Colliers International's latest logistics report shows that the logistics market has never been better as several records have been set in 2018. Prime yield is historically low, the transaction volume and the logistics segment's share of the total transaction volume are record high, and market vacancy is the lowest we have ever measured.
The report includes two new areas, Asker and Oslo south, and now covers all the main axes around the capital. In addition, a new count of all warehouse and logistics area that is available within the areas we cover has been carried out, which is now a total of approx. 3.5 million m2.
Continued strong growth
We are confident that the strong growth in the logistics industry in recent years will continue. We believe that prime yield will level out, but low vacancy and high demand indicate that the top rents will rise in the future. The need for logistics property is increasing in the market and investor appetite is large in this segment, says Colliers's analysis department.
Since 2015, the prime yield has decreased from 6% to the current level of 4.8%, which is significantly more than both the office and trading sector's yield development over the same period. There is great demand from both domestic and foreign investors for attractive logistics properties, and we expect a new record year both in relation to the transaction volume for this sector and the share of the total transaction volume. This therefore positions logistics property as one of the most attractive segments to invest in the coming years.
The transaction volume is the highest ever
So far in 2018, we have seen transactions amounting to around NOK 8 billion within the logistics segment, and we expect the volume to end above NOK 9.5 billion by the end of the year, and thus exceed the record from 2014 of NOK 8.5 billion. At the end of August 2018, the logistics sector's share of the total transaction volume was 22%, which is the highest ever measured. The proportion then also exceeded for the first time the office segment, which had a share of 20%.
Groruddalen still on top
We find the highest rent level of NOK 1,250 / m2 in Groruddalen. The rental level has been stable since 2015. However, the best logistics areas in the vicinity of Oslo have had a rental growth of 8% in the same period, and are in the process of reaching the level of the Groruddalen. This confirms our claim that microbial location is less important in this segment, as long as there is a certain proximity to the capital and good connection to the main road network. The other logistics areas around Oslo have also had a rental growth since 2015.
Historically low vacancy
Vacancy in this market has fallen further and is currently historically low at 4.8%. Note that this figure is influenced by increased total area in the analysis, but the decline is still significant if we compare with last year's area. There are also several available development properties in the market that are actively marketed, which are not included in the vacancy calculation.
If you wish to read more about the logistics market in Norway, take a look at our logistics reports under the "Research" tab.