investor insights q4 2016 - capital markets€¦ · q1 2017 for more information, contact: philip...
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Investor insights Q4 2016 JLL’s Supply Chain Activity Index
JLL’s Supply Chain Activity Index2
Q4 2016 review: Record activity across the industrial and
logistics asset class signals further growth
The European industrial and logistics real estate market
ended 2016 with new records for both investment transaction
volumes and warehousing take-up. JLL’s latest Supply Chain
Activity Index, strong market fundamentals and high investor
appetite point to robust activity throughout at least the first half of 2017.
Occupier activity in the European warehousing market
accelerated significantly over the final quarter of 2016. This was the highest quarterly take-up figure since the start of our recordings in 2008 and 40% above the quarterly average take-up of the previous three quarters. This helped to push full-year warehousing take-up beyond the 19 million sq m mark for the first time ever, up 12% on the previous year.
JLL’s Supply Chain Activity Index increased 0.9% to 130
points in Q4 2016, also marking one of its largest quarterly increases over the last five years and now stands at its highest level in the last ten years. Index growth was driven by
strong improvement in economic sentiment, steady growth
in EU trade volumes and GDP, and a moderately improving
commodities market.
Outlookcontinued economic momentum will fuel demand,
particularly from corporate occupiers
Momentum in economic sentiment is anticipated to remain
strong and well above the long-term average. Meanwhile,
forecasts for both GDP and trade growth point to further
moderate rises.
With the underlying components remaining favourable,
we expect the Index to post further growth over the first six months of 2017. However, Index growth is likely to slow down,
to a quarterly rate of around 0.3%, from a quarterly average of 0.7% in 2016.
Corporate occupier demand for warehouse space is expected
to remain at a quarterly average of around 4.6 to 4.7 million sq m in the first half of 2017. This stability in demand is due to strong fundamentals and will represents a 6% year-on-year
increase in take-up figures over the period.
Investor appetitepredicted to remain robust, although downside
risks remain
Despite improving economic sentiment, there remain
downside risks. Trade could be affected by a rise in popularism and protectionism, ongoing geopolitical issues
and the impact of climate change. However, the implications
of these will not be reflected immediately. The economy has momentum and will benefit from continued structural change across global supply chains, helping to support new retail
patterns. As a result, investor appetite is likely to remain on
the robust levels seen in 2016.
Investment activityanticipated to remain active as yield compression slows
The number of large portfolio and platform deals are expected
to remain on a robust level as we see an increase in the
range and variety of investors. This continuation of strong
investment activity may also result in potential further yield
compression across a number of markets throughout 2017 –
although the rate of compression is likely to slow compared to
recent years.
Find out more about
JLL’s Supply Chain Activity Index
jll.eu/il
Strong market fundamentals and investor appetite set to support robust investment activity into 2017
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved.
All information contained herein is from sources deemed reliable; however,
no representation or warranty is made to the accuracy thereof.
Q1 2017
For more information, contact:
Philip Marsden
Head of EMEA Industrial &Logistics Capital Market+44 (0)207 087 [email protected]
Nick Jones
Director - EMEACapital Markets+44 (0)7525 [email protected]
Tom Waite
Director - EMEACapital Markets+44 (0)207 087 [email protected]
Jon Sleeman
Head of EMEA Industrial &Logistics Research+44 (0)207 087 [email protected]
Alexandra Tornow
EMEA Industrial &Logistics Research+49 (0)69 2003 [email protected]
Ryan LoftusEMEA Industrial &Logistics Research+44 (0)20 7087 [email protected]