Logistics and semi-industrial markets still leading the way

LOGISTICS & INDUSTRIAL
Tim Harrup

The annual analysis of the semi-industrial and logistics market undertaken by real estate advisor JLL was presented yesterday at a press conference. The title of the presentation ‘Can the Market’s Hottest Sector Maintain its Pace in 2022?’ gives a very clear indication of the importance of this sector – particularly when it is considered that offices, retail and residential are the other three main real estate sectors.

JLL Head of Industrial and Logistics Leasing Mathieu Opsomer (who assumed this role following the departure last year of Walter Goossens) first set out the figures from 2021. There were some records and some surprises. Where records are concerned, at 2.286 million square metres of take-up across the two sub-segments (semi-industrial and logistics) 2021 was the second highest ever after 2016, and around 10% up on the five year average. The number of transactions was at its highest ever (1,147 against a five year average of 812) but as a logical result of this, the average transaction size was at its lowest ever (1,993 m² against a five year average of 2,554 m²).

Contrasts

There are significant differences between the two sub-segments however. The market was driven by semi-industrial, which saw almost 1.5 million square metres of take-up, around a third up on the five year average and representing almost two thirds of all transactions. Logistics, by contrast, was 11% down on the five year average, at 813, 000 m² of take-up. Staying with logistics – which has been very much a headline segment over recent years – the drop was characterized as an increase in the number of transactions to 72 (11% up on the five year average,) but a significant decrease (-22%) in the average transaction size, to 11,000 m². Most of the transactions (86%) were in lettings, with the remaining 14% in acquisitions. In terms of deliveries of space, the figures are also highly significant. Large logistics operators have very specific requirements for their facilities, and this is therefore very much a ‘build to suit’ market. As a result, of the 600,000 m² or so of space delivered in 2021, a mere 3% was speculative. Exactly the same volume of deliveries is schedules for 2022, but with 18% of this being speculative. And also with all this in mind, on the key Antwerp-Brussels axis, only 1% of all logistics space is vacant.

A look at the major logistics transactions of the year reveals that the E 313 and the Antwerp-Ghent axes dominate. The number one spot goes to Genk Green Logistics, which attracted five transactions for a total of 82,720 m². The five were: Eddie Stobart (2 x 20,000 m²), Nippon Express (21,000 m²), Neovia (11,720 m²), P&O Ferrymasters (10,000 m²) and some pre-lettings. Second place goes to MG New Docks in Ghent, where Eutraco pre-let 70,000 m². Ghent Logistics Campus completes the podium with 50,000 m² pre-let to Eltra, Connect+ Group and Van Moer.

Constraints

According to the finding of JLL, the main constraints to higher figures in logistics are lack of land, planning permission challenges, and the requirement for higher warehouses and multi-storey warehouses. In these ‘green’ times, occupiers and owners are also demanding sustainable warehouses, de-carbonized supply chains and new transportation modes. As a result of all this, speculative development remains limited and developers are awaiting a first tenant before launch works. There are no completely speculative projects. Another spin-off from this lack of available space comes in the form of occupiers taking larger areas than they need at the moment, with an eye to the future, and both occupiers and investors buying large vacant sites for the same reason.

Investment

JLL’s Head of Capital Markets Belux Adrian Glatt presented the figures for the investment market. He started by putting Belgium into a European context. The first figure illustrates why this market is described as the ‘hottest’. From accounting for 9% of the total European real estate investment market in 2013, it has more than doubled to 21% in 2021. By way of comparison, at the same time, the office sector has retreated from 41% to 33%. However, while 60% of this total real estate investment takes place in the big three of the UK, Germany and France, a minuscule 1% comes to Belgium. Adrian Glatt explained – when questioned about this – that the main reason is that most of the logistics space in Belgium is in the hands of a few large players (WDP and the others) and rarely comes to market.

Turning to Belgium, despite representing a tiny portion of the European whole, investment in the country in 2021 was 23% above the five year average, at 580,000 million Euros, of which 357 million was in logistics and 253 million in semi-industrial. And again, lack of available product limited the possibilities for investment. The average size for the 34 investment transaction was also up – by 5% – on the five year average at 17 million Euros. Some 94% of all investment took place in Flanders, with Wallonia and the Brussels Region at 4% and 2% respectively.
Ghent Logistics Campus heads the transaction size podium with a deal worth 180 million Euros which saw CBRE IM acquire 184,000 m² from Heylen Warehouses for 180 million Euros. Next comes Intervest which spent 30 million Euros on 60,000 m² at Tessenderlo, the seller being Aurelius Group. The podium is completed in Boortmeerbeek, north of Brussels on the Brussels-Antwerp axis, where Meyer Bergman acquired 21,000 m² from Sentipharm for 17.5 million Euros.