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CBRE Says Weight of Capital Driving Global Industrial, Logistics Prime Yield Compression
Rapid e-commerce growth and the modernization of logistics assets is attracting an abundance of institutional capital to industrial real estate, pushing investment yields across the globe close to record lows, according to the latest research from CBRE. The Los Angeles-based firms’ Global Industrial & Logistics Prime Yields report reveals that prime logistics continues to perform well globally, with steady yield compression in most industrial hubs.
In fact, 47 of the 63 markets tracked by CBRE recorded lower yields in 2018 when compared to the previous year.
CBRE’s Jack Fraker says, “The logistics sector continues to benefit from structural changes, such as online retailing and evolving consumer behaviors, transforming global supply chains. E-commerce operators require up to three times more space than traditional warehouse users, due to a greater diversity in products handled and the need to have them immediately accessible. Global investors have caught on and are keen on adding industrial assets to their portfolios.”
Among the 10 global markets with the lowest prime yields are six North American markets: Vancouver (3.75%); Los Angeles/Orange County, New Jersey, Oakland, Seattle (all 4%); and Toronto (4.25%).
Two Asian markets—Hong Kong (3.4%) and Tokyo (3.9%)—made the top three, largely due to high rents and minimal new development.
Two European markets completed the top 10 global hubs for lowest prime yields, with ‘German Hubs’ (Frankfurt, Munich and Berlin) and London both posting a prime yield of 4%.
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