Strong Rental Growth Continues Amid Historically Low Vacancies
The Prologis Logistics Rent Index
The Prologis Logistics Rent Index examines trends in net effective rents globally in 60 markets spanning the four major regions of the world. The unique index focuses on market-taking rents (net of concessions) for modern-grade logistics real estate, covering pricing for Class-A and well-locatedClass-B facilities. Data for the Prologis Rent Index comes from our global portfolio and our local knowledge of pricing in the markets in which we operate.
Key Takeaways from our 2016 Rental Survey
Moderate recovery in Europe continued. Rents were up 3 percent, led by the UK. But a broader swath of markets has begun to see increased rates. The United States led market rental growth in2016, rising 5 percent. Globally, rents rose by 4 percent.
Top Five Increases in Market Rent in 2016, Europe
- London/South East UK
Net effective rental growth was 3 percent last year across Europe, a repeat of the pace from 2015.Rental growth remains moderate compared to the U.S. but is notably ahead of the low inflationary environment. The unwinding of lease concessions has been the principal driver of the market rental recovery.The operating environment for logistics real estate has experienced a measured, albeit steady, improvement during the last several years. In turn, the market vacancy rate in Europe is below 6percent, the lowest level on record. While market demand has been positive, it has been constrained by the measured economic recovery. Broadly, net effective rents remain below prior cycle peaks, and the pace of market rental growth in Europe might surpass the U.S. in the next few years.