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Warehouse Markets Poised to Bounce Back as Global Economy Gets Back on TrackRoss J. Moore | Executive Vice President, Market and Economic Research
Europe, Middle East & Africa (EMEA)European, Middle Eastern and African warehouse leasing markets again registered slow growth in the second half of 2009. The United Kingdom, Hungary, Ireland, Russia, Spain Italy and the Baltic states in particular remained key areas of weakness. Even though signs of recovery were evident across the region, many markets were still characterized by sluggish leasing activity and little expansion. During the latter half of 2009, warehouse rents across the region fell on average by 3.7% (local currency) which represented an improvement from the first half when rents fell by 6.0%. Noticeable declines were recorded in the Netherlands, Spain, South Africa, Greece, Serbia, Russia and the Baltic states. Europe is home to some of the most expensive warehouse rents in the world with London’s Heathrow submarket holding the title for the second most expensive warehouse space in the world at $20.70 per square foot per year.
Within the EMEA region, industrial land values in London’s Heathrow submarket ranked second behind Madrid. Madrid land values averaged $50 per square foot while Heathrow averaged $47.00 per square foot. Heathrow land values still rank amongst the highest in the world despite falling 24% in the latter half of the year. Indeed land values fell in many European markets with Rome, Dublin, Munich, Paris, Helsinki, Vilnius and most of the South African markets all registering substantial declines.
North AmericaU.S. and Canadian warehouse markets continued to languish during the second half of 2009; however, in the latter stages of the year, signs began to emerge indicating that the worst was over. Tenants were still largely wary of taking additional space but the rush to return space began to show signs of subsiding. However, even though construction continued to drop off, vacancies in both countries moved higher but not with the same vigor as experienced in the first half of the year.
With both the U.S. and Canadian economies showing signs of expansion, leasing activity is expected to pick up as 2010 unfolds but occupancy rates are not expected to register a significant improvement until 2011. With fundamentals staying relatively weak for most of 2010, rents are expected to drift lower, hitting bottom in the second half of the year. For 2009 U.S rents fell 9.7% year-over-year while Canadian rents dropped 8.3%.
Asia PacificAsia Pacific remained the most robust region in the world; however, growth was still not back to pre- global financial crisis levels. Despite a relatively healthy economic backdrop, many markets within the region continued to record lower rents with Seoul, Wellington, Jakarta and Perth in particular registering double-digit declines. Signs continued to emerge, however, that with a more vibrant global economy and an improvement in both intra-regional and global trade, most of the region’s warehouse markets could be off the bottom by midyear. Despite the recent downturn, Tokyo, Hong Kong and Singapore warehouse rents all ranked in the top ten with Tokyo lease rates the most expensive in the world at $21.76 per square foot.
I N D U S T R I A L | y E A R - E N D 2 0 0 9
HighlightsCO L L I E R S I N T E R N A T I O N A L | G L O B A L
Birmingham United Kingdom 8.36 6.37 10.25 0.63 7.00 4.17
Bristol United Kingdom 11.94 8.76 11.19 0.63 7.50 4.17
Edinburgh United Kingdom 11.15 7.17 - 0.63 7.50 4.17
Glasgow United Kingdom 9.56 7.17 - 0.63 7.50 4.17
