Although EMEA’s rolling 12-month take-up was down - 8.4% Y/Y, activity over H1 2020 remained ahead of the same period a year ago. This 3.6% growth came with additional demand for servicing online retail being activated as our home delivery requirements soared during the COVID-19 lockdown. By June, space under active construction (UAC) had risen by only a marginal 1.8% (H/H), as many speculative developments were mothballed in the wake of COVID-19, or at least delayed or revised. This is expected to influence (negatively) upon future take-up volumes, especially in supply-bottleneck markets. The marginal increase in active construction was also the result of large development projects completing during the first half of 2020. While Istanbul (-81%), Dusseldorf (-76%) and Stuttgart (-67%) saw the largest (H/H) declines, little impact was seen in relation to their current vacancy rates - particularly Istanbul, which saw vacancy move in by -376 bps; further signifying demand severely outweighs new and available supply.

The weighted (average) vacancy rate for Europe remains a very low 3.7% - stable on Q1, and only a 10 bps increase on Q4 2019. This reflects that vacancy rates are bottoming out, with just 36% of markets recording vacancy contractions in H1 2020, compared to 45% in H1 2019. City-warehouse prime rents grew in 19% of the locations monitored during H1 2020. Some 17% of markets saw rents for logistics and distribution markets grow, primarily due to expansionary e-commerce demand. Overall, rents remained largely stable. This is set to continue for the next 12 months, bar core locations where rental growth is expected, albeit at a slower pace.

Landlord-favourable markets continue their prevalence across markets, but as of H1 2020 they were matched by neutral market conditions – both represent a 41% share of markets surveyed. This reflects an easing of landlord-favourable dominance of 51.5% in H1 2019. The outlook for the next 12 months depicts these conditions will remain largely stable although there may be a ceding of landlord conditions in some markets. Low vacancy, a lack of quality new availability and strong growth in e-commerce will be counterbalanced by broader economic uncertainty.

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ExCEEding Borders - Industrial & Logistics Market in CEE-17 - 2020
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