DNA of Real Estate: Q2 2018

Nigel Almond

Head of Data Analytics

Phone +44 203 296 2328

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DNA of Real Estate Q2 2018

The DNA of Real Estate covers the key office, logistics and high street destinations within Europe and provide an overview of their quarterly performances, giving you a summary of prime rents and yields for the respective cities and markets. 

Highlights:

  • Yield compression the strongest in the logistics sector (down 14bps since Q1)
  • No negative rental growth (quarter-on-quarter) in any European office or logistics markets 
  • European prime retail yield moved out for the first time in four years 

The overall European logistics yield dropped 14bps to 5.95% in Q2 2018, the first time it has fallen below 6% since Cushman & Wakefield began consistently tracking the three main property sectors in 1992.

All logistics markets monitored in Germany, Italy and Sweden recorded inward yield movements during the second quarter, and a couple of UK locations also contributed to the overall shift down to 5.95%. About a third of the monitored office locations saw some yield compression with a prime weighted average down from 4.49% to 4.42%. In contrast, high street retail yields softened in a few locations and the overall prime yield moved out by 1bps to 4.19%. Despite the fall in the prime logistics yield below 6%, the gap relative to office and retail is still higher than in the previous cycle. 

Office rents grew at a robust rate of 0.8% q-o-q with several markets – across different countries and regions in Europe – seeing increases up to 5%. Limited rental growth was recorded in the retail sector while rental correction in Turkey offset this growth, resulting in the weighted average rent 0.1% lower than the first quarter.  

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