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The catalan industrial-logistic sector is evolving positively with an excellent forecast for growth
02/08/17

According to the new Forcadell Industrial-Logistic Market Report, both sectors, industrial and logistic warehouses, have registered very positive figures regarding demand this 1st semester of 2017.

The industrial network is exhibiting signs of great activity in 2017, reflected in the growth in number SMEs and an expansion of warehouse spaces by companies already established, which entails a clear boost of the sector.

Forcadell highlights demand for industrial warehouses, for rent and sale has registered considerable year-on-year increases for 1S 2017. Prices have, on the other hand, shown an upward trend as a result of the good performance of the sector and the excellent forecast for the year-end.

INDUSTRIAL WAREHOUSES TO RENT

DEMAND
According to data by the consulting firm, demand of warehouses to rent has followed a very positive evolution throughout this 1st semester 2017, registering a 35,52 % y/y increase. This factor shows the positive evolution of the industrial catalan sector, and forecasts for the run of this 2nd semester could end up besting results of the 1st.Demands for smaller warehouses up to 500 sqm, characteristic of the catalan industrial network, involve practically half of the requests received this semester. Furthermore, demands for spaces of 500 to 1000 sqm have increased 15,3%. This is a consequence of the current growing economic context and an increasing rise of consumption, which has entailed a growth in the number of SMEs and a general boost of the industrial sector.

Forcadell points out this in this scenario many companies have been faced with the challenge of renewing their old warehouses, opting for renovating them and/ or adding more sqm now that the market conditions have improved. Demands of 1000 to 5000 sqm are around 20% while the ones of more than 5000 sqm remain in low demand, due to the stability this type of companies which require large space have. According to regions, availability is focused mainly Baix Llobregat, Vallès Oriental and Valles Occidental, which comprise a total of 95% of the total demand. The industrial warehouses located in areas like Osona, Anoia or el Bages, regions, further away from the Barcelona zone are the ones which have seen the lowest demand increases.

SUPPLY

The volume of warehouses for sale is scarce and insufficient to answer to the growing number of requests currently registered. Many owners instead of selling their warehouses have opted to rent their industrial assets. It is important to highlight that the slowdown regarding introduction of square meters is conditioned to the fact that companies that are already in the market and are looking for new premises opt to sell, which has no impact regarding introduction of new square meters. New construction warehouses are linked to turn-key and non-speculative projects, and are usually warehouses of medium or large spaces. According to regions, availability is focused mainly in the Barcelonès, Baix Llobregat, Vallès Oriental and Valles Occidental, which comprise a total of 90% the current supply in Catalonia.

PRICES

According to data by the consulting firm, throughout the 1st semester, following several semesters of price stability in industrial lands, there has been a slight increase, compared to the tendency seen the previous years. According to zones, in the average in the A zone has registered an increase of 6,4 % y/y increase, while in the B zone has been of 5,8%,  and  5,4% in C. According to regions, the largest increases registered in the Barcelonès area, with a %13 y/y increase, going from €684/sqm to the current €775/sqm; followed by the Maresme region,12,4 % y/y increase, going from €613/sqm to €689/sqm. In the Valles Oriental and the Valles Occidental regions, the increase has been similar, 10,6 % in the Vallès Oriental and 10,8% in the Vallès Occidental.El Camp de Tarragona and Osona, the regions which are futher aaway from Barcelona have registered the lowest increases, less than 5%.

 

INDUSTRIAL WAREHOUSES TO SALE

DEMAND
Throughout 1S 2017, demand for industrial warehouses for sale has registered a prominent rise in requests. This implied a 136, 9% y/y increase, which doubled the number of requests respect the same period on the previous year. Although the 2H 2016 the tendency was positive, registering a 15,7% year-on-year increase, the market was recovering from a fall in demand which occurred in early 2016, which was a -33% decrease respect early 2015.Regarding the distribution of demand according to space, demands for warehouses up to 500 sqm have grown 10,8% y/y, being the most requested by the catalan industrial network.Warehouses of spaces up to 2.500 to 5.000 are next most demanded, registering a y/y increase of 9,0% and a semester increase of 33%. Analyzed by zones, the regions of Baix Llobregat and El Maresme have increased the number of requests respect previous semesters. Their proximity to Barcelona make them interesting options for companies looking for locations.

