Further yield compression driving (speculative) developments in the Netherlands

15 March 2017

According to the ‘Logistics Update – March 2017’ published today by international real estate advisor Savills, further yield compression in 2017 will lead to more (speculative) developments.

Niek Poppelaars, Associate Director Logistics & Industrial at Savills Netherlands: “While the 2016 yield contraction from 5.75% to 5.25% GIY limits room for further contraction, the scarcity of prime investment product will continue to keep a downward pressure on yields at all major logistic sites.”

Douglas van Oers, Associate Director Logistics & Industrial at Savills Netherlands: “The occupier market also suffers from a scarcity of available prime product. The substantial occupier demand for prime logistics properties will lead to an upward pressure on rents.”

The Savills market update defines three major trends shaping the 2017 logistics property landscape:

1)     Political and economic uncertainty

In 2016 the choices for Brexit in the UK and Trump in the USA increased political and economic uncertainty. In mainland Europe, major elections are upcoming and the Greek bailout has returned to the agenda. It has to be seen how these will affect consumer confidence, the overall Eurozone economy, the resulting international trade and thus the logistics sector.

2)     Large, larger, largest

The size of new developments has increased substantially over the years. The average size of distribution centres ten years ago was just 16,900 sq m, while the average now is up to 28,850 sq m. New developments the south of the Netherlands in Noord-Brabant and Limburg are even larger in size: 36,400 sq m on average, with the 105,000 sq m Vida XL development in Venlo being the largest occupier transaction. The demand for new distribution centers will uphold, and therefore Savills expects further XL developments in 2017.

3)     Strong increase in e-commerce

Online retailers recorded the largest sales growth in 2016: +18.7% yoy. The growth of e-commerce is the driving factor behind many of the aforementioned new developments. In order to further increase online sales, the supply chain needs further modernisation and reconfiguration.

To read more on how these trends will impact the logistics and industrial occupier and investment market, download the full report here.

 
 

General Enquiries

Savills Amsterdam

 

Key Contacts

Douglas van Oers

Douglas van Oers

Associate Director
Agency

Savills Amsterdam

+31 (0)20 301 2058

 

Niek Poppelaars

Niek Poppelaars

Associate Director
Agency

Savills Amsterdam

+31 (0)20 301 2086