It is quite an understatement to say that a lot happened last year – including in the logistics property market. Based on recent half-year figures, we took a look at the main evolutions in WDP's five most important markets.
Well-stocked pipeline in Belgium and Luxembourg
The vacancy rate itself is currently at a historic low: 0.53% compared to 1.25% at the end of 2020. Given the many projects still in the pipeline, this low level of availability is expected to continue for some time.
The Netherlands: online growth further increases demand
For the Dutch logistics property market, the year 2021 started at a lower level than the previous year. Nevertheless, it is expected that the acquisition of logistics property will stagnate in 2021, but that the occupancy rate will remain stable. During the pandemic, the Netherlands also saw accelerated growth in online purchases in the food sector and an increase in the share of omni-channel logistics.
In 2020, online penetration in the Netherlands increased by more than 20%. According to a recent market study, this increase is expected to continue to more than 25% by 2025. Which is good news when it comes to the demand for logistics property. It is expected that 1.2 million m2 of additional space will be required to facilitate this online growth. More than ever, sustainability plays an important role in the search for logistics space, which only serves to increase interest in brownfields.
Large regional differences in France
The French logistics property market had to cope with a 12% decline in acquisitions in the first quarter, down to 635,000 m2.The reduced demand for mega distribution centres had a strong impact here. Positive trends were the success of omni-channel and the rising share of e-commerce, which boosted demand for urban logistics in France.
The vacancy level with our southern neighbours is rising slightly to an average of 5.8%. Regional differences are striking: an oversupply in Lille (9.5%) contrasts with scarcity in Rhône-Alpes (1.9%), while immediately available space in the south and east of the country is virtually non-existent.
Promising figures in Romania
The Romanian logistics property market can count on a strong acquisition of 261,500 m2, which is a fourfold increase compared to the same period a year earlier. The demand for real estate is still mainly situated in and around the capital Bucharest (77%), followed by regions around cities such as Brasov, Craiova, and Timisoara. Although only 30,700 m2 of logistics property space could be completed in Q1 of 2021 (compared to almost 200,000 m2 in the same period last year), forecasts for the rest of 2021 look good, with over 700,000 m2 in the pipeline. The continuing demand for modern logistics space, combined with limited completion of new developments, also translates into a decrease in the average vacancy rate to 5.0%.
German focus on sustainability
The German logistics property market got off to a strong start in 2021 with acquisitions increasing by 13% year-on-year to 1.6 million m2. About a third of these are in the top five German regions (Berlin, Düsseldorf, Rhine-Maine, Hamburg, and Munich). The focus on sustainability is also becoming increasingly clear in the German market. On a quarterly basis, the prime yield remains stable at around 3.4%. Redevelopments are on the rise due to the continuing demand for sustainable projects and the increasing scarcity of available land.
What does the future hold?
WDP is increasing its expected EPRA earnings per share for 2021 to 1.10 euro (previously 1.07 euro), which amounts to 201 million euro compared to 196 million euro previously. That equates to a 10% increase per share compared to 2020. Based on this outlook, WDP intends to propose a gross dividend of 0.88 euros for 2021, a similar increase, based on a low pay-out rate of 80%.