Industrial and supply chain real estate occupiers and investors alike had a record-breaking year in 2015, according to a recent JLL logistics survey study published this week, and this trend should continue well into 2016.
According to JLL, global demand for logistics facilities is expected to remain high in 2016. In 2016 and 2017, rental growth is expected to continue in all markets around the world. real estate companies qatar
"Last year was unlike any other on record, with historically large volumes of capital pouring into prime logistics real estate in key markets around the world, and corporate tenants continue to lease aggressively," said Craig Meyer, President, JLL Americas, Industrial Brokerage and Capital Markets. "Last year was a peak year, and while investor and occupier demand may not reach those previously unheard-of levels, all forecasts indicate that we will have another fantastic year overall."
"We can forecast 2016 to be a promising year for corporate occupiers, investors, and developers around the world," Meyer says, citing expectations for broad rental growth, institutional investor interest, and demand for new class A product. "Investor demand is spreading more uniformly across the three regions, suggesting a very strong'steady state' in the coming months," says the study.
Most industry participants expect occupier and investor demand to remain healthy in many countries, according to this year's survey, which included the views of 650 JLL logistics real estate experts from around the world.
Expected supply to contract more, but new production would bring more class A product to the market. Demand for sophisticated supply chain real estate continues to outstrip supply around the world. Increased growth in 2015 helped to meet demand for prime productive logistics space, but responses still indicate substantially fewer property choices than in the previous year's survey. In the first half of 2016, global supply is projected to increase slightly, owing to increased availability in Asia Pacific. The Americas are projected to remain marginally undersupplied, while EMEA will hit near-market equilibrium in the next six months.
Rent growth is expected to continue, especially in EMEA and Asia Pacific. Rent growth has accelerated in all three regions, especially in the Americas, and consumer sentiment is at an all-time high, even compared to last year. Rents in the Americas are expected to peak in late 2016, according to more than half of respondents, while rents in EMEA and Asia Pacific are expected to peak over the next eight quarters.
Investor demand is expected to remain high. In JLL's 2014 survey, demand for global logistics real estate was extremely high, with a global positive balance of 74 percent, as measured by the net of positive or negative responses as a percentage of all responses. In this year's survey, the number has dropped to 57 percent, which is not insignificant in terms of investor interest in the market. Investor demand in the Americas remained unchanged in 2015, although demand in EMEA and Asia Pacific fell dramatically. Investor demand is expected to remain optimistic in the coming months while returning to a more stable level, with all global respondents expecting property prices to peak in the second quarter.
Expectations: In the first half of 2016, prime investment opportunities will remain high. Although investment logistics real estate remains scarce in all three regions, respondents expect more properties to become available in the next six months as sellers attempt to profit from high market prices. It's also a good time for a variety of owners to restructure their debt and equity structures. In the Americas, 2015 was a year of large portfolios, and although this pattern will slow in 2016, smaller portfolio investment opportunities will expand.
Expectations: The value of industrial and logistics real estate will grow, but only gradually. According to JLL's 2014 sentiment survey, cap rates were dropping in more markets than increasing. According to the 2015 survey, compression has continued in all three regions, especially in EMEA. As time goes on, rising rents and improving market conditions are expected to help drive value growth.