CBRE RESEARCH
NOVEMBER 2022
Global
Industrial &
Logistics
Outlook
Agenda
Confidential & Proprietary | © 2022 CBRE, Inc.
1
Global Economic Outlook
2
Supply Chain
3
Retail & E-commerce
4
Investment Market
5
Industrial Global Market Outlook
6
Regional Market Fundamentals
Global Industrial & Logistics Outlook - November 2022 | 2
GLOBAL ECONOMIC OUTLOOK
GDP recovery
continues
GDP growth forecast
(% Annual)
10
8
6
4
2
– Global economy is expected to
enter a recession in 2023.
– Moderate growth will return by
Q4 2023.
– Industrial real estate is not
recession-proof, but drivers
remain to provide some
insulation during the downturn.
0
-2
-4
-6
-8
-10
2018
2019
U.S.
Euro Area
2020
U.K.
Germany
2021
France
Italy
Asia Pacific
2022
China
2023
Hong Kong
Source: CBRE House View, November 2022 Forecast.
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Global Industrial & Logistics Outlook - November 2022 | 4
GLOBAL ECONOMIC OUTLOOK
Inflation is a problem
everywhere
Consumer price index
(% Y-o-Y)
12
United States
United Kingdom
Euro Area
10
8
6
4
2
0
-2
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Sources: BLS; CBRE Research, Q3, 2022.
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Global Industrial & Logistics Outlook - November 2022 | 5
GLOBAL ECONOMIC OUTLOOK
U.S. (Left)
Euro (Right)
0
110
-5
100
-10
90
-15
80
-20
70
-25
60
-30
50
-35
Index
120
Index
Consumer confidence
is at recession levels
Consumer confidence index
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Sources: University of Michigan; ECFIN; CBRE Research Q3 2022.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 6
GLOBAL ECONOMIC OUTLOOK
Inflationary pressure
for major economies
CPI forecast
(Annual average)
10%
HIGHER BUT
NOT EXCESSIVE
INFLATION IN
2022
8%
SPIKE IN 2022 FOLLOWED BY MORE
MODERATE INFLATION IN 2023
6%
4%
Most see spike in 2022 followed by
a drop in 2023
2%
United Kingdom
Mainland
China
United States
Euro Zone
Australia
2023F
2022F
2021
2023F
2022F
2021
2023F
2022F
2021
2023F
2022F
2021
2023F
2022F
2021
2023F
2022F
-2%
2021
0%
Japan
Source: CBRE House View, November 2022.
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Global Industrial & Logistics Outlook - November 2022 | 7
SUPPLY CHAIN
Key drivers of
logistics demand
Omnichannel retail
Operational efficiency
Supply chain resilience
Sector growth
– Accelerating growth in
e-commerce requires
retailers to augment
delivery capacity
– Occupiers seek to expand
and upgrade to modern
facilities to enhance storage
efficiency and install tech,
especially automation
– Localization of production
– Third-party logistics (3PL)
– Diversification of sourcing
– Retailer
– Economic growth and
urbanization support
demand in emerging
markets
– Cold storage
– Post and parcels
– Growing demand for facilities
located near points of
consumption
Source: CBRE Supply Chain, November 2022.
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Global Industrial & Logistics Outlook - November 2022 | 9
SUPPLY CHAIN
“It takes roughly an
8% increase in fixed
facility costs to
equal the impact of
just a 1% increase in
transportation
costs.”
P&L line items
Transportation costs
Fixed facility costs*
Variable facility costs**
Logistics costs
Inventory carrying costs
Joe Dunlap
Managing Director, CBRE Supply Chain
Other related costs
45-70%
3-6%
15-25%
12-16%
7-12%
* Includes rent. ** Includes payroll.
Source: CBRE Supply Chain, November 2022.
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Global Industrial & Logistics Outlook - November 2022 | 10
SUPPLY CHAIN
Container-shipping
costs dropping due to
lower demand and
energy costs
Global container freight pricing index
Weekly Prices (USD)
12,000
$11,109
Yantian, Shenzhen
Port Closure
10,000
Suez Canal
Blockage
8,000
Russia-Ukraine
Conflict
6,000
4,000
Nov-22
Sep-22
Oct-22
Aug-22
Jun-22
Jul-22
Apr-22
May-22
Feb-22
Mar-22
Jan-22
Nov-21
Dec-21
Sep-21
Oct-21
Aug-21
Jun-21
Jul-21
Apr-21
May-21
Feb-21
Mar-21
Jan-21
Nov-20
Dec-20
Sep-20
Oct-20
Aug-20
Jun-20
Jul-20
Apr-20
May-20
Feb-20
Mar-20
0
$3,446
$1,828
2,000
Note: Global Container Freight Index represents the market rate for 40’ containers shipping fee (FEUs).
Source: fbx.Freightos.com, October 2022.
