madrid
Milan 60
Manchester
Newcastle
Barcelona
Rotterdam
Cardiff
70
Sheffield
PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
42
Bratislava
Rome
Düsseldorf
Lisbon
Warsaw
Milan
Warsaw
60
0 125
54
Krakow
Cologne
250 km
Berlin
Krakow
©BNPPRE Marketing 2012
Prime Rent Secondary Rent
Paris
Rents in €/m²/year
Leipzig
>= 100
70 - 99
50 - 69
40 - 49
< 40
Seville
Lyon
Antwerp
Brussels
Lille
Bratislava
Marseille
Valencia
5

6 PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
THE INVESTMENT MARKET STABILISED IN 2011 :
INVESTORS ARE LOOKING FOR SECURED ASSETS
which includes light industrial premises and warehousing, stabilised
in 2011 after a strong increase during the previous year. Yet, it did
not reach half of the industrial investment recorded in 2007.
The proportional importance of industrial investment increased
in particular.
The industrial investment market showed some signs of recovery
notably in France and Sweden but decreased in the UK, Germany
and Spain despite the upturn of the rental logistics market in some
of these countries. The shortage of core products with long term
Investors continue to be on the lookout for logistics products but are
with long term leases.
Industrial* investment volume
Western Europe
€ million
6,000
5,000
4,000
3,000
2,000
1,000
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2009 2010 2011
*industrial premises and warehouses
Industrial* investment volume
Western Europe
€ million
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
United Kingdom
Germany
*industrial premises and warehouses
France
2011 3-year average
The Netherlands
Sweden
The same caution applies in the Eastern & Central European
countries where investors have been focusing on established prime
by opportunistic investors.
where the shortage of new warehouses impacted on prices. In the
the scarcity of new products may also bring yields down in some of
these markets during 2012.
Real estate investment volume in 2011
Western Europe
Industrial* investment volume
Western Europe
€ million
500
400
300
200
100
0
Norway
9%
32%
Finland
14%
Spain
*industrial premises and warehouses
Italy
Belgium
45%
2011 3-year average
Portugal
Denmark
Offices
Retail
Industrial
Other
Austria

Net prime yields in Q4 2011 - Warehouses over 5,000 m 2
Lisbon
7.75%
Net prime yields - Warehouses over 5,000 m²
%
11
10
9
8
7
6
5
4
London
Edinburgh
Glasgow
7.75% 6.75%
7.25% Newcastle
Manchester
Dublin
10%
7%
7.25% Sheffield
Birmingham 6.5%
7%
6.6%
Amsterdam
Düsseldorf
Hamburg
Berlin 6.85%
Cardiff
7% 6.5%
Bristol 7%
Southampton
Rotterdam 7.1%
6.0%
6.8%
7.1%
Antwerp
7.25%
Leipzig
London
6.8%
(Heathrow) 7.15% 7.25% Cologne 6.5%
Lille Brussels
Frankfurt
Munich
7.15% Paris
6.6%
Frankfurt
7.75% Madrid
Birmingham
Munich
Hamburg
Edinburgh
8%
Düsseldorf
Lyon
7.15%
Barcelona
Cologne
Berlin
7.15%
Amsterdam
Milan 7.5%
Marseille Rome
7.75%
Manchester
Rotterdam
Paris
Lyon
PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
Lille
Warsaw
Marseille
8.5%
Brussels
8.0%
8.0%
Krakow
Bratislava
0 125
High point (2006-2011) Q4 2011
Antwerp
250 km
Milan
©BNPPRE Marketing 2012
Rome
Yields
Madrid
Lisbon
Glasgow
Barcelona
Warsaw
Bratislava
Dublin
7

