Reduced rental rates for retail space; felt a significant difference between strong and weak markets.
Budapest leads in an increase in rental rates for office space due to the high demand, historically low vacancy rates and a lack of business centers of class A.
According to the report from Cushman&Wakefield "DNA commercial real estate, the demand for logistics space in Europe contributes to an increase in rental rates and lower yields.
According to the report from Cushman&Wakefield "DNA commercial real estate, the demand for logistics space in Europe contributes to an increase in rental rates and lower yields.
Rents for logistics space in Europe grew by 0.6% in the last quarter of 2017, ahead of the segment of office real estate rental growth of 0.4% and a 0.3 percent drop in the segment of a commercial real estate. Yields for the best warehouse facilities have also undergone a significant decline, falling on average by 14 basis points during the quarter, and 39 - during the year, to 6.15%. The largest decrease was recorded in the markets of France and Germany.
Logistics
Nigel Almond, head of analytical Department of Cushman & Wakefield in the UK, commented: "the Increase in rates in the logistics sector is concentrated only in some urban areas, with about two-thirds of the markets reported growth for the quarter. Where growth occurred, it usually was significant. For example, in Barcelona and Madrid rates increased by 8.3% and 5% respectively against a background of significant leasing activity, which included pre-commissioning of large objects, due to the demand from companies dealing with 3PL (logistics design) and Electronic Commerce".
In Vienna was recorded highest growth compared with the previous quarter, while rental rates increased by 10%. The city benefited from the creation of the modern logistics space in the suburbs and the increasing demand for these objects. Growth was also evident in the UK regions, rental rates in Manchester increased by 7.1%, as the growth of e-Commerce and the need to improve supply chains, supported the demand.
Retail (trade corridors)
Retail (trade corridors)
At the end of 2017 rental rates in retail corridors decreased by 0.3% and annual growth was also negative (-0.3 percent) for the first time since 2010. This led to the termination of the growth period, during which the profitability index European trade corridors has increased by nearly 40%. The decline in rents was observed in selected markets. In Istanbul, rents have fallen by almost 10% during the quarter, an annual decline was at the level of almost 25%, since the major economic risks and volatility in exchange rates limit the expansion of retailers, despite the growth of the economy and level of consumption in the region. Rents for two-thirds of the markets remained unchanged for two consecutive quarters.
The rate of return on facilities in the commercial corridors continue to decline, but the greatest changes are now observed outside major locations.
Darren Yates, head of research in the field of commercial real estate EMEA at Cushman & Wakefield, added: "a Number of major trade corridors in Europe continue to show an increase in rental rates, which corresponds to increase in recent months, economic data. However, this trend masks a continuing polarization between the strong and weak parts of the market. Retailers have increasingly focused on the reduction of unprofitable stores and a significant investment investing in the flagship."
Office property
Rental growth in the office real estate segment slowed down by 0.4% compared with the previous quarter, although there is still a significant annual increase of 2.4%. Budapest is the increase in rental rates during the quarter by 9.1%, aided by high demand, historically low percentage of vacancy rates and the lack of space to grade A. All five of the key office markets of Germany said the rise, led by Berlin (+5.5 %) and Frankfurt (+ 5%), supported by a high leasing activity in all cities and a relatively low share of the vacancy rate is only 2.2% in Berlin - in most markets. Further growth is projected for 2018.
Investment
Investment demand remains high, with investment volumes for the whole of 2017 exceeds that of 2016. Significant demand continues to decrease yield. The level of rates of return in most markets showed a quarterly and annual decline. Profitability in the field of a commercial real estate is also decreasing, but since the rate of return on the best rooms today are reaching record lows in many markets, the next quarter is projected to be stable with small fluctuations in the future.
According to the materials Propertytimes