Leeds United Kingdom 8.76 7.96 11.19 0.63 7.50 -
London - Heathrow United Kingdom 20.70 19.11 47.02 0.63 6.00 -
Manchester United Kingdom 9.16 6.77 10.58 0.63 7.00 4.17
Kyiv Ukraine 7.25 5.58 - 1.00 15.00 -
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NORTH AMERICA
Calgary Canada 6.75 6.25 9.25 1.00 7.75 3.80
Edmonton Canada 6.77 5.96 9.36 1.05 8.86 3.80
Halifax Canada 6.19 4.76 4.53 1.05 9.50 3.80
Montreal Canada 3.81 3.81 9.53 1.05 - 3.80
Ottawa Canada 6.43 6.43 6.10 1.05 8.75 3.80
Regina Canada 7.62 6.19 5.47 1.05 7.50 3.80
Saskatoon Canada 8.10 7.15 7.71 1.05 8.50 3.80
Toronto Canada 4.91 4.49 12.02 1.05 7.90 3.80
Vancouver Canada 6.43 5.96 24.06 1.05 7.00 3.80
Waterloo Region Canada 4.74 4.22 5.91 1.05 8.00 -
Atlanta United States 3.56 3.20 1.50 1.00 8.00 3.81
Bakersfield United States 4.00 3.95 3.50 1.00 9.50 3.81
Baltimore United States 4.81 - - 1.00 - 3.81
Boise United States 5.20 5.20 2.90 1.00 - 3.81
Boston United States 4.75 5.00 50.72 1.00 7.50 3.81
Charleston United States 3.70 3.90 2.30 1.00 9.50 3.81
Charlotte United States 3.56 - - 1.00 - 3.81
Chicago United States 3.85 2.83 4.37 1.00 8.25 3.81
Cleveland United States 2.75 3.08 1.32 1.00 10.25 3.81
Columbia United States 4.00 4.00 1.00 1.00 - 3.81
Columbus United States 3.09 - - 1.00 - 3.81
Dallas - Ft. Worth United States 3.05 2.80 1.75 1.00 8.80 3.81
Denver United States 3.75 3.50 3.25 1.00 9.00 3.81
Detroit United States 4.12 - - 1.00 8.00 3.81
Fairfield United States 6.00 - - 1.00 - 3.81
Fresno United States 2.40 2.16 2.00 1.00 8.50 3.81
Ft. Lauderdale - Broward United States 6.92 6.66 11.50 1.00 - 3.81
Greenville United States 3.13 2.95 0.90 1.00 9.50 3.81
Hartford United States 4.28 4.28 2.30 1.00 10.00 3.81
Honolulu United States 11.88 - 42.00 1.00 - 3.81
Houston United States 5.00 4.29 6.12 1.00 10.00 3.81
Jacksonville United States 3.75 3.00 - 1.00 9.00 3.81
Las Vegas United States 5.61 5.57 10.81 1.00 - 3.81
Little Rock United States 3.57 1.79 2.48 1.00 10.25 3.81
Los Angeles United States 6.24 5.52 15.00 1.00 7.75 3.81
Los Angeles - Inland Empire United States 3.84 3.72 4.00 1.00 8.75 3.81
Louisville United States 3.20 2.95 3.32 1.00 11.00 3.81
Memphis United States 2.62 2.57 1.00 1.00 11.25 3.81
Miami United States 8.06 7.07 14.00 1.00 3.81
Milwaukee United States 4.10 3.40 2.10 1.00 9.75 3.81
New Jersey - Central United States 4.43 3.99 - 1.00 8.00 3.81
New Jersey - Northern United States 5.76 5.19 - 1.00 8.00 3.81
Oakland United States 4.56 4.44 - 1.00 8.00 3.81
Orange County United States 7.68 6.48 18.32 1.00 7.50 3.81
Orlando United States 5.08 4.62 2.40 1.00 9.20 3.81
Philadelphia United States 4.00 3.75 2.90 1.00 9.50 3.81
Phoenix United States 6.36 5.07 7.86 1.00 7.50 3.81
Pleasanton/Walnut Creek United States 4.80 4.20 13.00 1.00 - 3.81
Portland United States 5.32 5.28 5.58 1.00 - 3.81
Raleigh United States 4.09 - - 1.00 - 3.81
Reno United States 3.72 3.72 3.50 1.00 8.50 3.81
Sacramento United States 4.80 3.00 8.00 1.00 8.20 3.81
San Diego United States 8.28 7.68 - 1.00 8.49 3.81
MARKET COUNTRy
PRIME WAREHOUSE RENT
(USD/SF/yEAR)
PRIME BULK RENT
(USD/SF/yEAR)
PRIME LAND VALUE
(USD/SF)
EXCHANGE RATE (USD)
DEC. 31, 2009
PRIME yIELD/ CAP RATE
(%)
10-yEARGOVT. BOND
RATE (%)
GLOBAL INDUSTRIAL SURVEy U.S. DOLLAR – yEAR-END 2009
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GLOSSARy
Bulk Space – 10,000 SM/100,000 SF or more with up to 10 percent office space, the balance being general industrial/logistics/distribution space with 6 to 12 metre/18 to 36 SF ceiling heights. All loading is dock-height. Built in 1990 or later and standing in a prime industrial location.
