According to Savills, the Q2 average individual industrial deal rose by around 11% in size compared to Q1 data, suggesting that scale investors are returning. This is supported by a recovery in buy-side activity from cross border investors, the only major investor group to be net buyers of industrial and logistics space in 2024 to date. Cross border investors have already backed some of the largest deals this year, including Brookfield’s agreed purchase of a 14.6m sq ft US logistics portfolio from DRA Advisors for a reported US$1.3bn, only the third recorded real estate deal in the US surpassing the billion-dollar mark so far this year (across all sectors).

Oliver Salmon, Director - Global Capital Markets, Savills World Research, comments: “Assuming Q1 2024 represented the trough in this cycle, then we expect the market to rebase higher in the future. This is supported by the shift in investor allocations favouring industrial and the fundraising data. Prime yields look to have stabilised across Europe and North America, with some markets already seeing some yield compression, despite the scarcity of core money in some markets.”

Rasheed Hassan, Head of Global Cross Border investment at Savills, adds: “There remains a shortage of committed industrial vendors, as the majority want to wait until there are more datapoints to provide strong pricing comparables, but this is generating greater buyer interest when something is marketed and leading to more pricing tension. Given the fundraising activity tracked so far this year, we hope that the busy end of year trading season will give the markets what’s needed as a backdrop for this money to be deployed in 2025.”

Savills Q2 2024 Capital Markets report: Industrial and Logistics, notes that:

• Q2 Investment of US$9.5bn across the EMEA region was nearly 14% down on the year, driven by weaker activity at the portfolio or entity level, which can be volatile. The value of individual property sales, by contrast, increased by around 12% year-on-year, the first annual rise in two years. The average deal size has also increased by around one-third so far in 2024, suggesting that investors are increasingly comfortable deploying at scale in the region.
• US investment fell by 14% year-on-year in Q2 to US$19.9bn. The slowdown in activity was primarily underpinned by a lack of portfolio deals completing, with domestic institutional investors disposing of a net US$2.3bn of assets in the first half of 2024, after being net buyers for the last six years.
• Q2 total investment of US$8.0bn across the APAC region was down 34% on the year. However, much like in the other regions, a large decline in portfolio deals underpinned weaker turnover. The half-year comparison is stronger: down just 11% on H1 2023, underpinned by a solid start to 2024. Australia and South Korea are the best performing major regional markets, while Singapore is broadly stable.