London,
22
February
2017
|
16:10
Europe/London

LOGISTICS CONFIRMED AS BEST PERFORMING CRE SECTOR IN 2016

Summary
  • Annual total return of 8.6% for 2016
  • Logistics outperformed standard industrials and all commercial property in 2016

Global real estate advisor CBRE has launched the second edition of the CBRE UK Logistics Index. The benchmark index, first launched last summer, tracks investment performance of modern logistics stock in the UK. This edition also marks the first full year of published data from the Index, and the first opportunity to examine the impact of the EU Referendum on investment performance for Logistics property.

The total return for the six months to the end of December 2016 was 4.1%, down a little from the 4.4% achieved during the first half of the year. Overall for the full calendar year of 2016, the total return for UK Logistics was 8.6%.

The second half performance comprised 1.4% of capital growth, combined with a 2.7% income return.

The 8.6% annual total return for Logistics compares to a 7.2% return for all industrials, as measured by the CBRE Monthly Index. As a result the more specialist Logistics sector, outperformed the wider all industrial benchmark. Further, Logistics significantly outperformed the UK commercial real estate sector as a whole, which saw a full year total return of 2.7%.

UK wide take-up of modern logistics properties, of over 100,000 sq ft, totalled 29.3 million sq ft in 2016, a major increase on the long run average of around 20 million sq ft per annum. The past year has been a record in terms of occupier demand for modern warehousing.

Andrew Marston, CBRE National Research Director
Due to the six monthly nature of this data, the impact of the EU referendum is not possible to precisely define. However, given the second half capital growth was positive, the value correction in the wake of the referendum is likely to have been shallow and the subsequent uplift faster than other CRE sectors. Indeed with full year capital growth of 3.1% in 2016, logistics is one of very few sectors to experience net growth during the full year.
Andrew Marston, CBRE National Research Director