Property giant ProLogis reckons there are reasons for optimism in the European property market over the coming year.
In its third quarter results ProLogis European Properties said: “Looking forward, a number of markets, including Germany and some sectors of the UK, have seen class A vacant space almost completely absorbed, providing room for more optimism on improving occupancy into 2011.”
However, it warned that customers remained cautious over the pace and scale of the market recovery.
“For now, occupier demand continues to be dominated by consolidation and opportunities to increase operating efficiencies. As a result, customers are moving out of smaller, fragmented and older units into larger, more modern space, creating a widening disparity in rents and yields between primary and secondary distribution facilities.
“New supply is restricted to build-to-suit projects with virtually no speculative development. The impact of these supply and demand metrics can be seen in relatively steady occupancy rates across Europe over the past year, although these are still in a wide band, ranging from 90 per cent or more in Northern and Southern Europe to 83 to 88 per cent in Central Europe and the UK.”
The group’s portfolio now includes 232 distribution facilities, covering 4.9 million square metres across 11 European countries with an estimated net market value of 2.8 billion euros. It generated 63.4m euros of distributable cash flow over the first nine months of the year.