8 PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
Occupier logistics market - Warehouses over 5,000 m²
Cities
Take-up (m 2 ) Prime Rents (€/m 2 /year)
2011 2010 % change Q4 2011 Q4 2010 % change
Paris 1,167,000 842,600 53 52
Birmingham 784,194 873,660 75 69
London & South East 599,689 637,965 163 163
Hamburg 446,000 405,000 67 66
Manchester 436,737 456,154 66 66
Frankfurt 402,000 233,000 74 66
Lyon 332,400 197,700 44 44
Barcelona 320,100 227,848 63 78
Berlin 303,000 292,000 56 56
Sheffield 288,835 315,684 63 63
Antwerp 281,137 192,751 43 n.a. n.a.
Leipzig 281,000 67,000 51 51
Madrid 254,700 262,969 66 60
Lille 225,000 166,900 43 43
Munich 207,000 153,000 74 74
Marseille 194,200 81,300 42 45
Cardiff 189,708 98,291 63 69
Bristol 158,957 175,865 82 82
Düsseldorf 157,000 80,000 61 59
Cologne 137,000 94,000 58 55
Newcastle 115,943 106,838 66 66
Lisbon 44,750 115,325 60 60
Constant Exchange rates £/€ = 1,166
Investment market - Western Europe
Cities
Total investment (€ million) Industrial* investment (€ million)
2011 2010 2011 2010 % change
United Kingdom 35,511 40,088 4,082 4,331
Germany 23,521 19,573 1,166 1,240
France 17,211 13,657 973 782
Sweden 6,008 4,442 1,263 705
The Netherlands 5,305 5,960 729 749
Italy 4,286 4,277 160 173
Spain 2,542 4,674 213 224
Norway 2,191 1,810 210 422
Austria 1,610 1,800 70 55
Belgium 1,599 1,163 145 59
Denmark 1,280 977 80 77
Finland 1,225 1,304 210 145
Luxembourg 368 345 2 20
Portugal 248 727 27 250
Total 102,904 100,796 9,329 8,482 +10%
Constant Exchange rates £/€ = 1,166
* Light industrial premises and warehousing

Net prime yields - Warehouses over 5,000 m²
Cities
Net prime yields
Q4 2011 Q4 2010 Bp variation
London & South East -25
Birmingham -50
Frankfurt -10
Bristol -25
Hamburg 0
Munich 0
Düsseldorf 0
Cologne 0
Berlin 0
Amsterdam -40
Manchester -50
Cardiff -50
Rotterdam n.a. n.a.
Leipzig n.a. n.a.
Paris +2
Lyon +2
Lille +2
Marseille +2
Sheffield -25
Antwerp n.a. n.a.
Newcastle -25
Milan -25
Madrid 0
Lisbon +25
Rome 0
Glasgow +25
Barcelona +25
Krakow n.a. n.a.
Warsaw n.a. n.a.
Bratislava -50
Dublin -90
PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
9

10 PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
GLOSSARY
Definitions
Design & Build: construction of a bespoke building for an occupier.
Owner-occupier development: construction of a building for an occupier
who has signed a bill of sale on a property still to be built.
Lease turnkey: construction of a building for an occupier who has signed a
lease on a property still to be built.
Distributive trade: distribution of material goods to consumers via retailing
and wholesale trade.
Light industrial buildings: individual buildings intended for production
or small-scale distribution and able to accommodate all the company
departments under one roof.
Logistics: the process of planning, implementing, and controlling procedures
related information from the point of origin to the point of consumption.
Includes inbound, outbound, internal, and external movements.
New supply: all building restructuring that adds to the existing stock. These
are analysed according to progress.
Completed new supply:
Under construction: buildings on which construction has effectively begun.
Planning permission granted: authorisation to build obtained, generally
booked after settlement of third party claims.
Planning permission submitted:
processed.
Projects:
Portfolio: group of several assets located in different places.
Rent:
and excluding taxes and charges.
Prime rent: represents the top open-market rent at the survey date for a
real estate unit:
Secondary rent: represents a market rent at the survey date for a real estate
unit:
Second hand premises: premises that have been previously occupied by an
Speculative / Non speculative operation:
Speculative: construction launched without prior rental or sale to the
occupier.
Non-speculative: construction launched after partial or complete sale or
rental to an occupier.
Supply chain: all the elements in the process of supplying a product to a
customer. The chain begins with the sourcing of raw materials and ends with
manufacturing facilities, logistics service providers, distribution centres,
distributors, wholesalers, other intermediaries, etc.
Supply chain management: Encompasses the planning and management
of all activities involved in sourcing and procurement, conversion, and all
logistics management activities.
Transaction (Take-up): rental or sale to an occupier of a real estate asset,
sealed by the signature of a lease or deed, including turnkey and owneroccupier
operations. The transaction is only taken into account once any
existing conditional clauses have been lifted.
stage
signed
occupation
Vacant Space: all completed buildings actively seeking rental or sale to
occupiers.
Warehouses: buildings intended for storage, distribution or packaging.
Yield:
Net yield: ratio between net income (excl. operating costs) and the
Initial yield: ratio between the net rent before taxes and charges on the
date of sale and the selling price (all costs included).
Prime yield:
- of standard size,
- in the best location in each market.
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the information contained in the present report turns out to be inaccurate
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NOTES
PROPERTY REPORT - THE EUROPEAN LOGISTICS MARKET - MARCH 2012
11

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