Introduced in 2015, the Prologis Logistics Rent Index examines trends in net effective market rental growth1 in key logistics real estate markets in North America, Europe, Asia and Latin America. Our proprietary methodology focuses on taking rents, net of concessions, for logistics facilities. This index combines the company’s local insights on market pricing dynamics with data from our global portfolio. Rental rates at the regional and global levels are weighted averages based on estimates of market revenue. Global logistics real estate rent growth totalled 6% in 2023, underscoring the resilience of logistics real estate fundamentals. Nearly all markets globally recorded positive real rent growth, amid positive demand, low vacancy, and the need to evolve supply chains in response to changing consumer expectations, operational challenges and persistent disruption. Global Takeaways Data Pertinent to Europe for 2023 Eva van der Pluijm-Kok Vice President, Research & Strategy, Europe adds: “Looking ahead, Europe is likely to see a lower peak in the vacancy rate during the upcoming mini-cycle because new construction starts fell earlier than in the U.S. and other global markets. Improvement in the demand backdrop could cause rent growth to reaccelerate quickly as scarcity returns to many markets on both the Continent and in the UK.”  You will find the full research here. Building, Design & Construction Magazine | The Choice of Industry Professionals

Contracts Awarded for construction projects in the UK fell £11.1bn to £69.2bn in 2023, a 14% reduction from a record £80.4bn in 2022, according to the latest analysis from construction analysts Barbour ABI. Sectors hit by the cost-of-living crisis were particularly affected with residential housebuilding down 14%, commercial developments down 15% and Hotel and Leisure falling dramatically by 29%. A lack of confidence in the market was also reflected in applications for new construction projects, which fell by 16% to under £100bn. Housing applications are now 21% down on pre-pandemic levels. Barbour Consulting Economist Kelly Forrest commented: “2023 was challenging for the UK construction sector. In addition to viability challenges from higher construction costs and borrowing rates, consumers and business confidence remained weak. 2023’s good news stories were largely confined to the public sector as the government’s flagship school and hospital building programmes finally started to build some momentum amid moderating cost inflation and mounting political pressure.” Barbour ABI found that education awards bounced back to £6.1bn in 2023, a 20% uplift compared with 2022, and a 19% increase from 2019. Meanwhile, Healthcare beat 2022 by 4% and is now 160% higher than pre-pandemic levels. Forrest continued: “Overall weakness concealed pockets of buoyant sub-sector activity. Energy was a particular bright spot as investment poured into energy from waste and energy storage facilities, along with offshore wind.” Infrastructure Infrastructure spending, including government-funded projects, remained an important crutch for the industry in 2023. Contract awards fell 22% to £15.2bn but remained 47% higher than in 2019. Energy projects were a big driver. Windfarms, battery storage facilities and large waste-to-energy contracts all helped maintain awards momentum. Meanwhile, applications remained 62% higher than pre-pandemic levels and analysis of demand side approvals, still double pre-pandemic levels, suggests infrastructure will continue to perform in 2024. Looking ahead Forrest concluded: “In early 2024 there are a few reasons to be optimistic. Interest rates are likely to have peaked and inflationary pressures have eased markedly. Entering what is very likely to be an election year there is a risk there will be a hiatus in public sector investment as key decisions are postponed. The speed and resilience of the private sector recovery will be pivotal.” Building, Design & Construction Magazine | The Choice of Industry Professionals

Lending for commercial construction is expected to fall for the ninth year in a row, underlying how demand for office space and high street retail has declined over the period. The analysis comes from specialist property lending experts, Octane Capital, which compared lending levels across different areas of the property construction industry over the past decade using data from the Bank of England. Octane then estimated where total lending would sit come the end of 2023 based on the current data available (Jan to November).  The analysis shows that the average monthly amount outstanding across the commercial construction lending sector has gradually fallen from £5.11 billion in 2014 to £3.383 billion in 2022, a drop of 34%. Octane Capital estimates that 2023 will see this figure fall by a further -2.6% in 2023 to £3.30 billion, following on from an annual decline of -4.3% in 2022 and a minor reduction of -0.8% in 2021. Rental recession and challenging year for retail Last year office rentals in London were said to be in “rental recession” due to the number of empty workspaces, as the pandemic has facilitated a growing work from home and flexible working culture. Meanwhile the high street has struggled to compete with the growth of online retail for some time, while consumers are currently being squeezed by the cost of living crisis. In January the The British Retail Consortium warned that retailers are set for a “challenging” year in 2024 due to “weak consumer confidence. Overall construction lending dips for second consecutive year The analysis by Octane Capital also shows that lending across the construction sector as a whole is forecast to fall for a second consecutive year in 2023, as interest rate rises made borrowing gradually less affordable. Octane Capital estimates that the average monthly total of outstanding lending will reach £33.26 billion in 2023, marking a -7.1% drop from the year before, while in 2022 there was also a drop, at -4.0%. The second consecutive annual decline follows the Bank of England base rate hike from 0.25% to 5.25% between December 2021 and August 2023, making the cost of borrowing far more expensive for construction and development firms. Development down but domestic construction sees uplift Commercial lending for the development of buildings – which encompasses structural alterations, demolitions and rebuilding – has been on the steady decline since 2021.  Octane Capital estimates that some £12.74 billion of outstanding lending will be recorded in 2023, which will again result in a drop of -7.9%, following previous yearly falls of -5.3% in 2022 and -4.3% in 2021. Lending for domestic construction – a dwelling where more than one family unit lives – is the only construction type expected to go against the grain. After dropping off by -19.8% in 2021 it recovered by 9.2% in 2022, and is estimated to climb by 1.7% in 2023, as is forecast to sit at £6.04 billion for the year. CEO of Octane Capital, Jonathan Samuels, commented: “Demand for commercial construction lending has seen a consistent decline in recent years, with the average monthly amount outstanding falling by 34% between 2014 and 2022 and expected to fall further in 2023.  “While the pandemic accelerated the trend for more businesses to embrace hybrid working, it must have come as a shock to the office sector, as it’s ultimately businesses paying competitive rents that justify these construction projects. “Another factor hitting construction is the cost of financing, as it’s becoming harder for developers to make a good return on their investment given that interest rates are relatively high. “One positive is that interest rates now look to be falling again, so it could become more affordable for developers to fund projects in 2024 and beyond, which should help cultivate some growth, albeit this will likely remain subdued versus historic highs.” Data tables and sources Data tables and sources can be viewed online, here. Building, Design & Construction Magazine | The Choice of Industry Professionals

