London W1A 3BG www.cushmanwakefield.com/research This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. Should you not wish to receive information from Cushman & Wakefield LLP or any related company, please email unsubscribe@eur.cushwake.com with your details in the body of your email as they appear on this communication and head it Unsubscribe. 2014 Cushman & Wakefield LLP. All rights reserved. OVERVIEW Growth in the Dutch economy has finally rebounded, driven by gains in consumer and business confidence as well as a recovering export market. As the export sector builds momentum, the Dutch industrial and logistics market is slowly picking up as well. However, the little availability of modern logistics properties has put a strain on occupier demand, affecting market conditions at the start of 2014. Consequently, prime rents saw little movement over the quarter. OCCUPIER FOCUS Occupier demand for industrial space is evident, particularly for prime or modern space in the logistics hot spots of the country. However, the available supply of this property type is limited and thus cannot satiate demand. As a result, occupiers are increasingly turning towards build-to-suit solutions in which properties can be custom tailored for the needs of the tenant. Supply levels were stable in Q1, with the biggest obstacle facing the market the high proportion of outdated supply that makes up vacancy. Indeed, any space that does become available is quickly taken off the market and re-let, leading to a shortage of good- quality industrial supply and thus deterring demand. Further, it is unlikely that a major share of the supply will be let anytime soon, and thus industrial supply is expected to remain high. INVESTMENT FOCUS The first quarter of 2014 registered approximately 280 mn in investment volumes, which is the second highest quarterly volume in five years. However, this figure was primarily driven by the acquisition of the Pelican portfolio by ProLogis for 170 mn, albeit there were still a number of smaller logistics deals that concluded over the quarter. A strong quarter saw prime yields contract marginally in the majority of logistics submarkets. OUTLOOK The industrial and logistics property market is expected to keep recovering in line with the further improvements seen in the economy and, more specifically, the export sector. The investment segment of the market in particular is likely to outperform the occupier market, which is anticipated to suffer under the weight of heavy supply levels filled with outdated stock. With only a limited availability of modern logistics properties, demand can hardly be met, which is expected to inhibit market growth until the new development pipeline picks up. Despite this, demand is expected to receive a boost from positive growth in the economy as well as the fact that the Netherlands ranks as a strong country for logistics operations. MARKET OUTLOOK Prime Rents: Prime rents are anticipated to remain stable as demand picks up.
Prime Yields: Sustained investor demand is likely to put prime yields under a downwards pressure.
Supply: High supply levels should remain unchanged, with availability dominated by outdated space.
Demand: Rebounds in the economy and export sectors are expected to provide a boost to demand.
PRIME INDUSTRIAL YIELDS MARCH 2014 LOGISTICS LOCATIONS (FIGURES ARE GROSS, %) CURRENT LAST LAST 10 YEAR QUARTER QUARTER YEAR HIGH LOW Amsterdam 7.70 7.80 7.80 8.50 6.25 Schiphol 7.60 7.70 7.60 8.50 6.00 Rotterdam 7.60 7.80 7.80 9.00 6.25 Eindhoven 7.80 8.00 7.75 8.75 6.50 Venlo 7.60 7.75 7.75 8.50 6.40 Tilburg 7.60 7.75 7.75 8.75 6.50 Nijmegen 7.80 8.00 7.75 9.00 6.50 With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used as a comparable for any particular property or transaction without regard to the specifics of the property.
RECENT PERFORMANCE
Source: Cushman & Wakefield -5.0% -2.5% 0.0% 2.5% 5.0% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 AVERAGE PRIME YIELDS (left) RENTAL GROWTH (right) THE NETHERLANDS