OVERVIEW

MARKETBEAT
INDUSTRIAL SNAPSHOT
SWITZERLAND
Q3 2014
A Cushman & Wakefield Research Publication
OVERVIEW
The Swiss industrial market has remained
stable this quarter, despite exports
struggling under the sluggish economic
growth of the eurozone. Rents have held
steady, with some upward movement for
sought after pure logistics surfaces. Investment has been
supported by a number of sale and lease back transactions,
although demand currently outweighs supply.
MARKET OUTLOOK
Prime Rents:
Rents hold steady as supply remains tight.
Prime Yields:
Yields are currently stable but future
movement will depend on the evolution of the
interest rate.
Supply:
Stable but at a low level. New projects and
vacant surfaces will come onto the market
next year.
Demand:
Strong demand from several sectors,
particularly local industrial/craftsman's
companies.
OCCUPIER FOCUS
Watchmaking, R&D and logistics firms have been the major
source of demand this quarter and several watchmakers are
planning expansions, regardless of the potential negative impact of
political tensions in Asia. Occupiers remain focussed on large,
high spec logistics platforms, which should promote rental
growth in the short to medium term. The robustness of the
industrial sector is largely due to the new planning law brought in
2012, which has increased building rights and allowed for a mix of
commercial activities within industrial zones. This is expected to
promote further leasing activity in 2015.
PRIME INDUSTRIAL RENTS – SEPTEMBER 2014
Supply varies widely between various industrial zones, the two
most active in terms of development being the Zone Industrielle
de Plan-les-Ouates (ZIPLO) which is orientated towards the
watchmaking industry and the Zone Industrielle de MeyrinSatigny. Supply of modern industrial supply has not yet caught up
to demand, although continued development within industrial
zones should help alleviate this, particularly due to attractive
proposed rental levels.
Zurich
LOGISTICS LOCATIONS
Sfr
SQ.M/YR
145
€
SQ.M/YR
120
US$
SQ.FT/YR
14.1
Geneva
180
149
17.5
5.9
1.1
Basle
120
99
11.7
-4.0
1.8
Zurich
NOTE: Prime rents above refer to logistics properties. Manufacturing rents are usually 20-25% higher.
PRIME INDUSTRIAL YIELDS – SEPTEMBER 2014
LOGISTICS LOCATIONS
(FIGURES ARE NET, %)
CURRENT
QUARTER
5.60
LAST
QUARTER
5.60
LAST
YEAR
5.50
HIGH
7.55
10 YEAR
LOW
5.50
Geneva
6.00
6.00
6.00
8.90
6.00
Basle
5.90
5.90
5.80
8.05
5.80
With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of
Europe and the changing nature of the market and the costs implicit in any transaction, such as financing, these are very
much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used
as a comparable for any particular property or transaction without regard to the specifics of the property.
RECENT PERFORMANCE
Yields
9.00%
15.0%
8.00%
10.0%
7.00%
5.0%
6.00%
0.0%
5.00%
-5.0%
4.00%
3.00%
-10.0%
Sep-04
Sep-06
Yield - Prime
Rental Growth - Prime
Sep-08
Sep-10
Sep-12
Rental growth (y/y)
INVESTMENT FOCUS
Geneva’s investment market has maintained a relatively strong
performance so far this year, aided by a high proportion of sale
and lease back transactions. Domestic investors have also
become more active in the market, though acquisitions of vacant
buildings are increasingly rare as investors require a mid to longer
term lease with a stable rental structure. There has also a notable
rise in interest from small manufacturers seeking to acquire their
existing properties (condominium surfaces), most likely due to
the new industrial zoning laws.
GROWTH %
1YR 5YR CAGR
-3.3
-1.9
Sep-14
Yield - Country Average
Rental Growth - Country Average
Source: Cushman & Wakefield
OUTLOOK
Switzerland has performed well so far this year, with demand
growing and an expanding development pipeline. Industrial zoning
has had a highly positive impact on the market, allowing various
industrial branches to develop and establishing a strong network
of local industrial companies. 2015 should present further growth
for the industrial sector, although this is largely dependent on the
wider economic situation within the eurozone.
Cushman & Wakefield LLP
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