Historical low yields on logistics properties

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. 


Related Experts
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Carl Fredrik Marti

Head of Logistics

Oslo

Carl Fredrik Marti joined the Oslo office of Colliers in 2000. As Head of Logistics he is responsible for the Industrial & Logistics Team in Norway, and has relationships with both national and international logistics companies. Carl Fredrik is a certificated broker working with transactions and landlord representation. With more than 20 years of experience, he has provided successful brokerage services to many well-known companies over the past several years, and has extensive knowledge of the logistics real estate market.

 

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Tobias Voraa

Real Estate Advisor

Oslo

Tobias Voraa joined Colliers in 2018 as a Real Estate Advisor leasing industrial & logistics properties. His area of expertise is within Leasing and primarily industrial & logistics advisory. He mainly focuses on adding value to landlords with vacancies or industrial land for development in delivering new tenants.

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Petter Platou

Director Research and Valuation

Oslo

Petter has worked with many aspects within Real Estate, with specialization and certifications within valuation. He has a wide experience within Real Estate in general and can perform valuation of all types of properties, portfolio valuations, land value and market rent analysis. Petter closely monitors the real estate market, and prepares our market reports for the general real estate market, logistics- and retail market. He can also prepare specialized analysis and reports on request. Petter has previously worked with project management on behalf of tenants and owners, feasibility studies and transactions before he moved over to valuation.

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