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Global Industrial & Logistics Outlook - November 2022 | 11
SUPPLY CHAIN
U.S. freight costs
elevate but rate of
growth stabilizing
Cass Freight Index on Domestic Transportation
Expenditure Growth
120%
Year-Over-Year Growth
100%
80%
60%
Cass freight index on expenditures
up 21% year-over-year through
September but rate of growth is
declining.
2-year Stacked
60.6%
40%
20%
21.2%
0%
-40%
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
-20%
Source: Cass Freight Index on Expenditures, September 2022.
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Global Industrial & Logistics Outlook - November 2022 | 12
SUPPLY CHAIN
Schedule reliability
improves from
beginning of the year
Global schedule reliability
(% of ocean liners arriving on schedule)
100%
80%
60%
40%
20%
Se
p22
2
n2
Ju
De
c21
M
ar
-2
2
Se
p21
1
n2
Ju
De
c20
M
ar
-2
1
0
Se
p20
n2
Ju
ar
-2
0
M
De
c19
Se
p19
n19
Ju
9
ar
-1
M
De
c18
Se
p18
Ju
n18
0%
Source:: Sea-intelligence, October 2022
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Global Industrial & Logistics Outlook - November 2022 | 13
SUPPLY CHAIN
U.S. Supply
Chain Costs
Ocean shipping rates declining, domestic freight costs
growing along with fixed facility costs
Transportation costs
Facility costs
-76%
+21.2%
+18.9%
+9.1%
– Annual cost increase
to ship a 40-ft
container from
Shanghai to Los
Angeles
Average year-over-year increases in
domestic freight costs. Includes all
domestic transportation modes
(truck, rail, air) .
2021 year-over-year asking rent
growth was an all-time record.
Compares the U.S. hourly wage
increases for a non-supervisory
warehouse worker from Q1 2021 with
Q1 2022.
Ocean Shipping Rate
Cass Freight Index - Expenditures
Source: Cass Information Systems
Inc, Oct 2022.
U.S. Industrial Asking Rent Growth
Source: CBRE Research, Q3 2022.
Average Hourly Warehouse Wages
Source: CBRE Labor Analytics.
Source: Drewry Container
Port Index, Oct 2022.
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Global Industrial & Logistics Outlook - November 2022 | 14
SUPPLY CHAIN
Some positive signs
for materials delays
and prices but
volatility remains
Typical lead times as of Q3 2022
Historical price inflation for key construction
commodities (Index 1982=100)
450
Lumber and wood
Concrete products
Gasoline
400
Typical lead times as of Q3 2022
Iron and steel
All commodities
350
300
250
200
150
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
50
2012
100
Material
Current Lead
Time
Delta to
Pre-Covid
Concrete
2-3 weeks
+150%
Steel beams & decking
10-14 weeks
+75%
Drywall & metal studs
14-16 weeks
+600%
Lighting & controls
16-20 weeks
+100%
Wood doors & frames
18-20 weeks
+233%
Open web joists
12-20 weeks
+50%
Appliances
20-30 weeks
+400%
Aluminum glazing
30-36 weeks
+433%
Roofing membranes
24-36 weeks
+750%
HVAC equipment
36-52 weeks
+267%
Roofing insulation
40-52 weeks
+667%
Sources:: Bureau of Labor Statistics; CBRE Strategic Investment Consulting; CBRE Cost Consultancy, August 2022.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 15
RETAIL & E-COMMERCE
All markets saw an
acceleration of
e-commerce sales
during the pandemic
E-commerce % share of total retail sales
60%
FORECAST
50%
40%
30%
20%
10%
0%
2015
2016
Australia
2017
China
2018
France
2019
2020
Germany
2021
Mexico
2022
2023
U.K.
2024
U.S.
2025
2026
South Korea
Sources: CBRE Global E-commerce Outlook; CBRE Research, April 2022.
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Global Industrial & Logistics Outlook - November 2022 | 17
RETAIL & E-COMMERCE
But e-commerce
will not grow at the
same pace around
the globe
CBRE -commerce Drivers
Index: How Prepared is a
Market to Support Ecommerce?
Lowest possible score
Highest possible score
Mainland China
United Kingdom
United States
Germany
Singapore
South Korea
Denmark
Netherlands
Sweden
New Zealand
Norway
Finland
Canada
Belgium
Japan
Switzerland
Indonesia
Australia
France
Hong Kong SAR
Italy
Ireland
Spain
Czech Republic
Estonia
Taiwan
Portugal
Greece
Austria
Latvia
Slovenia
UAE
Russia
Lithuania
Slovakia
Brazil
Hungary
Turkey
Poland
Malaysia
Croatia
Mexico
Thailand
Romania
Philippines
Vietnam
India
South Africa
TOP SCORING MARKETS
KEY E-COMMERCE DRIVERS
Demographics
- % of urban population
Usage
- Digital skills of population
- Mobile internet ratio
- Dominant e-commerce player
Cultural
- Credit and debit card use
Infrastructure
- Fixed broadband subscriptions
0
10
20
30
40
50
60
70
80
90
100
Sources: CBRE Global E-commerce Outlook; CBRE Research, April 2022.
