jll self storage - ssasweden.com · • transaction volumes likely to fall in 2019 but market...
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JLL Self Storage
Market overview
Swedish Self Storage Association Conference 2019
• Real estate trends • The Swedish market • Self storage trends• Big data• Market transactions • Valuation metrics • Future outlook
Real Estate Trends
• Transaction volumes likely to fall in 2019 but market robust
• Longest positive trending market in modern history
• Some market hotspots including Stockholm
• Increasing allocation to Living & Alternatives
• Search for income yield
• Industrial growth : retail decline
• The move to flexspace
Real Estate Trends in 2019
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Allocation to Alternatives – 2008 to 2018
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Allocation to Alternatives
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2017 and 2018 % of total European alternative investment
Alternatives – Predictions for 2019
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0%
5%
10%
15%
20%
25%
30%
35%
Elderly Care Retirmeent Living Leased Hotels Student Housing Multifamily Primary Healthcare Automotive Data Centre Self Storage
Sector Allocations
Proportion of respondents Average allocation increase
Alternatives – Predictions for 2019
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Elderly Care Retirement Living PrimaryHealthcare
Hotels Student Housing Private RentedSector
Automotive Data Centres Self Storage
Res
po
nd
ents
Yield expectations
harden unchanged soften
Real Estate Trends in Sweden
Swedish GDP
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-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 P 2019 P 2020 P 2021 P 2022
Nordic transaction volumes
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-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bn
Eu
ro
Sweden Norway Finland Denmark
Transaction volume by sector in Sweden
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Office24%
Retail13%
Industrial13%Mixed-Use
3%
Residential32%
Hotel2%
Other13%
Prime Rents Q1 2019SEK/sqm (Y-o-Y)
Källa: JLL Research
Kista
2 400(+4,3%)
Solna/Sundbyberg
3 300(+3,1%)
ÖvrigaInnerstaden
4 900(+4,3%)
CBD
7 500(+4,2%)
Närförort
3 200(+3,2%)
Swedish yields
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3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q4´08
Q2´09
Q4´09
Q2´10
Q4´10
Q2´11
Q4´11
Q2´12
Q4´12
Q2´13
Q4´13
Q2´14
Q4´14
Q2´15
Q4´15
Q2´16
Q4´16
Q2´17
Q4´17
Q2´18
Q4´18
Logistics Stockholm >10,000 sqm Retail warehouses (>1,000) Stockholm
External Shopping centre (>40,000) Sweden Stockholm CBD Office Yield
Self Storage Trends
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Strong macros drivers …
Propensity to move
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Some of the most mature markets
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Major operators market share
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0%
20%
40%
60%
80%
France Italy Sweden Belgium Germany Netherlands UK (inclcontainers)
Spain
An ageing stock …
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European rental levels
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Rental growth in Europe
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0.00
1.00
2.00
3.00
4.00
5.00
6.00
Sweden Finland Ireland Netherlands UK Denmark Spain Germany Belgium Italy France
Ind
ustr
ial M
ultip
lier
Industrial Multiplier
Industrial Multiplier
Rental growth in Europe
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• Fragmented ownership in most markets
• Move from ‘mom & pop’ to professional operator and investor
• Rising interest from PE and institutional capital
• Rental growth in most markets – 7.5%+ in Germany
• Yield compression at an accelerating rate
• Availability of debt
• The problem of scale and lack of product and developers
24
Key European trends : self storage
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Rental growth – Older stores
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Rental growth –newer stores
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Rental growth –size vs location vs generation
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Big Data & Technology
Rental pricing algorithms
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GIS and Demographics
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MLA vs Staff costs
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Market transactions
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35
Key Transactions
Recent Sales
36
Valuation metric and methodology
• Explicit discounted cash flow
• Income multiple (or inverse of yield)
• Value psm MLA
• Running yield at maturity – typically 8%
• Cost of replication
38
The five valuation methods
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• The greater emphasis on value psm
• What is a Reasonably Efficient Operator
• Portfolio premiums of 10% to 20%
• Prime discount rates @ 7.5%+
• Capital value – new build tone is €3000 ++ psm with €2000 psm in regional locations
• Multiples – 30+ but “normalised” are 15 – 20 – leaseholds are c 6 – 8 with 15 years
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Valuation benchmarks
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Future outlook
– Mixed use
– Complementary uses – expanding the offer to build bigger
– Metro vs Satellite
– Digital transformation
– Pricing algorithms
– Online pricing and reservation : importance of e-marketing
– Institutional ‘retail’ grade stock
– Serviced storage and concierge
– Unmanned vs Automated
41
Key European trends : self storage innovations
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