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Turkey Market Report Third Quarter 2021

11/11/2021

While the rise in logistics rents accelerates investment activities, the eyes of international investors seeking solutions to global supply chain problems and increasing costs and risks are in Turkey.

While there was a 20% increase in logistics rents in 2021 compared to the same period of the previous year, International investors interest may accelerate to Turkey by creating opportunity from its advantageous geopolitical location in the long term. It is expected that the upward trend in leasing activities and rents will continue in the upcoming periods as well.

The strong demand and tight supply continue to put upward pressure on industrial sector
While the total transaction volume of warehouse space rental activities was realized as 64,000 m² in the third quarter of the year, a 20% increase was recorded in logistics rentals in 2021 compared to the same period of the previous year. It is expected that the significant increase in warehouse leasing activities and rents will be maintained in the upcoming period.

In the third quarter of the year, industrial and logistics investment transactions gained momentum. While investment transactions mainly consist of land purchases, significant rental transactions on a category basis; logistics users and packaged food manufacturers and wholesalers.

While the fluctuations in the exchange rate and supply chain problems lead to cost increases, these factors create negative pressure on the manufacturing industry, but the improvement is expected to continue in the future. Along with the increasing demand for qualified storage areas in the developing e-commerce axis, new development projects, technology and automation investments in storage, and investments in transfer center and regional warehouses will also increase.

Due to the limited supply of qualified buildings, users are expected to turn to the built-to-suit model with the project developers for properties that can meet their needs for modern production facilities and logistics buildings.

Retail showing signs of revival post lockdown

The online sales volume, which increased in parallel with the change in consumer habits as a result of the pandemic, increased by 44% in August compared to the same month of the previous year, and the online sales turnover increased by 61.8%. Along with the rise of online retail, the concept of experience merchandising maintained its popularity in this quarter, while shopping malls started to turn into socialization areas again.

When we look at the square meter productivity indices on the basis of categories, it is seen that the most notable increase was experienced in the food and beverage category with 100%, as in the previous quarter. While digitalization gains momentum in the reshaped retail market, retailers strengthen their technological infrastructure in their physical stores. This trend will continue to strengthen in the following periods of the year. However, property owners and investors must address the need for more open spaces, interactive entertainment and cultural activities, new health and safety standards, and concept change in response to changing consumer demand. The revival observed in retail will be shaped by concepts that offer useful, unique and target-oriented experiences.

As the trend towards hybrid working model and return to office increases, the demand for qualified and high quality office buildings is increasing
In the third quarter of 2021, the general supply in the Istanbul office market remained at the same level of 6.5 million m², while leasing transactions were recorded as 64,018 m² in total. New lease agreements accounted for 84.9% of the leasing transactions realized in the third quarter and the highest office rents were realized in Istanbul Levent with ₺190 per square meter.

In line with the normalization steps in the third quarter of 2021, companies have determined new strategies with the start of the return to office process. In this process, the importance of the existence of offices has emerged as a result of the decrease in employee engagement and business continuity as a result of the remote working model. Many companies adopted the hybrid working model that sees individuals in the office 2 or 3 days a week and plan to continue this system permanently in the post-pandemic period.  

List prices that remained stable for almost two years due to high inflation and exchange rate pressure, started to move upwards. Rents are now increasing in local currency at a rate below the inflation rate, and the increase is expected to continue. In this case, it is foreseen that the balance of supply and demand will be equiatable in the medium and long term.

 

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Burcin Pehlivanoglu
Burcin Pehlivanoglu

Marketing Professional I • Istanbul

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