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Global Industrial & Logistics Outlook - November 2022 | 18
RETAIL & E-COMMERCE
Internet sales as a % of total retail sales
55%
E-commerce
growth expected in
all markets
50%
45%
2026
2021
E-commerce penetration will continue to
grow in established markets
40%
Lower-growth levels in the market with
weaker presence of e-commerce drivers
although these markets are also
developing
35%
30%
25%
20%
Despite a slowdown due to stores reopening
and revenge spending, e-commerce will return
to growing ratios, having accelerated 4-5 years
during the pandemic.
15%
10%
0%
South Korea
Mainland China
Indonesia
United Kingdom
Australia
Canada
United States
Belgium
Ireland
Poland
Netherlands
Brazil
Russia
Greece
Taiwan
Turkey
Germany
Singapore
Czech Republic
Lithuania
Sweden
France
Hong Kong SAR
Norway
Denmark
Japan
Estonia
New Zealand
Mexico
Finland
Switzerland
India
Philippines
Romania
Slovakia
Thailand
Malaysia
Spain
Hungary
UAE
Latvia
Italy
Austria
Vietnam
Portugal
Slovenia
South Africa
Croatia
5%
Sources: CBRE Global E-commerce Outlook; CBRE Research, April 2022.
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Global Industrial & Logistics Outlook - November 2022 | 19
RETAIL & E-COMMERCE
E-commerce
penetration will
push online sales to
$5.2 trillion by 2026
Global
E-commerce
sales
Logistics space
2021-2026
+$ 2.2 Trillion
Change
– $5.2 Trillion in 2026
to support
e-commerce growth
over five years
– $3.1 Trillion in 2021
Additional
160 to 200 million sq. m.
Note: E-commerce sales forecast is based on our forecast of e-commerce penetration rate per different market. Our calculation assumes an
estimate of $1 billion of additional e-commerce sales requiring an additional 1 million sq. ft. or 92,903 sq. m. of logistics space.
Sources: CBRE Global E-commerce Outlook; Euromonitor; CBRE Research, April 2022; Aggregated estimates of the 48 markets included in the analysis.
List of all markets included in the Appendix.
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Global Industrial & Logistics Outlook - November 2022 | 20
RETAIL & E-COMMERCE
Logistics vacancy rate vs. e-commerce preparedness
E-commerce
adoption consumes
logistics space
Mainland China - Tier 2
16
14
Logistics vacancy rate (%)
– Preparing a market for ecommerce adoption requires
large amounts of logistics space,
which reduces the logistics
vacancy rate.
– The more prepared a market is
to support e-commerce, the
more difficult it is to find
additional logistics space.
18
Thailand
12
Brazil
10
8
Slovakia
6
Spain
Malaysia
4
Romania
Mainland China - Tier 1
France
Mexico
Poland
Netherlands
Italy
Hong Kong SAR
Czech Republic
2
0
0
10
20
Australia
Belgium
USA
New Zealand
Germany
Japan
Sweden
South Korea
Canada
Singapore
United Kingdom
30
40
50
60
E-commerce preparedness: CBRE E-commerce drivers index (0-100)
70
80
90
Sources: CBRE Global E-commerce Outlook; CBRE Research, April 2022.
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Global Industrial & Logistics Outlook - November 2022 | 21
0%
2022
0%
2021
0%
2020
10%
2019
10%
2018
10%
2017
20%
2016
20%
2015
20%
2022
30%
2021
30%
2020
30%
2019
40%
2018
40%
2017
40%
2016
50%
2015
50%
2022
50%
2021
60%
2020
60%
2019
60%
2018
APAC
2017
Share of Investment by
Property Type (Trailing
12 Months, Floating FX)
Europe
2016
Investors pull back
capital deployment
in the Americas and
APAC
Americas
2015
INVESTMENT MARKET
Multifamily
Hotel
Multifamily
Office
Hotel
Industrial
Industrial
Office
Industrial
Retail
Mixed-Use
Office
Hotel
Others
Retail
Others
Retail
Source: Real Capital Analytics; CBRE Research, Q3 2022.
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Global Industrial & Logistics Outlook - November 2022 | 23
INVESTMENT MARKET
Volume slips amid
rising interest
rates, economic
concerns
Share of global investment volume
40%
35%
30%
25%
20%
15%
10%
Office
Multifamily
Industrial
Q3 2022
Q1 2022
Q3 2021
Q1 2021
Q3 2020
Q1 2020
Q3 2019
Q1 2019
Q3 2018
Q1 2018
Q3 2017
Q1 2017
Q3 2016
Q1 2016
0%
Q3 2015
5%
Retail
Source: CBRE Research, Q3 2022.
