Discussion of the semi-industrial and logistics property market in Belgium, the Netherlands, France, Central Europe and Romania

1. Belgium

As elsewhere in Western Europe, the international economic crisis was keenly felt in the Belgian market as from the second half of 2008. The top returns rose from around 6.30% in mid-2008 to 7.75% in July 2009; rental prices were comparatively stable and therefore the increases in returns are a direct consequence of decreases in value of around 20% since mid-2008.

Take-up in 2009 up to the end of June already comfortably reached 500,000 m², which is an excellent achievement in the light of the present crisis. The investment market was sluggish but held up relatively strongly compared to other sectors such as the office market.

2. France

Despite the crisis the French market remained relatively strong in the first half of 2009: the Paris region in particular recorded strong take-up. Rents are subject to downward pressure everywhere and the top returns rose to 8.25% in Paris, 8.50% in Lyon and Lille, and 8.75% in Marseille.

Compared to early 2008 the top rental values are under downward pressure in most semi-industrial markets. The Marseille and Lille regions were an exception to this: rental prices remained stable here but at a relatively low level of 40 to 45 EUR/m²/year. In Paris and Lyon areas, rents decreased by some 2% compared to early 2008, and the number of rental incentives increased.

3. Netherlands

The Dutch market experienced a difficult year in terms of both take-up and investments. The top rents softened to 85 EUR/m²/year at Schiphol but mostly remained stable elsewhere. The top returns rose by 125 to 150 base points since July 2008. The investment volume has gradually further receded since the second quarter of 2008.

4. Czech Republic

The economic crisis affected Central Europe later than Western Europe but the slowdown has clearly taken hold here as well now. The Czech Republic was the first Central European country where this manifested itself in a declining take-up.

Projects involving risks are being put on hold, as vacancy levels have risen from 10% to around 16% within a period of one year. There is continuing interest from foreign developers in this market, but in the current economic circumstances all forms of risk are avoided. The decline of returns witnessed in the past few years has swung into an increase by 150 to 175 base points compared to mid-2008.

5. Romania

Compared to most other European markets Romania held up fairly strongly in 2008, but take-up was exceptionally low in the first half of 2009. Vacancy levels are rising substantially at present (12 to 15%) and the supply of space offered for subletting is continually growing. Top rents are stable in Bucharest (48 EUR/m²/year); in the other locations such as Brasov, Timisoara, and Constanta they declined from 54 EUR/m²/year in mid-2008 to 51 EUR/m²/year at present. Top returns have risen very significantly: whereas they were still at 7.50% in Bucharest a year ago (7.75% elsewhere), they are now assumed to have advanced to 9.25% in Bucharest (10% elsewhere).

Author: Jef Van Doorslaer and the European Research Group of Cushman & Wakefield.

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