4th May 2018 | in Articles | by Property EU
Top logistics developers and online retailers are flexing their muscles, as we report in this section on industrial development.
Talk to any developer of industrial and logistics property and it isn’t long before the excitement comes across. This is boom time for logistics generally and those involved in manufacturing the assets are enjoying robust demand from a wide occupier base. The whole asset class has been re-rated due to the weight of capital chasing product and various factors are leading to speculation that there are risks in some parts of the market.
As Alistair Calvert, CEO of Gramercy Europe, says, over the last five years, prime logistics yields in Europe have compressed by 150-280 bps with France, Germany and the Netherlands currently exhibiting yields of below 5%. ‘Current logistics valuations often greatly exceed replacement cost. This is a significant risk in a sector where it is quick to build and assets are undifferentiated,’ Calvert adds.
It would be bizarre to imagine there won’t be a change in investor sentiment at some point in the future, but when that will be nobody knows. For now, it is being enjoyed as a strong defensive asset class in a market which has a diverse and deep demand.
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