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Global Industrial & Logistics Outlook - November 2022 | 24
INVESTMENT MARKET
Global investment
drops in 2022
Global investment volume by sector (US$ Billions)
600
500
400
200
Office
Retail
Industrial
Multifamily
Hotel
2022 Q3
2021 Q4
2021 Q1
2020 Q2
2019 Q3
2018 Q4
2018 Q1
2017 Q2
2016 Q3
2015 Q4
2015 Q1
2014 Q2
2013 Q3
2012 Q4
0
2012 Q1
100
2011 Q2
– Industrial investment volume in
APAC plunged 47% Y-o-Y in Q3 to
US$4 billion. This large drop was
somewhat amplified by historically
high volume in the sector last year.
300
2010 Q3
– Industrial investment volume in
the Americas fell by 28% yearover-year in Q3 to $33 billion.
There is still strong demand from
occupiers.
– Industrial investment in Europe fell
by 5% Y-o-Y in Q3 to US$15 billion.
This was the smallest Y-o-Y
decrease in the region across the
main commercial real estate
sectors.
Other
Source: CBRE Research, Q3 2022.
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Global Industrial & Logistics Outlook - November 2022 | 25
INVESTMENT MARKET
Industrial has the
sharpest increase
in yields compared
to early 2022
Composite yields by property type %
11
10
9
8
7
6
5
5.0
4.1
3.9
3
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
4
Global Office Yield
Global Retail Yield
Global Industrial Yield
Source: CBRE Research, Q3 2022.
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Global Industrial & Logistics Outlook - November 2022 | 26
GLOBAL INDUSTRIAL MARKET
OUTLOOK
Spread between
industrial yield and
bond rate narrows
further
Industrial yield and bond rate (end of period), quarterly, %
12
10
8
6
4
2
Spread
Global Industrial Yield
Q3 2022
Q2 2021
Q1 2020
Q4 2018
Q3 2017
Q2 2016
Q1 2015
Q4 2013
Q3 2012
Q2 2011
Q1 2010
Q4 2008
Q3 2007
Q2 2006
Q1 2005
Q4 2003
Q3 2002
Q2 2001
Q1 2000
Q4 1998
Q3 1997
Q2 1996
Q1 1995
Q4 1993
Q3 1992
Q2 1991
-2
Q1 1990
0
Global Bond Rate
Sources: CBRE Research, National Sources & Macrobond, Q3 2022.
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Global Industrial & Logistics Outlook - November 2022 | 27
INDUSTRIAL GLOBAL MARKET
OUTLOOK
Amid continuing
occupier demand,
industrial
fundamentals will
stay strong
Consumer expectations
– E-commerce will continue its slow, steady growth as a %
of overall retail as consumer expectations further justify
next-day and same-day delivery.
– Having the right inventory in the right locations,
whether it be the retailers, suppliers or outsourced
3PLs, will be key to meeting consumer demand.
Supply chain transformation
– Automation will be utilized at a greater clip to tackle
labor challenges that firms may be budgeting
in/evaluating to improve their operations.
– Population growth and logistics hubs will drive demand
in emerging markets.
Location optimization
– Greater visibility and emphasis into labor dynamics and
transportation infrastructure will drive intelligent site
selection.
– Exploration of energy resources and evaluating
reliability, efficiency and capability to provide improved
environmental outcomes.
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Global Industrial & Logistics Outlook - November 2022 | 29
INDUSTRIAL GLOBAL MARKET
OUTLOOK
At least 64% of
logistics occupiers in
the United States,
Europe and APAC
plan to expand in the
next three years
Occupiers’ expansion plans in the next three years
47%
Grow by more than 10%
23%
52%
17%
Grow by less than 10%
50%
26%
U.S.
29%
Remain the same
20%
20%
Europe
APAC
4%
Shrink by less than 10%
7%
1%
Shrink by more than 10%
3%
0%
0%
Source: Asia Pacific Logistics Occupier Survey (Sep 2021) and European Logistics Occupier Survey (May 2022),
U.S. Occupier Survey (Nov 2022), CBRE Research.
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Global Industrial & Logistics Outlook - November 2022 | 30
INDUSTRIAL GLOBAL MARKET
OUTLOOK
Trends to watch
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Automation on the rise
ESG to impact industrial
Increased demand from industrial occupiers, combined with an
extremely tight job market, will lead to the expansion of automated
technology and robotics. Since automation will require building
amenities found primarily in newly constructed facilities, this will
increase the demand for first-generation facilities in 2022 and beyond.
According to CBRE European Logistics Occupier Survey 2022, logistics
facility design is increasingly crucial for building selection in order to
accommodate automation and improve productivity.
Given the need to reduce carbon emissions, the industrial sector
will face more regulatory pressure, particularly for energy
efficiency. While much of this effort will likely be focused on
improving passenger and freight transportation efficiency and
reducing manufacturing emissions, warehousing may be
impacted as well. Consequently, developers may use more
sustainable construction materials like timber instead of concrete
and steel.
