In this third edition of our Global Occupancy Costs - Logistics report, we present the current costs of occupying prime logistics space across 64 markets worldwide, representing a near doubling of our coverage. Besides a global ranking of current costs, we provide our future outlook for 54 markets across Asia Pacific, Europe and the US.
Last year, prime logistics occupancy costs increased by an average of 3.0% in USD terms globally, just above inflation at 2.7%. But, there were some big regional differences. At 1.5%, US occupiers benefitted from the lowest cost increase. In contrast, Asia Pacific recorded the strongest growth at nearly 6%. Finally, strong local currencies in Europe led to growth of 3% in USD terms. As a consequence, growth in local currencies was muted at 0.5%.
The global top five least expensive markets are dominated by the Chinese Tier II cities of Wuhan, Shenyang and Chengdu, with Atlanta and Marseille completing the top five. Costs in all these markets are below USD 70 per sq m per annum. Meanwhile, London Heathrow remains the most expensive market globally - at USD 313 per sq m per annum, followed by Hong Kong, Zurich, Singapore and Oslo.
Despite above inflation growth in 2012, our five-year outlook for logistics occupancy costs is more benign at an average annual growth of 1.6%, well below projected inflation. Although the economic recovery will reinforce occupier demand, added supply is expected to limit rental growth. Dublin (a small market in global terms) is one of the exceptions where supply of prime space is projected to remain constant and increased demand is expected to trigger the highest cost growth globally. In contrast, Hong Kong is projected to see the biggest cost decline in the next five years, with occupiers continuing their migration to more affordable premises in mainland China.
Source : DTZ (Groupe UGL)