SUPPLY
The volume of warehouses for sale is scarce and insufficient to answer to the growing number of requests currently registered. Many owners instead of selling their warehouses have opted to rent their industrial assets. It is important to highlight that the slowdown regarding introduction of square meters is conditioned to the fact that companies that are already in the market and are looking for new premises opt to sell, which has no impact regarding introduction of new square meters. New construction warehouses are linked to turn-key and non-speculative projects, and are usually warehouses of medium or large spaces. According to regions, availability is focused mainly in the Barcelonès, Baix Llobregat, Vallès Oriental and Valles Occidental, which comprise a total of 90% the current supply in Catalonia.

PRICES
According to data by the consulting firm, throughout the 1st semester, following several semesters of price stability in industrial lands, there has been a slight increase, compared to the tendency seen the previous years. According to zones, in the average in the A zone has registered an increase of 6,4 % y/y increase, while in the B zone has been of 5,8%,  and  5,4% in C. According to regions, the largest increases registered in the Barcelonès area, with a %13 y/y increase, going from €684/sqm to  the current €775/sqm; followed by the Maresme region,12,4 % y/y increase, going from €613/sqm to €689/sqm. In the Valles Oriental and the Valles Occidental regions, the increase has been similar, 10,6 % in the Vallès Oriental and 10,8% in the Vallès Occidental.El Camp de Tarragona and Osona, the regions which are futher aaway from Barcelona have registered the lowest increases, less than 5%.

INDUSTRIAL LAND

Demand for industrial land by end consumers has increased this 1S 2017, while space supply is still scarce, and prices still very high. As it has been since 2016, demand for land sites to build logistic warehouses is consistent. In the industrial area, in certain cases it is more cost-effective to buy a warehouse which is already built instead of purchasing the land and building later, basically for the lack of available land. Promotors are interested in opportunities to buy, to encourage turn-key transactions.

Following several semesters of price stability in industrial lands, we are facing a period in which there has been a slight increase. According to zones, in the A the increase has been 17,2% y/y increase, while in the B I has been of 10%, in C of 10,8% and in D of 8,6%The maximum year on-year increase has been in the Vallès Oriental (18,7%), which has supposed a price evolution from €128/sqm  o €152/sqm. Followed closely by the Vallès Occidental with a 18,6% y/y increase, €150/sqm/month to €178/sqm/month. The rest of regions have registered clearly more contained increases, around the 5% and 8% marks, but overall higher than their past developments. Price evolutions for 2017 are expected to maintain this growing trend.

INVESTMENT MARKET

In 2017, local Core Investment Companies and Family Offices continue as the main players in the industrial warehouse investment market, while in the logistic market the lead players are REITs and international funds like P3 Logistic Parks, Rockspring, Greenoak and Logicor. These entities have completed the majority of transactions in Spain as well as most of the new developments. Closing 1S 2017, investment in the logistic sector reached €600m, a transaction volume that exceeds the total obtained the previous year. Forecasts for the future yearend closing are very optimistic, since it is expected that the positive take-up rate to continue given the progress of the sector. The main logistic core or communication axes in Catalonia, in any of the 3 crowns, have been those led by the main transactions by economic volume and extent. Investors are also opting for land since the market is showing an obvious demand for developments of warehouses of medium and large space (3.000-15000 sqm).Yields in the logistic market stand around 6% to 10%, following the tendency of the previous 2 semesters. According to location and price of purchase, yields can stand between 7% and 9%. Financial entities, on their behalf, are open to provide loans to financially sound clients. The most outstanding investment transactions in the 1st semester of the year have been the purchase of 11 logistic warehouses by P3 Logistic Parks for €243.35m (332.500 sqm) in Spain; the investment Group Barings Real Estate Advisers bought a 56.000 sqm warehouse for €35m to GLL Real Estate partners in Madrid.

INDUSTRIAL LOGÍSTIC MARKET

Throughout the 1st semester, the catalan logistic market registered a take-up of 150.086 sqm. Albeit the evolution of the sector has been very positive these recent years, the fact is the logistic sector is slowing down for the first time since in 2016 it started its upward trend. By quarters, in the Q1 2017 there was a 38.026 sqm take-up (-60%) and the Q2 registered 112.060 sqm (-32%).These figures imply a -42% y/y decrease, in contrast to the first 6 months of 2016 that saw a 260.933 sqm take-up. Although on 2015 and 2016 take-up in the first semesters of both years was lower than in the respective 2Hs, this has not impacted the final take-up figures, which has been altogether very positive for 2015 as well as 2016.Just as FORCADELL experts pointed out in previous market reports, it will be challenging to match or exceed the results achieved in 2016.Supply for logistic warehouses has seen a slowdown seen in the different crowns, although more visibly in the 1st and 2nd.

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