Global Industrial & Logistics Outlook - November 2022 | 31
INDUSTRIAL GLOBAL MARKET
OUTLOOK
The use of
automation and AI
will accelerate
rapidly to counter
labor shortages
Global investment in warehouse robotics ($USD BILLIONS)
80
70
60
50
40
30
20
10
0
2018
2019
2020
2021
2022 (f)
2023 (f)
2024 (f)
2025 (f)
Total Investment ($USD)
Source: Interact Analysis, November 2021
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Global Industrial & Logistics Outlook - November 2022 | 32
INDUSTRIAL GLOBAL MARKET
OUTLOOK
Specialty industrial product will make up
growing share of demand
Manufacturing
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Data centers
Cold storage
Global Industrial & Logistics Outlook - November 2022 | 33
INDUSTRIAL GLOBAL MARKET
OUTLOOK
Low vacancies and
record high rents will
lead to more
outsourcing of
distribution
3PL Lease Transaction Market Share YTD 2022 vs Q2 2023 Projection
Medical , 3.0%
Undisclosed , 2.9%
Automobiles,
Tires, & Parts ,
5.0%
Building Materials
& Construction ,
5.3%
3PL,
33.9%
3PL
40%
E-Commerce
Only , 5.9%
Manufacturing ,
7.6%
Food & Beverage ,
7.6%
General Retail &
Wholesale , 28.9%
Source: CBRE Research, September 2022
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Global Industrial & Logistics Outlook - November 2022 | 34
REGIONAL MARKET
FUNDAMENTALS
Global View
2022 YTD
AMERICAS
EUROPE
APAC
448.2 MSF Net
Absorption
(21.1 BSF) (Existing
Inventory)
202.6 MSF Net
Absorption
(3.55 BSF) (Existing
Inventory)
36.6 MSF Net
Absorption
(884 MSF) (Existing
Inventory)
Rent
+16.5% Y-o-Y
Growth
Rent
+13.0% Y-o-Y
Growth
Rent
+5.7% Y-o-Y
Growth
$108B Sales
Volume
€46.5B Sales
Volume
$12.8B Sales
Volume
Note: Americas includes U.S., Canada and Mexico. Europe includes UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium, Czech Republic and
Slovakia. APAC includes Mainland China Tier I & selected Tier II cities, Greater Tokyo, Greater Osaka, and Singapore.
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Global Industrial & Logistics Outlook - November 2022 | 36
REGIONAL MARKET
FUNDAMENTALS
The Americas
Supply outpaces demand
Robust demand led to 448.2 million sq. ft. of net absorption year-to-date in the U.S., Canada and Mexico, 27% higher
than the same period last year. Construction completions totaled 354.7 million sq. ft., 56.3% higher than this same time
period last year. Companies continue to lease space to account for continued e-commerce sales growth, supply chain
diversification, inventory control and population shifts. Overall vacancy decreased by 10 basis points (bps) to a historic
low of 2.1%.
Rents remain on an upward trajectory
The average asking rent in the U.S. climbed to $9.54 per sq. ft., a year-over-year increase of 12.8%. Canada and Mexico
saw rents rise year-over-year by 28.5% and 8.1%, respectively. Rental rate growth is expected to stay in the double digits
in the U.S. well into 2023.
Investors remain cautious given the current economic environment
Total investment sale volume between January through September of this year slightly increased by 0.6% in the entire
region, year-over-year. The U.S. witnessed a Y-o-Y rise of 25.2% in sale volume, reporting just over 99.1 billion in
industrial investment deals year-to-date. A softening of activity is predicted as rising interest rates continue against a
weaker economic backdrop as lending standards tighten.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 37
REGIONAL MARKET
FUNDAMENTALS
(MSF)
Americas
Regional
Snapshot
U.S. transaction activity by industry, 100K+ sq. ft.
Completions, net absorption and vacancy
Vacancy Rate (%)
700
12
600
10
500
5.0%
5.3%
8
New Jersey
2.3%
$13.81
PA I-78/81 Corridor
3.8%
$6.23
Chicago
2.5%
$6.06
Dallas/Ft. Worth
5.2%
$6.78
Houston
4.4%
$6.60
Atlanta
4.2%
$6.39
Miami
3.1%
$12.27
Los Angeles
0.9%
$18.48
Inland Empire
0.5%
$17.52
Seattle
4.2%
$13.37
Mexico City
3.0%
$7.24
Sao Paulo**
10.0%
$4.96
Toronto
0.5%
$15.97
7.6%
400
6
300
4
200
100
2
0
0
7.6%
28.9%
Note: Includes U.S., Canada and Mexico combined stats.
