By Tom Leahy on March 11th, 2019
A record number of warehouse deals took place in Europe in 2018 and it was the biggest year yet for deal volume in the Netherlands, Spain, Poland and Norway. Amid the expansion of the sector, the “mid-box” unit has emerged as a distinct asset class.
The mid-box unit has grown in prominence as a consequence of the ongoing move to online shopping and the greater need for parcel delivery units. These properties are usually less than 10,000 square meters (110,000 square feet) in size, close to urban areas, and used to fulfill last mile and next-day type delivery requirements.
Average yields for this type of asset have dropped below 6% to their lowest ever level. With the shift towards online retailing still very much in its infancy in many European countries it is likely investor demand will continue to grow in line with these trends.
The flip side of this trend is demand for the extra-large, big-box units. These are more than 50,000 square meters in size and let to the likes of Amazon, major retailers and grocers for regional, national and international distribution centers. At 5.5%, average yields for these assets are even lower than those for the smaller units and more of these properties traded in 2018 than ever before.
Real Capital Analytics will be at the Eurologix networking event at MIPIM in Cannes, France on March 12. Meet RCA representatives at Stand P-1.F36 at MIPIM March 12-15.