Select Property, a leading developer, operator and investment specialist, has secured a £44.5 million development finance facility from Close Brothers to bring forward its first Affinity Living build-to-rent development in Birmingham. The leading UK merchant banking group has provided the facility to support Select Property as it ramps up development of its new 266-unit property, Affinity Living Lancaster Wharf. Due to complete in Q3 2025, the build-to-rent specialist has already sold out Lancaster Wharf’s apartments to investors, securing £77 million in sales. Located just a 10-minute walk from Snow Hill Station and Colmore Row, it is Select Property’s first Affinity Living residence in Birmingham, having established a strong reputation across its four existing properties in Manchester. Its ethos focuses on providing high-quality, community-led and resident-centric homes in the heart of some of the UK’s most vibrant regional cities. In a recent survey of its 1,300 residents across its four Affinity Living properties in Manchester, 75% said they would choose to stay at Affinity Living when their tenancy came to an end, showcasing the strength of the brand’s offering. Close Brothers has supported Select Property on a number of projects over the last decade, including Affinity Living Riverside and Riverview in Manchester. Adam Price, CEO at Select Property, said: “We are very proud of the Affinity Living experience that we have created and developed in Manchester city centre. Given its success, we knew it was the right time to bring our proposition to new markets and Birmingham was the perfect place to do so given the continued growth of its young professional population. “Our new property at Lancaster Wharf will provide best-in-class rental homes in an unrivalled location with community at its heart, so we have no doubt that resident demand will mirror the demand we have seen from investors for this development. “Close Brothers has been an invaluable partner to us in this project, working quickly to provide us with the support we need to see the development through to completion.” Simon Powell, Director at Close Brothers, added: “We have worked with Select Property for many years and have forged a strong relationship with their highly experienced team, and are delighted to be supporting them on yet another fantastic scheme. Situated within an area of major regeneration, Lancaster Wharf will provide much-needed, high-quality apartments for the rental market that will complement the ongoing improvements in the wider area. “We have supported housebuilders and developers for over 40 years and look forward to continuing to do so over the coming years with experienced partners like Select Property.” Building, Design & Construction Magazine | The Choice of Industry Professionals

A mixed-use development in Molesey, Surrey, has been rejuvenated by Odyssey Developments thanks to a seven-figure property development loan from Secure Trust Bank (STB) Real Estate Finance. The property, located within Greater London, is a commercial-residential hybrid with a florist on the ground floor and two, two-bedroom flats above. Molesey, situated on the south bank of the River Thames, is just minutes from Hampton Court Palace, and takes 35 minutes to reach central London via train. The second floor of the building was recently added using STB’s loan, alongside a further two detached houses built on the remainder of property’s land. The deal was agreed thanks to STB’s approachability and thorough understanding of the real estate market. Signed under an 18-month term, the loan itself is structured as one of STB’s popular residential property development loans, used to support with the heavy refurbishment of residential development sites. STB Relationship Director, Paul Scagliosi, orchestrated the deal with Odyssey Developments, with a LTGDV of 59% and a 74% LTC, taking just six weeks to complete. John O’Neil, Director at Odyssey Developments, said: “It’s important for us at Odyssey Developments to have a trusted financial institution that understands our needs and is able to turn around the necessary requirements and funding for a project in a speedy manner. Secure Trust Bank executed this superbly. “Our new build houses which were constructed through the less desirable autumn and winter months were fully completed and sold in 26 weeks with no delay or overrun. Much of this was only achievable due to our close working relationship with STB. “Our appreciation and gratitude go out to those personnel at STB who worked so closely with us on this very successful project. We look forward to working with STB again soon, on our next housing proposal.” Paul Scagliosi, Relationship Director at STB Real Estate Finance, said: “This development has been rewarding and very fun to work on. We have come away with a great working relationship, and four high-quality homes within touching distance of London. John and the team at Odyssey are brilliant to work with, exceptionally skilled at what they do and are all-round nice people. The tailored approach and process was smooth given its complexity, and I’m glad we were able to contribute to a great, practical development.” For more information about Secure Trust Bank Real Estate Finance, please visit https://www.securetrustbank.com/business-finance/real-estate-finance Building, Design & Construction Magazine | The Choice of Industry Professionals