3PL
General Re tail & Wholesale
E-Comme rce Only
Food & Bevera ge
Manufact uring
Automobiles, Tire s, & Parts
Building Mater ials & Const ruct ion
Medica l
Undisclose d
Note: YTD bulk transactions through 9/30/22
Average asking rents, Y-o-Y growth
%
35
Investment volume
US$ Billion
30
25
20
15
10
5
0
Q3
2
01
Q3 2
20
1
Q3 3
20
1
Q3 4
20
1
Q3 5
20
1
Q3 6
20
1
Q3 7
20
1
Q3 8
20
Q3 1 9
20
2
Q3 0
20
Q3 2 1
20
22
-5
U.S.
Canada
Mexico
Note: Rental rates in USD for U.S. and Mexico, CAD for Canada.
Confidential & Proprietary | © 2022 CBRE, Inc.
33.9%
5.9%
1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 22
2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 20
D
YT
Completions (L)
Net Absorption (L)
– 3PLs remained most active
accounting for 33.9% of
transaction activity, while
general retail and warehouse
followed just behind, accounting
for 28.9% of deals.
– Average asking rents continued
to report double digit Y-o-Y
growth in Canada and the U.S.
MARKET VACANCY RATES & AVG ASKING RENTS SQ. FT.*
3.0% 2.9%
200
180
160
140
120
100
80
60
40
20
0
*U.S. markets indicating average asking net rents, other
markets indicating prime rents.
**Data calculated from 30km radius of the capital.
Sources: CBRE Research, Q3 2022
CBRE National Partners, Q3 2022
CBRE Econometric Advisors Q3 2022
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD
2022
Real Capital Analytics, Q3 2022
Note: All investment values in USD.
Global Industrial & Logistics Outlook - November 2022 | 38
REGIONAL MARKET
FUNDAMENTALS
YTD 22 Demand
by Size Segment
– Leasing activity is down 10%
compared with this time last
year, but up 36% from 2020.
– Light industrial (under 25K SF)
users are hitting the brakes with
a 21% reduction in transactions.
– 1.2 MSF+ leases are up nearly
double compared with last year.
– 52 leases have signed in deals 1
MSF and larger, much higher
than the 34 signed this time last
year.
– 74% of all of lease transactions
were new deals, the same rate as
this time last year.
– Look for leasing activity to finish
2022 at 850 million sq. ft., 15%
lower than 2021’s record total.
800
751.3
674.0
700
600
497.2
500
400
300
238.6
183.4
200
207.2
159.3 149.6
100
37.9
153.3
116.4
110.6
58.5
177.7
72.1 78.1 78.2
46.3
29.7
10.6 15
0
Under 25K SF
25-100K SF
100-300K SF
YTD 20 Transactions (MSF)
300-700K SF
YTD 21 Transactions (MSF)
700-1,200K SF
1,200K+ SF
Total
YTD 22 Transactions (MSF)
Transaction volume includes new leases and renewals 1/1 to 9/30.
Source: CBRE Research, November 2022.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 39
REGIONAL MARKET
FUNDAMENTALS
Europe
Extremely low vacancy rates
The supply response is being hindered by high borrowing costs, increasing construction costs and higher exit yields. As
a result, the already very low vacancy rates in Europe continued compressing in Q3. This low availability is, in some
instances, preventing additional leasing activity.
Continued supply-demand imbalance
The demand and supply imbalance and the unviability of some further developments due to the factors mentioned
above keeps adding pressure on occupational costs, both through rental growth as well as indexation. Several
European locations increased again their prime rents quarter on quarter during summer.
Investment volumes continued robust
European industrial and logistics investment reported an 18% rise in the first 9 months of 2022 compared to the same
period in 2021. However, the UK, the largest market, was the first country to reflect the slowdown with a significant
quarter-on-quarter fall.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 40
REGIONAL MARKET
FUNDAMENTALS
European average prime yields
European completions, take-up and vacancy
(Million sqm)
40
8%
€65.0
Czech Rep (Prague)
4.25%
€90.0
6%
France (Paris)
3.75%
€84.0
35
7%
6%
25
5%
20
4%
5%
Germany (Munich)
3.40%
€102.0
15
3%
4%
10
2%
Italy (Milan)
4.30%
€60.0
5
1%
Netherlands
(Rotterdam)
3.70%
€80.0
Poland (Warsaw)
4.75%
€66.0
Slovakia (Bratislava)
5.30%
€57.0
Spain (Madrid)
4.25%
€70.8
UK (London)
4.25%
£26.50/sq.ft.
12
20
13
20
14
20
15
20
Completions
Confidential & Proprietary | © 2022 CBRE, Inc.
3.75%
30
0
– Extremely low vacancy rates are
restraining the number of units
that can be offered to occupier
and have left many requirements
unmet.
– Demand is strong in the year to
date, particularly in the 3PL,
production and manufacturing
sectors.
– The logistics sector is showing
the quickest repricing of all
European sectors, but
investment volumes remained
resilient in Q3 thanks to large
transactions, but YTD growth
slowed down.
