Key Trends in Dutch Logistics Real Estate : Insights from Bart-Jan Luijk from INDUSTRIAL real estate partnerINDUSTRIAL real estate partners is a specialized brokerage firm specialized in logistics and industrial real estate in the Netherlands.
In 2023 take-up dropped significantly compared to 2022.
One of the major causes is the scarcity of suitable locations to develop, which has led to a lack of supply in high demand areas.
Demand in general remained strong but differed in key regions of the country. Market rents showed a significant upward trend over the past years. Not only the decreasing supply of available warehouse space, but also the high inflation rates have led to a rapid rental growth on all asset classes (core and non-core). The trend of rising lease prices continued in 2023 but lost some momentum as economic growth went down and affordability came into play. Tenants are increasingly reluctant to pay the sharply risen prices, and incentive packages are increasing. But with persistent low supply, there may not be much room for lower rents.
Regarding the investment market the yield inflation, caused by risen interest rates resulting from the Ukraine-induced price inflations, bit deep into the investment market. In 2023, core propositions, which are the most sensitive to interest rate changes, came to a practical standstill. Appetite for core-plus and value-add, on the other hand, increased substantially, but this could not compensate for the decrease in other segments.
The Dutch logistics market showed signs of recovery in Q1 2024 both at the occupier as investor side.
Supply in the traditional hotspots remains tight, but outside these locations, supply and vacancy are rising. The rate of lease price rises may have passed its peak for now, but we expect further increases in the longer run because of a combination of issues: lack of greenfield development locations, complexity of brownfields, grid congestion and increasing regulation (e.g. nitrogen). Regarding the investment market, expectancies are that (European) central banks will begin to bring down interest rates from mid-2024, and that the global economy will have a soft landing from the current slowdown. Meanwhile, a large amount of money is still looking for a destination in logistics real estate. Uncertainty about largely unpredictable, geo-political factors are holding the market back at the moment, combined with the cost of lending. However, if we assume stability, we expect the market to pick up again from this summer.
INDUSTRIAL real estate partners is a brokerage firm specialized in logistics and industrial real estate in the Netherlands.
From our three offices in Amsterdam, Rotterdam and Tilburg, the main areas for logistics and industrial real estate in the Netherlands are fully covered.
Because of our focus and expertise on this niche of the real estate market and the seniority of our small but dedicated team, our firm works for major (international) developers, landlords and logistics companies in the country.
Bart-Jan Luijk
Partner
INDUSTRIAL real estate partners
bartjan.luijk@industrial.nl