The yield gap between prime industrial and shopping centre yields in mainland Europe has closed for the first time, according to new data from Savills.

The agent said that prime industrial yields, mainly logistics, narrowed to 4.95% during the first quarter of this year. This was 9bps lower than their shopping centre equivalents, which reached 5.04%.

It was also the first time since 2015 that European prime shopping centre yields rose above 5%. Yields in this asset class have softened by 40bps over the past two years.

Previously the average spread between prime shopping centre and prime industrial yields was 143bps, until it dropped to 108bps in 2018, and 54bps last year.

Demand for logistics has soared as a result of increased e-commerce on the back of the Covid-19 crisis. Savills predicts that the yield gap between the two will further widen in these directions throughout the year.

Marcus de Minckwitz, director in the EMEA regional investment advisory team, said: “This trend is one that has been exacerbated in recent months with the arrival of Covid-19 across Europe which has meant more consumers than ever have been shopping online; not only out of choice, but also out of necessity.

“Although the end of Q1 has been quieter year-on-year from an investment perspective and, we predict, as has Q2, we expect a strong recovery of the industrial sector driven by logistics transactions. As a result, and with retail being disproportionately hit by the pandemic, the spread between yields for logistics and shopping centres could increase further throughout 2020.”

Eri Mitsostergiou, research analyst at Savills’ European research division, said: “Given the scale of investor demand and low vacancy rates, the prospects for logistics are the most positive, with 79% of our markets expecting an increase in transaction volumes in the second half of 2020.

“This is a trend expected to be sustained into 2021 and 2022. Logistics capital values are anticipated to increase accordingly, with 47% of markets predicting increases from H2 2020.

“The pandemic could force many companies to reassess their regional supply chains and near shoring, potentially creating new manufacturing hubs, boosting further the overall industrial investment volumes.”