Belgium (Brussels)
8%
16
20
17
20
18
20
Take-up
19 020
20
2
21
22
20 TD
Y
7%
3%
2%
0%
1 2 01 3 01 4 01 5 01 6 01 7 01 8 01 9 02 0 02 1
22
D
20
2
2
2
2
2
2
2
2
2
YT
Prime Logistics
Prime Retail
Prime Office
Vacancy Rate (RHS)
European industrial investment volumes
European logistics prime rents, Y-O-Y growth
14%
12%
10%
8%
6%
4%
2%
0%
-2%
0
17
12
13
15
18
21
14
16
19
22
2 0 3 2 0 3 2 0 3 2 0 3 2 0 3 2 0 3 2 0 3 2 0 3 2 02 3 2 0 3 2 0
Q
Q3
Q
Q
Q
Q
Q
Q
Q
Q
Q
Thousands
Europe
Regional
Snapshot
LOGISTICS PRIME YIELD & RENTS/SQM P.A.
9%
(€ Billion)
70
Source: CBRE Research, Q3 2022
60
Completions, take-up and vacancy rate are
aggregated for the ten countries mentioned above.
50
40
30
20
10
0
1 2 01 3 01 4 01 5 01 6 01 7 01 8 01 9 02 0 02 1 02 2
2
20
2
2
2
2
2
2
2
2
2
Q1
Q2
Q3
Q4
Global Industrial & Logistics Outlook - November 2022 | 41
REGIONAL MARKET
FUNDAMENTALS
North American
capital is
increasingly
targeting
European
industrial and
logistics assets
European industrial and logistics investment by purchaser origin
Domestic
North America
Other
European Crossborder
Asia Pacific
7.5%
10.5%
6.8%
6.6%
36.2%
41.2%
20.7%
2022
2019
30.9%
21.0%
YTD
18.6%
Source: CBRE Research, Q3 2022.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 42
REGIONAL MARKET
FUNDAMENTALS
Asia Pacific
Leasing activity continues to lose steam
Industrial and logistics leasing activity eased across Asia in Q3 2022, with markets including mainland China, Korea
and India recording weaker demand. Leasing volume in the Pacific was weak compared with the same period of last
year, owing to a further drop in availability. However, the region logged a slight improvement in net absorption from
the previous quarter, with activity edging up in undersupplied Sydney and Melbourne.
Pacific markets drive regional rental growth
CBRE Asia Pacific Logistics Rental Index grew by 1.4% in Q3 2022, a slightly slower rate than in the previous two
quarters. Rental performance across the region was bifurcated, with extremely low vacancy and soaring construction
costs pushing up rents in Australia and New Zealand. Sydney, Adelaide, and Perth each registered rental growth of
over 20% y-o-y this quarter.
Investors turn cautious following rate hikes
Industrial deals added up to US$3.7 billion, a decline of 49% y-o-y, the largest fall among the three sectors. Korea and
Japan were the only markets to record growth in logistics investment volume, thanks to steady purchasing by REITs
and real estate funds.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 43
REGIONAL MARKET
FUNDAMENTALS
Vacancy rate (Q3 2022)
Net absorption of major markets in Asia
PRIME YIELDS & AVERAGE RENTS/SQ. FT./P.A.
100
Beijing
80
4.85%
$8.9
Shanghai
4.80%
$7.7
Hong Kong SAR
3.30%
$20.5
Greater Tokyo
3.33%
$10.6
Greater Seoul
4.50%
$8.6
Singapore (Prime)
6.48%
$13.1
Sydney
3.93%
$12.0
Melbourne
4.15%
$6.4
Brisbane
4.25%
$7.3
Perth
4.75%
$6.6
Auckland
4.78%
$9.4
$40
Delhi NCR
8.00%
$2.7 – 8.9
$30
Mumbai
8.25%
$2.7 – 3.3
Shangha i
Gr eater Tok yo
Million sq. ft.
APAC
Regional
Snapshot
Beijing
Guangzhou
Gr eater Seoul
60
Hong Kong SAR
Gr eater Osa ka
40
Brisbane
Melbourne
20
Auckla nd
Perth
Vacancy picks up in Asia
Shenzhen
0
Sydney
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Singapore Prime
Q1
Q2
Q3
Q4
0%
2%
4%
6%
8%
10%
12 %
14%
Investor demand, total acquisitions
APAC Logistics rental index, Y-O-Y growth (%)
9
8
6
5
4
US$ billion
7
Sources: CBRE Research, Q3 2022.
$20
$10
3
1
Q2
2
0
Q1 1 0
20
Q4 1 1
2
Q3 011
20
Q2 1 2
20
Q1 1 3
2
Q4 01 4
2
Q3 014
20
Q2 1 5
20
Q1 1 6
2
Q4 01 7
2
Q3 017
20
Q2 1 8
2
Q1 01 9
20
Q4 2 0
20
Q3 20
2
Q2 02 1
20
22
0
Confidential & Proprietary | © 2022 CBRE, Inc.
