CBRE: Logistics real estate sector is breaking all records

Amsterdam, 27 January 2022 – Due to the strong increase in online shopping and e-commerce, partly as a result of the coronavirus pandemic, the logistics real estate sector in the Netherlands is breaking all records: never before has so much property changed hands. In 2021, this amounted to a record €5.3 billion. The demand for logistics real estate is rising faster than the supply, so the vacancy rate is falling. This fall in available space is driving up rents, especially in the Randstad conurbation.

These figures are presented in Market Outlook 2022 published by CBRE Netherlands, a subsidiary of the listed company CBRE Group. With over 100,000 employees, it is the world’s largest real estate consultancy. In its annual Market Outlook, CBRE publishes and analyses the figures for the past year and provides a substantiated forecast for the coming year.

Decline in Dutch real estate investments
The Dutch real estate sector experienced a considerable dip last year, with the logistics sector the only exception. At €17.3 billion, the total real estate investment volume in 2021 was 10% lower than in the previous year. The decline is almost entirely due to the housing market, for the simple reason that there were no residential portfolios available. An increase in the transfer tax in 2021 was the main reason why many residential portfolios planned for the first two quarters of 2021 were brought forward to 2020. But the coronavirus pandemic also played a role.

Things are looking better for the coming year. CBRE expects the investment volume to grow by 16% to around €20 billion, bringing investments close to pre-2018 levels. This is due to the current favourable economic climate and the great interest shown by domestic and foreign investors in various real estate sectors, such as retail, offices, residential property and healthcare real estate. More and more high-quality portfolios are becoming available, which means there is also more property for sale. Investors are hoping to benefit from the expected scarcity in the office market and are therefore more inclined to accept the risk of their newly acquired office building initially remaining vacant. 

Housing market bouncing back
In 2022, more new-build homes will come on the market and more existing residential portfolios are expected to open up as well. As a result, CBRE anticipates a good year for investors in the residential market, with an investment volume of between €6.5 and 7 billion, compared to €4.2 billion in 2021. Following a year-long decline, the residential investment market will again attract the most investment of all sectors.

The Dutch office market can look forward to better results in 2022.Erik Langens, Executive Director Capital Markets at CBRE: “Since time immemorial, cities and offices have been the cement of cooperation and creativity; the market, where ideas and expertise were exchanged as well as goods, was the fuel of the economic engine. In today’s knowledge-intensive economy, such meeting places are even more important: we therefore attach great importance to ensuring a pleasant, social and sustainable working and meeting environment where we are always connected to our colleagues and the company we work for.” The wave of new property search requests indicates that there is plenty of demand for high-quality workplaces in the city centre. In less than two years, the number of search queries rose by no less than 52%, while the number of companies looking for suitable office space and already in concrete negotiations is actually 139% higher than nine months ago. “After a long period of endless analyses and procrastination, companies now seem to be ready to take the big step,” says Langens.

High street investments recover
Dutch shopping streets had a difficult year in 2021, due to the lockdowns and the strong growth of online shopping. CBRE notes that all risks have now been factored into retail property prices. The real estate consultant expects that trade in retail properties will increase again in 2022 and that the volume will recover slightly to around €1.75 billion (from €1.6 billion in 2021).

Dutch hotels also had a difficult 2021. Investors think the drop in the number of overnight stays is temporary, caused by the coronavirus pandemic and the lockdowns and travel restrictions. CBRE is optimistic about the coming year, when it expects €800 million of investments in Dutch hotels (last year this was €200 million).

The investment volume in healthcare real estate was limited to €850 million last year, due to a lack of supply, and cooperation between investors and healthcare organisations is slow to take off. However, the demand for high-quality healthcare property is very high, and CBRE expects that €1.1 to 1.2 billion will be invested in Dutch healthcare real estate next year.

Financing market on the rise
Many domestic and foreign financiers reduced the risk profile of their funding portfolios last year. This not only had an impact on new customers, but also on the existing customer base. A rapidly growing group of private financiers and debt funds have stepped in to fill this financing void.

Attractive financing opportunities are gradually re-emerging for the retail and office markets (outside the core segment). This offers commercial opportunities and so continuous growth in the supply of more opportunistic financiers. There are also more attractive financing opportunities in the logistics real estate market. In addition, we are seeing a shift in focus towards light industrial and last mile hubs, the same trend as in the investment market. It is currently still difficult to find financing for hotels, while the healthcare real estate segment is still too specialised for many financiers. Combined with the fact that most projects are small scale, only a limited number of very enthusiastic local market players are interested in this segment.

Robert-Jan Peters, Executive Director Debt & Structured Finance: “Gaps are being filled across the entire market, resulting in increasingly predictable and attractively priced loans. We foresee an active lending year, in which we will be closely monitoring interest rate developments.”