Global logistics markets end 2018 on a high note

Global logistics markets finished 2018 with record levels of demand and robust pre-leasing keeping vacancy at record lows. With continued buoyant occupier activity despite tariff and trade concerns and a lack of modern vacant space, we expect continued rental growth momentum in 2019.

The U.S. industrial market closes another remarkably strong year

Belying trade policy uncertainty, leasing sentiment in the U.S. industrial market remains strong with both net absorption and new completions crossing the 200 million square foot mark, in line with the trends seen in 2017. Following over eight years of growth, national annual rental increases for 2018 continued at 4.7% as most markets remain landlord-favourable.

Sixth consecutive year of expansion in European logistics market

Sustained robust take-up has driven the European logistics market to its sixth consecutive year of expansion, although the double-digit take-up growth of the past few years came to an end in 2018. The European aggregate vacancy rate is set to keep below 5% despite a significant rise in speculative development; while this accounts for around 30% of total construction, it is well below its previous peak 10 years ago. Looking ahead, we anticipate that occupier demand will be sustained at healthy levels regardless of the expected slowdown in overall economic growth. Moderate rental growth is forecast to continue in 2019, supported by increasingly scarce supply.

Rents in Asia Pacific rise amid supportive demand drivers

Demand for industrial space continued to be underpinned by 3PL firms and manufacturers across most Asia Pacific markets in the fourth quarter. Manufacturers were particularly active in Beijing and Shanghai, with rents rising in both cities. Labour shortages are supporting a move towards more automated facilities in Tokyo, while strong demand is boosting rental growth in Sydney, despite new additions in the last quarter of 2018 propelling annual supply to its highest level since 2008. Most regional markets recorded an uplift in supply during the last three months of the year, although additions were generally modest and rents continued to rise.

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