EUROPEAN LOGISTICS

MARKET
Q1 2022

INTERNATIONAL RESEARCH
MAY 2022
L O G I S T I C S WA R E H O U S I N G M A R K E T I N E U R O P E
LOGISTICS IN A NUTSHELL
STRONG OCCUPIER
FUNDAMENTALS
Take-up increased by 15% in Q1 2022 in the six
leading European countries. Market fundamentals
are healthy with low vacancy rates around 5% in
most countries. The lack of new developments
combined with the strong activity in the e-
commerce sector are the two main factors that
contribute to rental growth in prime sectors.
ONLINE PENETRATION FOR
RETAIL SALES IS STILL LOW
It accounts for 11% of total retail sales in Europe.
There are great differences between countries.
Changing shopping habits resulting in increasing
online sales is a structural demand driver for
warehousing space. As online shopping grows, so
does reverse logistics, further space will be needed.
AN ALL TIME HIGH FOR
LOGISTICS INVESTMENT
The industrial & logistics market is yet again
breaking new record volumes of investment
(+10% in Q1 2022), representing 23% of total
commercial real estate (10% in 2016).
Supported by strong occupier fundamentals,
yields are still compressing slightly in most
markets.
THE CHOICE OF LOCATION
REMAINS PARAMOUNT
As retailers are developing omni-channel solutions,
the choice of location for last mile solutions along
with regional solutions will prevail. The challenge
will be land availability
ECONOMIC GROWTH HAS
BEEN REVISED DOWN
Economic uncertainty and the cost of living crisis will
dampen disposable consumer spend and rising
energy prices and supply chain issues present their
own structural challenges. The situation remains
positive in the Eurozone with +2.8% of GDP growth
projected for 2022.
LARGE DISPARITIES IN LABOUR
COSTS ACROSS EUROPE
Labour availability and cost are strategic in occupier
decisions on where to locate, and also for developers
assessing the cost and time within which they can
deliver buildings.
I N T E R N A T I O N A L R E S E A R C H 2
 O N L I N E S A L E S O F G O O D S P E R C A P I TA I N 2 0 2 1
STILL LOW IN SOME COUNTRIES
€/year per inhabitant
Market trend ≥ 2000
1000 - 2000 Finland
• Northern European countries
account for the highest sales Growth of sales of goods 500 - 1000 800
online per capita and the per capita in 2021 (y-o-y) < 500 Norway
Onlinelowest
sales per capita
rates still low in some countries
of growth. 979
n.a Sweden
Hungary 26%
• In Southern and Central 1,153
European nations, the Italy 22%
number of people shopping Poland 19% Denmark
online is well below the Belgium 17% 1,201
European average, but also
showing the highest rates of France 16% Ireland

growth. Czech Republic 15%

1,086 Poland
N’lands
369
1,113
United Kingdom
Ireland
• A British person buys €2,237 15% 2,237 Germany
worth of goods online each Sweden 13% Belgium
1,084
year on average. 962 Czech Rep..
EU21 12% 567
• With Covid, shoppers turned Spain 12% France Austria
Hungary
to internet sales and
Denmark 11% 1,148 863 318
traditional retailers
developed internet solutions United Kingdom 9% Italy
for their customers. Both Portugal 8% 351
factors contribute to an
Germany 7%
increase in ecommerce sales.
Norway 7% Portugal Spain

Austria 5% 278 346

Finland 4%
Netherlands 2%

I N T E R N A T I O N A L R E S E A R C H 3
LOGISTICS OCCUPIER MARKET IN EUROPE
TAKE-UP IN 6 COUNTRIES: +15% (Q1 2022 VS Q1 2021)

