ITALYINDUSTRIAL & LOGISTICS

MARKET

H1 2019

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

€ 1.07 B€ 1.45 B

5.25 %6.00%

6.00%6.50%

18.3 Mln sqm17.5 Mln sqm

7.4% 7.4 %

2.3 Mln sqm 1.7 Mln sqm

€ 52/sqm/yr

€ 55/sqm/yr€ 53/sqm/yr

Industrial & Logistics Investment Market: from nice to institutional asset class

Investment Volumes(including portfolios)

€ 330 M

5.25%

5.75%Prime Net Yields

Italy

Rome

Milan

Outlook

Stock18.6 Mln sqmNorthern

Italy & Lazio

Northern Italy & Lazio

Vacancy (Grade A&B)6.1%

Take up

Northern Italy & Lazio 1.12 Mln sqm

€ 55/sqm/yr

€ 55/sqm/yrPrime Rents Rome

Milan

2017 2018 H1 2019

€ 51/sqm/yr

Industrial & Logistics Dashboard

Italy logistics marketKEY FIGURES

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

Lombardia 1. Milan

Piemonte2. Torino

3. Novara

Emilia Romagna

4. Bologna

5. Piacenza

Veneto 6. Verona

Liguria 7. Genoa

Northern Italy Logistics Market

The main regions and main hubs of the Northern industrial market we analyse are:

Location Map

74

52

3 1 6

Motorways

State\Provincial\RegionalHighways

Airport

Harbour

A1

SS\SP\SR

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

Area (*) Zone

NORTH1. Fiano Romano/Passo Corese2. Riano3. Monterotondo

EAST 4. Tiburtina5. Bagni di Tivoli

SOUTH6. Santa Palomba7. Pomezia8. Aprilia9. Colleferro/Frosinone/Anagni

WEST 10. Fiumicino

Lazio/Rome Logistics Market

*There are no significant industrial areas in the north western parts of the city

Santa Palomba

Tiburtina

Tivoli Terme

Monterotondo

Fiano Romano

1

2

3

45

6

7

8

99

10

Motorways

State\Provincial\RegionalHighways

Airport

Harbour

A1

SS\SP\SR

Main Logistic Areas

For the purpose of our research, we have divided the Roman logistics market into ten macro areas as depicted by the map below.These areas are distributed unevenly in the zones to the south, east and north of the city, each with varying characteristics andfunctions:

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

LOGISTICS 2017 2018 2019 H1 Trend

STOCK (GRADE A,B,C)(SQ M) (estimated) 17.5 Mln 18.3 Mln 18.6 Mln MAINLY

BTS

AVAILABILITY (GRADE A,B)(SQM) 1.28 Mln 1.35 Mln 1.14 Mln MAINLY GRADE B

BUILDINGS

VACANCY RATE (GRADE A,B)(%) 7.4 % 7.4 % 6.1 % MAINLY GRADE B

BUILDINGS

Italy Logistics Market

Stock and Availability at H1 2019

ITALY | AVAILABILITY VS VACANCY RATE (GRADE A,B)

ITALY | STOCK (GRADE A,B,C)

Lombardy44%

Piedmont8%

Emilia Romagna16%

Veneto10%

Liguria3%

Lazio19%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

2011 2012 2013 2014 2015 2016 2017 2018 Q22019

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

1.600.000

1.800.000

sqm

Availability (Grade A&B) Vacancy Rate (%)

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

2011 2012 2013 2014 2015 2016 2017 2018 H1 20190

250.000

500.000

750.000

1.000.000

1.250.000

1.500.000

1.750.000

2.000.000

2.250.000

2.500.000

sqm

Q1 Q2 Q3 Q4

Italy Logistics Market

2018 take up below the peak volumes of last year, but above historical average

ITALY | TAKE UP (GROSS) 2011 – H1 2019

TAKE UP (GROSS) (SQ M) 2016 2017 2018 H1 2019

BY YEAR 1.7 Mln 2.3 Mln 1.7 Mln 1.12 Mln

Average Y: 1.25 Mln sqm

Average H1: 625,000 sqm

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

34% 26%

40%

22%62%

16%

2017

Italy Logistics Market

Demand driven by e-commerce, distribution retailers and 3PLs requiring large-size BTS solutions

53%BTS

47%Existing

30%Existing

70%BTS

2018

TAKE UP - Comparison between BTS vs Existing Buildings

TAKE UP - Comparison between Type of transactions2018

2017

62%Pre-let

70%Existing

30%BTS20

11

2011

26%Pre-let

• E-commerce, large-scale distribution retailers and 3PLs most active players, looking for modern, efficient and strategically located warehouses

• Pre-lease transactions are representing 58% of absorption since the beginning of the year

• In 2018 53% of the volume was for built-to-suit/built-to-own projects

• 84 transactions in 2018 vs. 92 transactions in 2017 • During H1 2019 Lombardy and Piedmont accounted

respectively for 32% of volume transacted followed by Emilia Romagna with 18%.

