Good secondary shopping centres come in all sizes and can operate at the neighbourhood, district and sub regional level. A high quality retail tenant mix and good car parking and access are the key characteristics of good secondary centres, although the size and spending power of the catchment population, and the location of the scheme within its urban environment are also important. Shopping centre managers can significantly influence the success of a centre – particularly if this is supported by regular investment. Their main challenge in coming years is to improve the sustainability credentials and digital marketing capabilities of their centres without compromising the many other factors that contribute to their centres’ success.
The growth in online retailing, along with other pressures on logistics supply chains, is driving consolidation into larger XXL-warehouse units of 50,000 sq m and above.
Take-up of this type of unit in Europe has risen strongly in the past two years to account for over 14% of total industrial take-up compared with 5-6% previously, with retailing the dominant source of demand.
Advantages of these units include, centralisation of operations, increased flexibility to serve ever-increasing demand from customers, a better inventory management and improved analysis of information on customer buying patterns.
In many cases, multiple occupiers can operate from the same facility, which produces benefits that include greater responsiveness with optimum use of assets.
The availability of sites of sufficient scale in a good quality location is a key challenge for occupiers pursuing a XXL-warehouse strategy. Specialist developers who can satisfy occupiers on scheme deliverability are well-placed to take advantage of growing demand.
The sector is also attracting investment capital. There are indications of stronger pricing for the best assets and new generation of requirements.
As European retail sales move into recovery, CBRE examines where the potential hotspots of retail demand will be in Europe. Defining retail potential as a combination of expected growth and current market size Istanbul ranks top with an already substantial spending base and a projected 15% rise in retail sales to 2015. A more positive view of German demographics than contained in official projections pushes 14 German regions into the top 60 ranked regions. UK regions are also well represented in the top 60 locations.
Energy demand is increasingly shifting from OECD to non-OECD countries, meanwhile technological advances and new innovations are unlocking new sources of energy, creating new markets as well as prolonging the life of existing energy fields. This has the potential to impact directly on the operational decisions of firms in the energy industry
Shifts in energy demand, supply and price impacts on the real estate markets in cities where, due to proximity to oil and gas fields, a high proportion of the occupier base work in the industry; energy-dependent markets
The ‘energy-dependent markets’ are seeing rental growth that exceeds growth in both the CBRE Global Rent Index, and rental growth among other more established office markets, such as those which are considered financial centres
In the more mature office markets, rents are generally higher, but growth lower, and conversely, in the emerging markets, rents are lower but growth rates higher.
Following the ‘rush to invest’ before the introduction of the new KAGB, net inflows have been at a slight negative in September. However, with €3.6 billion, Q1-Q3 2013 results are some of the highest in recent history.
Those fund managers who have been maintaining high levels of inflows have been matching that with substantial level of acquisitions. In total the GOEFs are likely to buy close to €5 billion in Europe in 2013, with purchases in the UK alone already above €1 billion.
KanAm Grund launched of the first new fund under the new KAG - LEADING CITIES INVEST. With a ‘cash call’ issued on 20th November to fund the purchase of four office properties, it is still early days for this new generation GOEF. However, the fact that it is launched and out in the market is already a very strong statement.
The next few months will confirm the view – but clearly, the GOEF industry is moving into a new era: carrying over the best of the old and evolving with some new vehicles and strategies.
Market conditions in most European peripheral submarkets have been challenging in recent years, but some have performed better than others in attracting demand during the difficult period. Although the airport markets are driven by differing dynamics, there are some notable general features of the markets which are integral to their comparative success.
One of the main attractions to an airport office market is the global connections at the airport itself, but of equal importance is the level of connectivity to the local and regional economy, as it is the existing local occupiers which will form the basis of demand for airport office space, and the labour pool to support the market going forward.
A key determinant of success will therefore be the level of representation of companies within the target sectors for the airport market which are already operating within the local economy. To attract these tenants, it is important the airport market is able to provide high quality office space which is suitable for their target tenants and attractive for potential employees, which is well integrated into the airport infrastructure to fully benefit from the connections available in the area.
There are plans for major office-led commercial development on the site and surrounding land of a number of medium sized European airports, and it is likely the presence, or absence of these key features, will have a significant bearing on the capacity for the schemes to attract demand to the market, and the rental values that can be achieved.
There is growing recognition among occupiers and distributors of the advantages of cross-dock facilities in modern supply chains and of the emergence of parcel delivery centres (PDC) as a specific category. With growing pressure on margins and delivery speed, these buildings can play a significant role in supply chains by eliminating or reducing inventory holding and handling costs.
The market in Europe is currently relatively immature but expected to expand as the growth in online retailing boosts leasing demand. User demand is dominated by third-party logistics companies (3PLs) but we expect these trends to generate a growing contribution from parcel courier companies.
The relatively small scale of the sector and of individual assets, coupled with low site coverage, has so far constrained the emergence of a sizeable institutional investment market, but the anticipated growth in the user market will increasingly support expansion. Evidence from both Europe and the US indicates rental levels 40-50% above conventional warehouse rents.
Pricing evidence from other more mature markets indicates that early-mover investors will benefit from a yield re-rating as sufficient liquidity emerges to allow portfolio funding and trading, and pricing for this type of asset converges with that for conventional warehouses.