With demand structurally strong,
supply is the variable adjusting
the market
 Q1 2022 set yet again another new
record volume of transactions in
Europe, boosted by online sales.
Take-up rose by 15% in the 6 leading
European markets with strong market
growth in Germany and the UK.
 Significant changes in consumer
behaviour triggered by the Covid-19
crisis supported on-line shopping
and helped raise the penetration of e-
commerce in markets where this had
been limited so far, further boosting
demand for logistics space.
 Supply drying up over the past
three years while demand stayed
sharp means there is a major
imbalance in some markets. This was
particularly evident in prime locations
where demand shifted towards other
regional locations.
 The speed of delivery and
availability of land will dictate
the market balance in areas
where the vacancy rate is well below
the European average of 5%.
 New developments are still
insufficient to meet demand, yet few
speculative developments are
launched.
Country profiles in Q1 2022
 In Germany, logistics market ran at full speed to
reach a new record volume of transactions in Q1
2022 boosted by large transactions from
manufacturing companies. However, activity in
some submarkets was hampered by a lack of
supply.
 The UK occupier market maintained a solid
dynamics in Q1 fuelled by e-commerce. However,
there is an acute shortage of new units supporting
rental growth in the UK. The tightening supply of
best in class units combined with strong
requirements means that occupiers are fully
investigating second-hand opportunities.
 In Poland, even tough take-up decreased in Q1
2022, the market remained dynamic with a strong
demand for renewed leases (not included in the
volume of take-up).
 In France, the market was supported by large
transactions above 20,000 sqm during Q1 2022;
Retail and distribution accounted for nearly half of
the total volume taken up, whilst demand from
3PLs has been slowing down. Overall, supply
remains scarce in most submarkets.
 In the Netherlands, demand remained robust but
the lack of supply hampered the market in Q1
2022. Rents stabilized but strong demand and low
availability are still putting pressure upward on
rents, as seen in Rotterdam.
 In Spain, the market achieved yet again a historic
record volume of transactions in Q1 2022. Activity
was stimulated by e-commerce and food retailers.
Vacancy rates are still very low contributing to
upward pressure on rents, particularly in
Barcelona.

million sqm Take-up – 6 countries (France, Germany, million sqm

32 Netherlands, Poland, Spain, UK) 10 +44%
28 8
24 +46% -14%
+15% 6 +24% -35%
20
16 4 +14%
12 2
8 2.2 1.4 1.0 1.0
Q1 2022 vs 0 0.6 0.7
4 6.0 6.9 Q1 2021 20 21 22 20 21 22 20 21 22 20 21 22 20 21 22 20 21 22
0 2.7 3.0 2.8 3.6 4.2 4.9 5.3 4.8 4.6
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Germany UK Poland France N'lands Spain*
Q1 Q2-Q4 *Total of Madrid + Barcelona + Valencia

4
LOGISTICS OCCUPIER MARKET IN EUROPE
HEADLINE RENTS ARE STILL RISING

Rental growth (year-on-year) Tight demand and limited supply continue to Incentives have reached a floor
put upward pressure on rental growth.
5% • The average rent-free period is at its
4.0% • Prime rents rose by 3.2% (y-o-y) in Q1 2022 in a lowest proportion ever, at a Europe wide
4% 3.4% 3.6% average of 6.1% of headline rents. They
3.2% panel of 48 markets covering 21 countries.
range between 5% and 10% in Europe in
3% 2.4% 2021 and represent less than 1 month per
• The vacancy rate stayed well below 5% and
steady demand pushed rents upwards. statutory year.
2% 1.7%
• Rising construction and labour costs and land • Incentives for warehouses are far below than
1% availability also contribute to drive rental increases. for offices.

• In the short term, another challenge is the potential • The lack of supply for prime products has
0% led to stability in incentives over the past
shortage of materials disrupting the completion
17 18 19 20 21 Q1 22 of new developments. few months.

