Buying Warehouse or Investing in Submarkets for Office Space

Buying Warehouse

Warehouse demand is growing due to the rise in online shopping trends. The world's largest brands are selling on the internet, and companies want small local warehouses instead of expensive central office space in cities, e.g. London, Manchester, Liverpool etc.

The largest online suppliers and companies like Amazon seek local hubs or warehouses to store products. In the EU, the property submarkets are growing for the same reasons. These smaller cities have some of the lowest-priced properties offering great alternatives for office spaces.

The cities such as Stockholm, Prague, Munich, and Amsterdam have submarkets in central locations or outside, while such office spaces are bought by European companies seeking better locations. 

Places such as Munich East offers submarkets. Similarly, Sloterdijk Teleport (Amsterdam) offers lucrative submarkets for office space. Companies and employers living in some of the leading cities in the EU are ready to move to such locations as the business operation cost reduces, and companies can save on rent.

The submarkets for office space can be centrally located regions close to the main city having proper connectivity to the main city and reliable transportation facilities.

The demand continues to grow, but office supply has tightened in the EU, and the price of office space is increasing. Due to similar reasons, investment in hotels in London increased in 2017, and even the revenue per room grew 5 per cent as per the PWC reports. As a result, the overall growth in the UK hotel sector was forty-four per cent in the current year. 

The decision to quit the EU has led insurance and asset management funds to seek to shift branches in cities such as Luxemburg, Paris, Frankfurt and Ireland. In 2015, the UK bank held approximately 90 billion pounds out of the 183 billion pounds – invested in commercial properties (in the EU and the UK).

Real estate market experts claim banks are more equipped compared to 2008 to handle falling rates. In 2016 -2017, banks increased capital reserves and reduced exposures significantly.

But in 2018, the problem of the real estate market is unaffordability due to very high prices, where even employed homebuyers cannot acquire properties and cannot make rental deposits. An increase in population and shortage led to a rise in the price of residential properties and office space in the last 15 years. 

Growth in property attracts foreign buyers as the pound's value is reduced partially, and overseas investment continues to pour into the market leading to further growth and a price rise. Recently, Charleston real estate expanded by teaming up with Mayfair International Realty of the UK, mainly targeting investors overseas. 

Office space rentals are very high in the leading cities of the EU and the UK compared to submarkets, small warehouses, or industrial space in the submarkets. Now, even the brokers are getting more enquiries from foreign investors in UK warehouses, which are expected to grow significantly in the coming years. 

To get information on office space and warehouse investment in the EU and the UK, click Hamilton International Estates (www.hamiltoninternationalestates.com).