Despite economic uncertainty, the European industrial and logistics market is showing signs of relative stability compared with other real estate sectors. Robust activity in Central and Eastern Europe (CEE)—and also particularly in Germany—has contributed to the strength of the overall industrial picture, according to a market report by real estate consultancy CB Richard Ellis.

While overall European investment activity dropped sharply in the first half of 2008, industrial investment was more stable, totalling €6.6 billion (Kč 167.8 billion) and accounting for 10 percent of total European turnover. Excluding the UK, industrial investment activity in the first half was only 3 percent lower than during the same period in 2007, while overall European investment turnover in the first half totalled €66.5 billion, a 46 percent reduction on H1 2007. Some 54 percent of all European industrial investment comprised cross-border acquisitions, compared with less than 40 percent in 2006, suggesting that the sector’s more international nature is an ongoing and longer-term trend.

The geographic spread of industrial investment activity across Europe has also shifted. The historically dominant economies such as the UK and France are not making as large a contribution to the total investment pool. At 29 percent of total industrial investment, Germany represented the single largest component of first-half activity, up from 12 percent for 2007 as a whole. By contrast, the UK comprised only 20 percent of the market in H1 2008, compared with over a third last year, and France also reported a decline.

Many CEE markets have seen increased occupier activity as the supply of modern logistics space expands and where a combination of rising construction costs and strong demand is pushing up rents. In the Czech Republic, total market take up in the first half of the year increased by 83 percent from the corresponding period last year.

“Despite negative expectations, total industrial take up in the Czech Republic remained strong for the third consecutive quarter—178,000 square meters in Q3 2008—and we can still expect that 2008 as a whole will become another record-breaking year in terms of take up,” said Filip Kozák, head of the industrial agency department of CB Richard Ellis.

However, Kozák pointed out it is essential to mention that even though the transactions were closed in Q3 2008, the negotiations have been in progress for the past six to 12 months. “As a result, they were not directly influenced by the current situation on the financial markets,” he said