Pre-Lease

New Lease

Sale - Owner Occupier

41%Pre-let

58%BTS

42%ExistingH

1 20

19

45%

41%

14%

Cushman & Wakefield

REAL ESTATE MARKET

ITALYItaly Logistics Market

Prime Rents

ITALY | PRIME RENT(€/SQM/YR) 2011 – 2019 Q2

€/sqm/y Q/Q Y/Y

Rome 55

Milan 55

Bologna 50

Turin 43

Genoa 60

Verona 45

Piacenza 42

Novara 42

MARKET OUTLOOK Prime headline rents generally stable, but experiencing upward pressure due to the limited availability of quality product,

mainly in prime locations

Higher rents for BTS products, considering the level of customizations and building characteristics required by tenants

Speculative developments are back on the market focalizing in prime locations – Lombardy, Veneto, Emilia Romagna andRome area, on mid-size grade A buildings

Demand driven by BTS, with a good distribution in terms of size. Absorption driven by 3PL, e-commerce operator andretailers

2011 2012 2013 2014 2015 2016 2017 2018 Q2 201930

40

50

60

70

€/sq

m/y

r

Rome Milan Bologna Turin

Genoa Verona Piacenza Novara

Italy Investment – All SectorsMARKET OVERVIEW

Cushman & Wakefield

REAL ESTATE MARKET

ITALY10

.800

5.50

0

3.70

0

4.10

0

4.40

0

2.30

0

3.90

0

5.12

0

6.57

0

9.52

0

11.4

30

8.39

0

4.88

0

190

146

93 92

109

60

68 72

76

159

181 187

83

0

2

4

6

8

1

1

1

1

1

2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019

Italian Real Estate Market

Market consolidation after 5 years double digit growth

I N V E S T O R O R I G I NI N V E S T M E N T V O L U M E S

€10.8B €11.4B

€5.9 B Average

140

160

180

Single Asset

Portfolio

Porta Nuova

N° Transactions

Cushman & Wakefield

REAL ESTATE MARKET

ITALYItalian Real Estate Market

Large amount of capital with different risk profile intended for the Italian market

€ Mln

Retail

Office

Industrial

Hospitality

Other

Total

530

520

210

1.770

890

3.920

370

620

320

2.750

1.440

5.500

150

490

470

1.220

1.290

3.620

60

2.120

330

1.780

590

4.880

0 1.000 2.000 3.000 4.000 5.000 6.000

r

H1 2019

H1 2018

H1 2017

H1 2016

+35%

+330%

+46%

-54%

- 30%

- 60%

Italy Industrial & Logistics InvestmentMARKET OVERVIEW

Cushman & Wakefield

REAL ESTATE MARKET

ITALYIndustrial & Logistics Investment Market

Key Messages from H1 2019 - Cushman & Wakefield House View

Logistics and Industrial continues to be a highly sought-after asset class

despite the low investment volume recorded – € 330 M

H1 2019. There has been an increase

in off market transaction with longer timing for closings

In response to strong investment activity, prime

yields have been compressed to their 10-year minimum

In response to the lack of core product, investors are more flexible in considering the purchase of land site areas for

speculative projects and redevelopment opportunities of existing buildings

With some developers backed by capital, not all new product reaches the market, increasing interest for sale & lease-back or well

positioned vacant sale opportunities

Continuing differential between vendor and purchaser pricing

expectations

Major players specialised in logistics, on both development

and investment side, are particularly active, taking

advantage of their expertise, land banks and ongoing

projects

Cushman & Wakefield

REAL ESTATE MARKET

ITALYIndustrial & Logistics Investment Market

*

€ M

ln

High demand, strong competition, scarcity of products

Source: Cushman & Wakefield Capital Markets

780

460

310

140

240

20

170

350

390

510

1.45

0

990

330

25

23

99 9

2 3

7

12

18

25

30

14

0

5

1

1

2

2

3

3

4

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019

Single Asset

Portfolio

N° Transactions

Cushman & Wakefield

REAL ESTATE MARKET

ITALYIndustrial & Logistics Investment Market

Prime Yields

Net Q/Q Y/Y

Rome 5.75%

Milan 5.25%

Bologna 5,75%

Turin 6,75%

Genoa 7.00%

Verona 6.50%

Piacenza 6.00%

Novara 6.25%

ITALY | PRIME NET YIELD (%) 2011 – 2019 Q2

MARKET OUTLOOK Lack of grade A properties coupled with the sustained demand for new spaces is leading developers and investors to start

new or refurbishment projects on a speculative basis in good locations

Increasing interest for sale and lease-back opportunities, when supported by solid fundamentals (rating of the tenant, leaseduration and building quality), and for vacant properties

Forward funding, forward purchase and JVs with developers are part of the investors’ strategies to anticipate competition

2011 2012 2013 2014 2015 2016 2017 2018 Q2 20195,00%

6,00%

7,00%

8,00%

9,00%

10,00%

Rome Milan Bologna TurinGenoa Verona Piacenza Novara

Cushman & Wakefield

REAL ESTATE MARKET

ITALY

In using the data contained in this report, the following should be noted:

• The data series has been prepared based on information which has been collected through our own Research, Capital Markets and Agency teams as well asmaterial available to us from public and other external sources. In respect of all external information, the sources are believed to be reliable (unless stated) andhave been used in good faith. However, Cushman & Wakefield has not verified such information and cannot accept responsibility for their accuracy andcompleteness, nor for any undisclosed matters that would affect the conclusions we have drawn. Nonetheless, in interpreting the information used, we havehad to rely on the validity and accuracy of the data and information sources available to us.

• We have taken every possible care in the collation of this data series. The data is believed to be correct at the time of reporting, but may be subject to changeduring the life of the project and beyond and as new information becomes available. We reserve the right to change data without prior notice in the light ofrevised market opinion and evidence.

• In accordance with standard practice, we would confirm that the information is confidential to the parties to whom it is addressed, for their sole use, and for thestated purposes only. No responsibility is accepted to any third party in respect of the whole or any part of its contents. Neither the whole, nor any part of thisproject or data series, nor any reference thereto, may be included in any document, circular or statement without our written approval of the form and context inwhich it appears. It may not be reproduced by any means (electronic or otherwise) without prior written consent from Cushman & Wakefield.

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Data Series

Research Department

Capital Markets Industrial & Logistics