€/m²/year 199 Logistics Headline Prime Rents Q4 2013 Q1 2022 Range 2007-2022
180

140
103
88 90 90 87 88
100 75 81
68 61 58 55 49 48 44
60

20

5
INDUSTRIAL & LOGISTICS INVESTMENT IN EUROPE
INVESTMENT REMAINS STRONG ACROSS EUROPE

Industrial and logistics investment broke another record
 Industrial and logistics Investment volumes in Europe reached over 13.7bn in
Q1 2022, another record for a first quarter. The market was predominantly
boosted by the outstanding activity in Germany as a result of large portfolio
transfers.
 The sector maintained a strong market share over other asset classes in most
countries, accounting for 23% of total commercial real estate in Europe.
 The positive sentiment in the occupational market is continuing to encourage
capital deployment in the sector. Occupation is being driven by the ongoing surge
of online retail and 3PL occupiers, and their structural growth to meet changing
consumer habits.
 Industrial and logistics investment has been driven by continued strength in the
occupier market, creating record rental increases and low vacancy across
Europe.
 While there is unlikely to be a let-up in investor demand, volumes may be
challenged by increasing scarcity of stock as seen in the UK and the Netherlands
over the past few months.
Country profiles in Q1 2022
 In the UK, the industrial and logistics investment
market showed little signs of slowing down, even
though challenged by increased scarcity of stock.
Activity remains vigorous and drives sharp
competition for the best assets still putting a
downward pressure on prime yields.
 In Germany, the market recorded a historic
volume of transactions boosted by two large
transactions above €500m. It gained market
share against other assets. The prime yield
stabilised at 3% in Q1.
 The market kept a strong dynamic in France with
demand refusing to fade. The prime yield
stabilised at 3.2% for standard grade A premises
and 3% for urban logistics assets during Q1.
 In the Netherlands, the investment market in
industrial and logistics maintained good
momentum despite a scarcity of products
available. The prime yield stabilized at 3% in the
Netherlands, 3.6% in Venlo and 4% in
Amsterdam and Rotterdam.
 In Poland, following a record volume last year,
activity slowed down in Q1 2022. Prime yields
remained stable at 4.5% for standard assets and
reached 4% for long-leased assets.
 Spain reached another record volume of
investment in industrial and logistics in a first
quarter. The sector continues to catch investor
interest and gain market share. In Q1 2022, prime
yields stood at 3.6% for last mile purposes.

€bn Investment Europe Q1 Q2-Q4 €bn Q1 Q2-Q4

Trend Q-o-Q
70 20 -33%
+10%
60 16
50 12 +133%
40 57 Q1 2022 vs
Q1 2021 8 +7% -12% -16%
30 -55% +43% +139%
34 29 32 33 4
20
18 19 19 19 0
10 10 14
6 8 8 8 10 12 14 19202122 19202122 19202122 19202122 19202122 19202122 19202122 19202122
0 6 3 1 2 3 3 4 5 4 6 8 9 7
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 UK Germany France Sweden N'lands Poland Spain Italy

6
LOGISTICS PRIME YIELDS
COMPRESSION SLOW DOWN DURING Q1 2022

Q1 2022 vs Q4 2021 Grade A warehouses (big boxes) for standard lease terms (5 to 15 years)

GERMANY =
HELSINKI

= OSLO STOCKHOLM
3.7
UK
4 3.5 TALLINN

FRANCE -10bp 6.75

=
RIGA 6.75
NETHERLANDS COPENHAGEN EUROPE – Q1 2022
DUBLIN VILNIUS
4.2
SPAIN -20bp
3.75 MANCHESTER HAMBURG

3 BERLIN 6.75 -55 BPS

3.25 VENLO
3
POZNAN
vs Q1 2021
=
BIRMINGHAM
LONDON
3.6 4.75 WARSAW II
POLAND 3.25
3 FRANKFURT PRAGUE
KATOWICE
4.5
=
BRUSSELS 3 4
CZECH REP PARIS
4 4.75
3.2 MUNICH

3 BUDAPEST 48 markets, 21 countries

ITALY -10bp VIENNA
LYON 4 6.5 BUCHAREST

3.2 7.8
SWEDEN -20bp Trend over last quarter
MILAN

-8 BPS
MARSEILLE
NORWAY = 3.2 3.90
LISBON MADRID
DENMARK -5bp BARCELONA ROME
5.25 3.7 4.75
3.7 ATHENS
BELGIUM -15bp 7.25
IRELAND =

≤ 3.5% 3.5% - 5% > 5% Source: BNP Paribas Real Estate Research.