Warehouse Space – 2,000 SM/20,000 SF or more with up to 15 percent office space, the balance being general industrial/logistics/ distribution space with 6
to 10 metre/18 to 30 SF ceiling heights. All loading is dock-height. Built in 1990 or later and standing in a prime industrial location.
Land Value – Land values are based on prime logistics/ industrial locations and are based on approximately 3 acres/1.2 hectares/12,140 square metre/130,680 SF of serviced land.
Prime Yield/Cap Rate – The yield for a prime logistics/ industrial property. Rent figures should be estimates of achievable open market rents for each location.
SF = Square Feet
SM = Square Metres
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
NORTH AMERICA Continued
San Francisco Peninsula United States 9.96 9.96 175.00 1.00 6.50 3.81
San Jose/Silicon Valley United States 6.00 5.64 37.41 1.00 8.50 3.81
Seattle/Puget Sound United States 6.93 - - 1.00 - 3.81
St. Louis United States 3.93 - - 1.00 - 3.81
Stockton/San Joaquin County United States 3.96 3.60 5.50 1.00 8.60 3.81Tampa Bay United States 4.84 4.42 - 1.00 9.00 3.81Washington, DC United States 7.93 - - 1.00 - 3.81West Palm Beach United States 7.50 6.90 9.00 1.00 - 3.81ASIA PACIFICAdelaide Australia 9.13 7.05 40.25 1.12 8.00 5.83Brisbane Australia 9.96 8.71 26.97 1.12 9.50 5.83Melbourne Australia 7.05 7.05 20.25 1.12 8.50 5.83Perth Australia 7.47 6.64 33.19 1.12 8.50 5.83Sydney Australia 10.79 8.05 32.36 1.12 8.50 5.83Beijing China 4.46 3.97 15.18 6.84 8.31 3.70Guangzhou China 0.76 0.87 14.95 6.84 7.00 3.70Hong Kong China 18.17 9.81 1,063.59 6.84 4.75 2.45Shanghai China 4.47 4.84 13.81 6.84 11.00 3.70Delhi India 6.91 12.00 74.64 46.89 8.40 7.71Jakarta Indonesia 2.85 - 6.91 9,416.20 8.00 5.60Tokyo Japan 21.76 21.76 474.12 92.24 6.50 1.27Auckland New Zealand 7.07 - 16.87 1.39 8.29 6.12Christchurch New Zealand 6.07 - 15.87 1.39 8.63 -Wellington New Zealand 5.40 - 18.34 1.39 8.33 6.12Singapore Singapore 12.89 9.54 58.04 1.41 8.50 2.63Seoul South Korea 11.48 11.48 47.83 1,165.77 8.00 5.31Bangkok Thailand 6.33 - 6.95 33.45 11.00 3.46LATIN AMERICABuenos Aires Argentina 6.69 6.41 11.15 1.00 16.50 -São Paulo Brazil 12.75 11.47 14.87 1.75 12.00 6.16Santiago Chile 2.52 2.31 0.18 1.00 11.50 1.67Bogota Colombia 11.71 7.25 20.45 1.00 10.50 5.22San José Costa Rica 7.44 8.96 6.51 1.00 10.50 -Mexico City Mexico 4.32 5.40 9.36 1.00 8.30 7.80Lima Peru 5.58 5.58 12.27 1.00 15.00 -
MARKET COUNTRy
PRIME WAREHOUSE RENT
(USD/SF/yEAR)
PRIME BULK RENT
(USD/SF/yEAR)
PRIME LAND VALUE
(USD/SF)
EXCHANGE RATE (USD)
DEC. 31, 2009
PRIME yIELD/ CAP RATE
(%)
10-yEARGOVT. BOND
RATE (%)
GLOBAL INDUSTRIAL SURVEy U.S. DOLLAR – yEAR-END 2009
NORTH AND CENTRAL AMERICACanadaCosta RicaMexicoUnited States of America
COLLIERS INTERNATIONAL LOCATIONS | 294 OFFICES IN 61 COUNTRIES
$1.6 Billion (€1.1 Billion) in Global Revenue �
1. 1 Billion SF (102 Million SM) Under Management �
12,700 Employees �
Colliers International is an affiliation of leading real estate firms committed to delivering consistently superior commercial real estate services, wherever and whenever needed.
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COLLIERS INTERNATIONAL GLOBAL INDUSTRIAL SURVEy yEAR-END 2009