JLL Self Storage - ssasweden.com · • Transaction volumes likely to fall in 2019 but market...
Transcript of JLL Self Storage - ssasweden.com · • Transaction volumes likely to fall in 2019 but market...
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JLL Self Storage
Market overview
Swedish Self Storage Association Conference 2019
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• Real estate trends • The Swedish market • Self storage trends• Big data• Market transactions • Valuation metrics • Future outlook
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Real Estate Trends
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• Transaction volumes likely to fall in 2019 but market robust
• Longest positive trending market in modern history
• Some market hotspots including Stockholm
• Increasing allocation to Living & Alternatives
• Search for income yield
• Industrial growth : retail decline
• The move to flexspace
Real Estate Trends in 2019
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Allocation to Alternatives – 2008 to 2018
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Allocation to Alternatives
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2017 and 2018 % of total European alternative investment
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Alternatives – Predictions for 2019
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0%
5%
10%
15%
20%
25%
30%
35%
Elderly Care Retirmeent Living Leased Hotels Student Housing Multifamily Primary Healthcare Automotive Data Centre Self Storage
Sector Allocations
Proportion of respondents Average allocation increase
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Alternatives – Predictions for 2019
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Elderly Care Retirement Living PrimaryHealthcare
Hotels Student Housing Private RentedSector
Automotive Data Centres Self Storage
Res
po
nd
ents
Yield expectations
harden unchanged soften
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Real Estate Trends in Sweden
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Swedish GDP
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-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 P 2019 P 2020 P 2021 P 2022
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Nordic transaction volumes
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-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Bn
Eu
ro
Sweden Norway Finland Denmark
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Transaction volume by sector in Sweden
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Office24%
Retail13%
Industrial13%Mixed-Use
3%
Residential32%
Hotel2%
Other13%
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Prime Rents Q1 2019SEK/sqm (Y-o-Y)
Källa: JLL Research
Kista
2 400(+4,3%)
Solna/Sundbyberg
3 300(+3,1%)
ÖvrigaInnerstaden
4 900(+4,3%)
CBD
7 500(+4,2%)
Närförort
3 200(+3,2%)
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Swedish yields
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3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Q4´08
Q2´09
Q4´09
Q2´10
Q4´10
Q2´11
Q4´11
Q2´12
Q4´12
Q2´13
Q4´13
Q2´14
Q4´14
Q2´15
Q4´15
Q2´16
Q4´16
Q2´17
Q4´17
Q2´18
Q4´18
Logistics Stockholm >10,000 sqm Retail warehouses (>1,000) Stockholm
External Shopping centre (>40,000) Sweden Stockholm CBD Office Yield
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Self Storage Trends
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Strong macros drivers …
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Propensity to move
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Some of the most mature markets
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Major operators market share
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0%
20%
40%
60%
80%
France Italy Sweden Belgium Germany Netherlands UK (inclcontainers)
Spain
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An ageing stock …
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European rental levels
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Rental growth in Europe
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0.00
1.00
2.00
3.00
4.00
5.00
6.00
Sweden Finland Ireland Netherlands UK Denmark Spain Germany Belgium Italy France
Ind
ustr
ial M
ultip
lier
Industrial Multiplier
Industrial Multiplier
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Rental growth in Europe
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• Fragmented ownership in most markets
• Move from ‘mom & pop’ to professional operator and investor
• Rising interest from PE and institutional capital
• Rental growth in most markets – 7.5%+ in Germany
• Yield compression at an accelerating rate
• Availability of debt
• The problem of scale and lack of product and developers
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Key European trends : self storage
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Rental growth – Older stores
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Rental growth –newer stores
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Rental growth –size vs location vs generation
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Big Data & Technology
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Rental pricing algorithms
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GIS and Demographics
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MLA vs Staff costs
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Market transactions
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Key Transactions
Recent Sales
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Valuation metric and methodology
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• Explicit discounted cash flow
• Income multiple (or inverse of yield)
• Value psm MLA
• Running yield at maturity – typically 8%
• Cost of replication
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The five valuation methods
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• The greater emphasis on value psm
• What is a Reasonably Efficient Operator
• Portfolio premiums of 10% to 20%
• Prime discount rates @ 7.5%+
• Capital value – new build tone is €3000 ++ psm with €2000 psm in regional locations
• Multiples – 30+ but “normalised” are 15 – 20 – leaseholds are c 6 – 8 with 15 years
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Valuation benchmarks
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Future outlook
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– Mixed use
– Complementary uses – expanding the offer to build bigger
– Metro vs Satellite
– Digital transformation
– Pricing algorithms
– Online pricing and reservation : importance of e-marketing
– Institutional ‘retail’ grade stock
– Serviced storage and concierge
– Unmanned vs Automated
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Key European trends : self storage innovations
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