I N T E R N A T I O N A L R E S E A R C H 7
 INDUSTRIAL & LOGISTICS INVESTMENT IN EUROPE
PRIME YIELDS CONTINUE TO DECLINE (-8 BPS IN Q1 2022)

€ billion Investment - 2021

Strong demand and limited prime products
150 led to further yield compression
124
• Prime yields dropped by 8 bps in Q1 2022 (in a panel of
100
21 countries).
71
• Last mile assets bottomed at 2.75% in the UK and
50
41 3% in France and Germany.
• Long-term government bond yields rose everywhere
0
throughout Q1 2022.
07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Q1
22 • This will lead to a stabilization of logistics prime yields
Office Industrial / Logistics Retail in the next few quarters.

Net Prime Yields - Grade A warehouses (big boxes) for standard lease terms (5 to 15 years)
March 2022
6%
Office Grade A (big box) 10 yr Gvt bonds
5%
3.70% 3.90% 4.50%
3.65% 4.50%
4% 3.05% 3.20%
3.25% 3.00%
3%
3.00% 3.10% 3.00%
3.00% 2.90%
2% 2.70%
2.40%
1%

0%
UK Germany N'lands France Sweden Spain Italy Poland

8

EUROPE
FRANCE
Headquarters
50, cours de l’Ile Seguin - CS 50280
92650 Boulogne-Billancourt cedex
Tel.: +33 1 55 65 20 04
GERMANY
Goetheplatz 4
60311 Frankfurt am Main
Tel.: +49 69 29 89 90
UNITED KINGDOM
5 Aldermanbury Square
London EC2V 7BP
Tel.: +44 20 7338 4000
AUSTRIA I CZECH REPUBLIC I DENMARK I ESTONIA I FINLAND I GREECE I HUNGARY I JERSEY I LATVIA I LITHUANIA I NORTHERN IRELAND I NORWAY I PORTUGAL I ROMANIA I SWEDEN
L O C AT I O N S
(APRIL 2022)
BELGIUM
Avenue Louise 235
1050 Brussels
Tel.: +32 2 290 59 59
SPAIN
C/ Emilio Vargas, 4
28043 Madrid
Tel.: +34 91 454 96 00
IRELAND
57 Adelaide Road,
Dublin 2
Tel.: +353 1 66 11 233
ITALY
Piazza Lina Bo Bardi, 3
20124 Milano
Tel.: +39 02 58 33 141
LUXEMBOURG
Kronos building
10, rue Edward-Steichen
2540 Luxembourg
Tel.: +352 34 94 84
Investment Management Avenida da República, 90 Piso 1,
Tel.: +352 26 06 06
ALLIANCES
SWITZERLAND I USA
MIDDLE EAST / ASIA
NETHERLANDS DUBAI
Antonio Vivaldistraat 54 Emaar Square
1083 HP Amsterdam Building n° 1, 7th Floor
Tel.: +31 20 305 97 20 P.O. Box 7233, Dubaï
POLAND
Tel.: +971 44 248 277
Grzybowska 78, HONG KONG, SAR CHINA
00-844 Warsaw 63/F, Two International
Tel.: +48 22 653 44 00 Finance Centre
PORTUGAL
8 Finance Street, Central,
Hong Kong, SAR China
Tel.: +852 2909 8888
SINGAPORE
Fracção 1
1600-206 Lisboa
Tel.: +35 1 939 911 125 20 Collyer Quay, #17-04
Singapore 049319
Tel.: +65 681 982 82
10