by Brianna Crandall — September 6, 2013—Greater Tokyo currently ranks as the most expensive industrial real estate market in the world, followed closely by London, as fierce competition for modern facilities from rapidly growing e-retailers and expanding third-party logistics operators (3PLs) drives demand, according to new research from global property advisor CBRE Group, Inc.
CBRE’s quarterly survey, which tracks the top 10 prime global logistics markets, reveals Tokyo is the most expensive market ($20.02 per square feet per annum), followed by London ($19.12 per sq. ft. per annum) and Singapore ($17.13 per sq. ft. per annum).
Rents in eight of the top 10 most expensive markets were stable during the second quarter (Q2) of 2013, with rental values growing in Tokyo and Hong Kong. Due to demand from e-retailers and expanding third-party logistics providers (3PLs), Tokyo’s rents expanded 2.2% during the quarter. Hong Kong grew by 2.6% for the quarter, due to exceptionally tight supply of available space. Third-ranked Singapore also faced a shortage of good-quality stock amid strong demand.
Prime rents in most European markets, including London, Paris, Stockholm, Moscow and Helsinki, held steady despite a challenging economic environment. However, demand for highly specified, well situated warehouses remains robust. Occupiers looking to expand have limited options that met their specifications, prompting many to remain in their existing premises.
The top 10 prime global logistics markets, as illustrated by the graphic on this page, are:
- Greater Tokyo, Japan ($20.02 per square foot per annum)
- London, United Kingdom ($19.12)
- Singapore, Singapore ($17.13)
- Helsinki, Finland ($16.58)
- Stockholm, Sweden ($14.22)
- Hong Kong, China ($13.65)
- Moscow, Russia ($13.01)
- Brisbane, Australia ($10.92)
- Paris, France ($10.89)
- Perth, Australia ($10.33)
Dr. Raymond Torto, CBRE’s Global Chief Economist, commented, “Retailers continue to serve as a significant source for global logistics demand in many markets, including London, Tokyo, Singapore, and Hong Kong. Meanwhile, the growth of e-commerce and growing international demand [has”> benefited cities such as Tokyo and Brisbane. The shortage of high-quality, modern stock has also helped to support rents across many markets. While several cities have considerable supply pipelines, including Tokyo, Perth, Brisbane and Stockholm, there is little concern of oversupply due to strong demand. This was evidenced by the high level of pre-leasing commitments in Tokyo and Perth.”
Amaury Gariel, Managing Director, EMEA (Europe, the Middle East and Africa) Industrial and Logistics, CBRE, commented, “Headline rents edged up on this quarter but remained down on 12 months ago. The generally weak environment throughout much of Europe, alongside the high demand and shortage of prime logistics supply in core locations has left growth largely stagnant. Recovery across Europe will result in an appreciable increase in rents in the main European hubs including Antwerp, Rotterdam, Paris and Frankfurt. Moscow’s situation is unique in that the scarcity of supply is boosting rents, if this trend continues, it is expected that almost all of the one million sq m of new 2013 supply will be leased immediately. The only other comparable market situation is Istanbul.”
