Q3 2016
JLL’s Supply Chain Activity Index on track
for a steady year for warehouse take-up,
despite uncertainties
The Index maintained its steady expansion in Q3, although economic and political
uncertainties decelerated growth.
JLL’s Q3 take-up figures show an 8% quarter-on-quarter decline but, impressively, they
were still over the 4 million sq m mark for the sixth quarter in a row.
The Index’s Q3 growth is on the back of further uplifts in European GDP and
trade volumes.
There was a largely neutral effect from the other two of the Index’s four constituent
series, with commodity prices remaining stable and economic sentiment in the EU
moving marginally over the quarter.
Looking ahead, the Index should expand at a slower pace in Q4 and Q1 2017,
picking up again in Q2 2017.
While on balance the Index for the upcoming quarters will sustain its upward trend,
with European GDP and trade volumes set to grow further, a deterioration of economic
sentiment is factored in; this reflects Brexit uncertainty, albeit it is expected to stay above
its long-term average. Contributions from commodity prices – which are likely to remain
stable – will continue to be largely neutral.
The Index forecasts that take-up in the final quarter of 2016 will slightly increase
on Q3 to around 4.3 million sq m.
This will mean an outturn for the full year of just above 17 million sq m – on par with
the 2015 record level based on JLL’s data. Moving into next year, H1 take-up is
projected to reach around 8.4 million sq m, compared to 8.7 million sq m in H1 2016.
Upside potential to occupational demand is still supported by network alignments
anchored in the further growth of online retail.
Meanwhile, downside risks are also present and originate in the broader environment (Brexit,
the ongoing refugee crisis, vulnerabilities in the banking system, and populist governments),
not in the logistics economy itself. On balance, these risks appear to be very much confined.
United Kingdom
Germany
“In the UK, we continue to see good levels of demand for
logistics space with take-up in the first nine months of this
year up 23% on the same period a year ago. Much of this is
being driven by e-commerce related requirements. Looking
forward, the UK economy is expected to slow down next
year and the uncertainties over Brexit will likely act as a
drag on occupier demand. That said, economic pressures
and change often themselves generate demand and we
are still tracking a healthy level of active requirements.
Supply remains very tight with the national vacancy rate
at just 5%.”
“Occupational demand remains on track for another
record year in 2016. Activity in Q3 continued to be driven
by 3PLs and retail companies with both sectors already
approaching last year’s totals and thus anticipated to see
strong annual growth for the full year. An active final quarter
in the logistics occupational market should be sustained by
further improving German economic sentiment, with the DIW
(Deutsches Institute für Wirtschaftsforschung) reporting
the economic barometer rising to 103 points in October.
This points to accelerating economic growth in the closing
quarter of the year.”
Richard Evans
Lead Director Industrial & Logistics
[email protected]
Frank Weber
Head of Industrial Agency
[email protected]
France
CEE
“While total take-up in the logistics asset class is down
compared to 2015, we continue to see positive economic
indicators. Total trade volumes are up on 2015 and while
the French economy expands slowly, there is a renewed
confidence in the manufacturing sector. Additionally,
consumer confidence is the highest it has been in several
years along with a steady growth in retail spend. We’ve
seen this impact property in the form of an increase
in new warehouse developments in France. Given the
strong supply-chain economy we do expect higher levels
of demand in Q4 and into 2017.”
“Occupier activity in the Central European logistics markets
continued to grow over Q3, largely thanks to further
strengthening demand in Poland, with full-year 2016 take-up
on course for a new record. Even though overall economic
growth is anticipated to have lost some momentum in Q3,
following accelerating GDP growth to 3.3% annually in Q2,
growth prospects remain stable as solid spending continues
to support the outlook in the face of declining investment
due to a lower drawdown of EU development funds. This
should keep logistics occupational demand at an active
level through the first half of 2017.”
Bruno Montigny
Lead Director Industrial & Logistics
[email protected]
Harry Bannatyne
Lead Director of CEE Industrial & Logistics
[email protected]
Find out more about JLL Supply Chain Activity Index
To find out more please contact:
Guy Gueirard
Head of EMEA
Industrial & Logistics
+33 (0)6 59 03 74 54
[email protected]
Jon Sleeman
Head of EMEA Industrial &
Logistics Research
+44 (0)207 087 5515
[email protected]
Alexandra Tornow
EMEA Industrial &
Logistics Research
+49 (0)69 2003 1352
[email protected]
Ryan Loftus
EMEA Industrial &
Logistics Research
+44 (0)20 7087 5659
[email protected]
www.jll.eu
© 2016 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.