Rent growth in the global industrial sector has dropped to 2.4 percent, its lowest level since 2004 representing a significant drop from the 6.1 percent rise seen in 2007, according to a study by real estate advisor Cushman & Wakefield.
Rent growth in North America and Western Europe showed steep declines in 2008. Western Europe, home to the world’s most expensive industrial locations, remained flat for the most part averaging 0.4 percent. Rent growth in the US and Canada fell to negative 0.4 percent, the report, Industrial Space across the World 2009, said.
Central and Eastern Europe (CEE) and South America fared somewhat better than their more developed counterparts. Growth in the CEE region was roughly equal to 2007 at 6.7 percent, buoyed by strong growth in Poland and Ukraine.
South American rents grew by an average of 12.4 percent during 2008, led by Rio de Janeiro which rose a staggering 46 percent last year due to the low availability of modern space. On the other end of the spectrum, however, rents in Bogota, Colombia fell by 17 percent.
A bright spot for rising rental price growth was Africa and the Middle East where rents rose by 23 percent overall, thanks to rising rental growth in Israel of 20 percent and 28 percent growth in South Africa.
Asia Pacific, though, was the region to show the most drastic change over the past 12 months, falling from 13.6 percent growth in 2007 to negative 0.2 percent growth in 2008. Some regions of India showed strong rental price growth but the surge was uneven. Rents in Greater Noida, New Delhi rose 25 percent while rents in Guragaon, New Delhi fell 8 percent. As manufacturing centres, Beijing and Shanghai were both hit hard falling 12 percent and 6 percent respectively.
The industrial market will remain soft in 2009, according to Cushman & Wakefield, particularly in export-led economies. Africa, the Middle East and South America are well positioned to recover swiftly once demand returns due to their low vacancy rates, lack of modern property and low levels of construction activity. China and India are in store for a rough ride because their export-driven economies are reliant on the recovery of developed markets where the outlook continues to deteriorate.