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Investment in European Warehouses Up 12% in 2007

LONDON-European direct warehousing investment totaled nearly $30 billion in 2007, according to a Jones Lang LaSalle report.

By John McCloud | Updated on April 07, 2008

LONDON-European direct warehousing investment totaled nearly $30 billion in 2007, according to a Jones Lang LaSalle report released in late March. Though the figure was down 12% from the preceding year, it was still the second strongest year on record.

“Despite the turmoil in the financial markets, 2007 was a record year for investment activity in the industrial sector in Continental Europe, with volumes up by $2.58 billion in 2006 to $30 billion in 2007,” says Aymeric de Sérésin, a director in JLL’s pan-European investment team. “In the majority of the recently emerging markets, such as Russia or the CEE (Central and Eastern Europe) countries, the share of owner-occupier developments remains high, limiting opportunity for investors. Whilst investor interest in those markets is increasing, the limited opportunity has driven yield levels down, minimizing the risk premium within these markets and so investors remain cautious.”

In the UK, Europe’s largest warehousing investment market, volumes decreased by 35% year over year to $8.56 billion, while in Germany, the largest Continental European warehousing investment market, results remained broadly in line with the previous year, with $4.58 billion transacted. Investment activity in France more than doubled to $3.7 billion, and the Netherlands for the first time broke the $2 billion mark, with the total up 30% in 12 months. In Central Europe, total investment volumes were up by 50%, while Southern Europe experienced a 37% decline, largely due to a near 70% decline in the Spanish market. The most significant drop in investment levels, however, were recorded in Russia, which saw a nearly 90% decline to a mere $207 million. But the cause was limited opportunity rather than a fall in investor demand, which remains high.

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