Prime logistics rents increased globally during the 12 months ended March 31, accelerating their growth in many markets due to strengthening economies around the world and greater demand for distribution of goods bought both online and in stores, according to a report from CBRE.
Prime logistics rents—which are the highest achievable lease rates for top-quality warehouse and distribution-center space—increased by 3.2 percent across the globe in this year’s first quarter from a year earlier, according to CBRE. That exceeds the previous 12-month period’s 2.2 percent global increase.
Of the ten global logistics hubs registering the largest gains in prime logistics rents in the year, four are in the Americas. The biggest gainer globally was Vancouver, which posted a 29.1 percent increase due to its lack of land available for industrial development amid its growth as Canada’s largest port. U.S. cities ranking in the top ten are Oakland (14 percent increase), Seattle (13.4 percent), and New Jersey (9.5 percent).
Rounding out the top ten are five hubs in Europe—Budapest, London, Tilburg/Eindhoven (Netherlands), Paris, and Manchester/Liverpool—and one in Asia, Beijing.
Prime logistics rents offer a means of gauging the strength and momentum of the high end of warehouse markets across the globe. That the growth of prime logistics rents has accelerated globally bodes well for the industry’s continued momentum.
“This is a positive indicator that we’re still seeing global growth roughly six years after the U.S. market for industrial and logistics real estate began its recovery from the recession,” said David Egan, CBRE’s global head of industrial and logistics research. “This underscores the theory that e-commerce-driven demand for logistics facilities has created a fundamental shift in this market, establishing new baselines for occupancy, rents, and other measures.”
Regionally, Europe/Middle East/Africa posted a 4.3 percent gain in prime logistics rents, outpacing those of the Americas and Asia, as well as its own 1.2 percent gain from the previous 12-month period. Much of EMEA’s increase can be attributed to improving economies in that region and resulting gains in consumption.
The Americas registered a 3.8 percent gain, on par with its increase of the previous year, and Asia notched a 2.2 percent gain, surpassing its 1.4 percent advance from the earlier 12-month period.
Asian markets accounted for six of the ten most expensive prime logistics markets, led by Hong Kong at a rate of $30.99 per square foot ($333.57 per sq m) per year. Three EMEA markets made that list—London, Stockholm, and Munich. The only Americas market to land among the ten most expensive was Oakland at $9.96 per square foot ($107.20 per sq m) per year.