$0
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Q1 2
-Q 02
3 1
20
22
2
RE IT
Other
Property Company
Corporation
Property Fund
Institutional
Private
Note:
1. CBRE tracks net absorption and completions for selected major
markets in Asia (Mainland China Tier I & Selected Tier II cities,
Greater Tokyo, Greater Osaka and Singapore).
2. Vacancy: All are as of Q3 2022 except vacancy rates in Australia,
Auckland and Greater Seoul are as of Q2 2022.
3. Singapore yield changed to 30 years leasehold en-bloc industrial
building, instead of 60 years leasehold strata-titled factory as
previously reported.
4. Australia cities’ rents and yield changed to Super Prime industrial
assets instead of Prime industrial as previously reported.
5. Rent in Greater Seoul is as of Q2 2022
Global Industrial & Logistics Outlook - November 2022 | 44
Markets with tighter
industrial vacancy on
average seeing
significantly higher
rents and tighter
spreads
Logistics (Prime) – Net Effective Rental Growth vs Spread (Forecast as of July 2022
45%
Sydney
0.3%
40%
Melbourne
1.1%
35%
Rental Growth (2022F & 2023F as of July 2022)
REGIONAL MARKET
FUNDAMENTALS
30%
Perth
0.5%
25%
Brisbane
1.4%
20%
Auckland
0.5%
15%
Singapore
0.2%
10%
Hong Kong SAR
2.7%
5%
Beijing
12.4%
Greater Seoul
4.2%
Shanghai
8.1%
Shenzhen
0.4%
Guangzhou
8.6%
Greater Tokyo
5.2%
0%
-100
-50
0
-5%
50
100
150
200
250
300
350
400
Spread (as of Q3 2022)
Note: Vacancy is as of the latest available data for each market, and is represented by the size of the bubble within the graph. Spread represents
the risk premium, which is the difference between property yields and 10-year government bond yields
Source: CBRE Research, November 2022.
Confidential & Proprietary | © 2022 CBRE, Inc.
Global Industrial & Logistics Outlook - November 2022 | 45
Thank you
Gracias
ধন#বাদ
Salamat
ध"यवाद
Obrigado
謝謝
Спасибо
감사합니다
Merci
‫תודה ﺷﮑرﯾہ‬
.
.
Danke
ありがとう
Terima Kasih
Americas
EMEA
APAC
Research Leadership
John Morris
Simon Blake
Luke Moffat
Richard Barkham, Ph.D.
john.morris1@cbre.com
Simon.Blake@cbre.com
Luke.moffat@cbre.com
richard.barkham@cbre.com
Chris Riley
Jack Cox
Matt Haddon
Henry Chin, Ph.D.
chris.riley@cbre.com
jack.cox@cbre.com
matt.haddon@cbre.com.au
henry.chin@cbre.com.hk
James Breeze
Joerg Kreindl
Liz Hung
Julie Whelan
james.breeze@cbre.com
joerg.kreindl@cbre.com
liz.hung@cbre.com.hk
julie.whelan@cbre.com
Matthew Walaszek
Mark Cartlich
Tony Lai
Jos Tromp
matthew.walaszek@cbre.com
mark.cartlich@cbre.com
tony.lai@cbre.com
jos.tromp@cbre.com
Jennifer Olsen-Suhr
Tasos Vezyridis
jennifer.olsen@cbre.com
tasos.vezyridis@cbre.com
‫ﺷﻛ را‬
Pol Marfà Miró
pol.marfamiro@cbre.com
CBRE ©2022 All Rights Reserved. All information included in this proposal pertaining to CBRE—including but not limited to its operations, employees, technology and clients—are proprietary and confidential, and are supplied with the understanding that they will be held in confidence and not disclosed to third parties without
the prior written consent of CBRE. This letter/proposal is intended solely as a preliminary expression of general intentions and is to be used for discussion purposes only. The parties intend that neither shall have any contractual obligations to the other with respect to the matters referred herein unless and until a definitive
agreement has been fully executed and delivered by the parties. The parties agree that this letter/proposal is not intended to create any agreement or obligation by either party to negotiate a definitive lease/purchase and sale agreement and imposes no duty whatsoever on either party to continue negotiations, including
without limitation any obligation to negotiate in good faith or in any way other than at arm’s length. Prior to delivery of a definitive executed agreement, and without any liability to the other party, either party may (1) propose different terms from those summarized herein, (2) enter into negotiations with other parties and/or (3)
unilaterally terminate all negotiations with the other party hereto. CBRE and the CBRE logo are service marks of CBRE, Inc. All other marks displayed on this document are the property of their respective owners, and the use of such logos does not imply any affiliation with or endorsement of CBRE.