Logistics- and Industrial Market Overview

H1 2023

Below-average take-up in the logistics segment at the mid-point of the year

August 10, 2023

Weak letting activity in times of economic uncertainty

The German market for warehousing and logistics space recorded a total take-up result of around 2.05 million sqm in the first half of 2023. This is down by a significant 58% on the same period last year (H1 2022: 4.83 million sqm). It also falls 46% short of the five-year average for the first six months and 41% short of the ten-year average. At 27%, the reduction in the number of registered leases (300 in the first half of the year) is less pronounced than the decrease in the take-up volume.

This low take-up result can be attributed to many factors. Full occupancy rates are being recorded in many places and vacancy rates are very low in most regions. Given the shortage of space to rent and available land, this situation could deteriorate further in future. Even today, enquiries for high volumes of space are difficult to satisfy. Consequently, many tenants are shifting their focus to markets in other countries not previously considered, while others are exercising their lease options in an effort to secure their existing tenancies.

Another reason is the lack of new buildings and, in particular, the dearth of speculative properties. Once again, developers are increasingly relying on sufficient pre-letting levels as they hedge against the continuing rise in financing costs and drop in capital value multipliers compared to previous years.

Negative evaluations by some tenants of their own economic situation also play a role. This pessimism is currently shared by the important demand groups in the warehousing and logistics space segment, particularly manufacturing and retail.

Lowest take-up result recorded in the Big 5 for the last 10 years

Around 655,000 sqm of space was taken up in the Big 5 conurbations (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) in the first six months of 2023, the lowest level recorded over the past ten years. This figure is also 58% down on the same period last year and falls 40% short of the five-year average. This is mainly due to the absence of deals for units larger than 20,000 sqm, with just three leases of this size concluded in the first six months compared to 14 in the same period last year.

With the exception of the Munich region which recorded a slight plus of 8.0% and a take-up volume of 120,000 sqm, all other regions registered below-average letting performances in a year-on-year comparison. At around 173,000 sqm, the highest take-up volume was recorded in the Hamburg region, with 40% less space taken up here than in the first half of 2022. The Frankfurt region followed in second place with around 138,000 sqm (-25%) and the Berlin region (119,000 sqm, -85%) followed at some distance behind, registering its greatest year-on-year decline. Düsseldorf recorded the lowest take-up in the Big 5 with 105,000 sqm (-41%).

Just 254,000 sqm of new warehousing space was completed in the Big 5 in the first half of 2023, some 70% less than in the same period last year (835,000 sqm). Most completions were in the Berlin and Frankfurt regions. The volume of space under construction is also declining; a year ago, it was around one million square metres but is now 623,000 sqm, with just 58% of this space still available. The focus of construction activity is in the Hamburg and Berlin regions.

Sharp rise in prime rents

Prime rents for units in the >5,000 sqm size category have risen significantly year-on-year in all Big 5 regions. This is principally due to the shortage of space and increased and still high building costs. By the mid-point of the year, the highest prime rent was being achieved in Munich. At €10.50/sqm per month, this was an increase of 35% year-on-year. Düsseldorf followed with €8.50/sqm per month (+31%) and Hamburg with €8.25/sqm per month (+10%), while prime rents reached €7.50/sqm per month in Berlin (+20%) and Frankfurt (+7%).

Major deals concluded by the automotive sector outside the Big 5

Around 1.39 million sqm was taken up outside the Big 5 regions in the first half of 2023. This is the first time that the take-up volume has fallen below 1.5 million sqm there since 2010. The result fell 48% short of the five-year H1 average and was 58% lower year-on-year. This fall affected all segments, but retailers and eCommerce companies were affected disproportionately with 82% less space taken up by these companies compared to the first half of 2022. By the mid-point of 2023, take-up by retailers and eCommerce companies accounted for just 14% of the total take-up volume. Distribution/logistics companies accounted for 42% of the take-up, while manufacturers were responsible for 32%; the automotive sector was a major demand driver for space. In contrast to the comparable period of 2022, there were no lettings concluded of units larger than 100,000 sqm (H1 2022: three deals).

The largest deal of the first half of 2023 was registered in the Leipzig/Halle region. This involved a well-known car manufacturer who leased around 87,000 sqm in Bitterfeld-Wolfen with the intention of operating its largest spare parts warehouse from there. A car manufacturer was also responsible for the second-largest deal: BMW leased around 80,000 sqm for its new distribution centre in Pilsting, Lower Bavaria, with the space scheduled for completion in the second quarter of 2024. The third-largest deal was concluded by Rhenus, a logistics service provider, which concluded a contract for more than 70,000 sqm in Sülzetal near Magdeburg.

Contact us

Our Industrial and Logistics contacts:

Industrial Leasing:
Sarina Schekahn, Head of Industrial Leasing Germany

Industrial Investment:
Diana Schumann, Co Head Industrial Investment Germany
Dominik Thoma, Co Head Industrial Investment Germany

Helge Scheunemann, Head of Research Germany


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