Logistics- and Industrial Market Overview
Below-average take-up in the logistics segment at the mid-point of the year
Around 119,000 -sqm of warehousing and logistics space was taken up in the Berlin region* in the first half of 2023. This is the lowest half-year take-up result registered over the past ten years and is attributed solely to letting activities; owner-occupier deals were not registered.
A record take-up was registered in 2022, primarily due to the Tesla deal (327,000 sqm in Grünheide) in the first half of last year. Accordingly, there is a significant discrepancy in the half-year comparison, with the take-up volume decreasing by 85%. The result for the first six months of 2023 is founded on the conclusion of 47 leases and even this is disappointing, as it corresponds to a decrease of 41% compared to the first half of 2022.
By far, the largest letting (15,000 sqm) was concluded by the retailer Bär & Ollenroth, followed by the logistics company BLG Logistics and the eCommerce company Flink SE with 8,000 sqm and 6,600 sqm, respectively. The industry ranking was led by retailers with 43% who were followed by manufacturers and distribution/logistics companies with 15% and 13%, respectively.
Around 94,000 sqm of warehousing and logistics space was completed in the first half of 2023. Just 120,000 sqm of the around 137,000 sqm of warehousing space currently under construction in the region is still vacant. Available space in existing properties is also scarce and supply is very limited, especially in urban areas.
The prime rent for warehousing space in the >5,000 sqm size category, which rose from €6.50/sqm per month to €7.50/sqm per month in the fourth quarter of 2022, remained stable in the first half of the year.
A total of around 105,000 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals in the Düsseldorf region* in the first half 2023. This falls 21% short of the five-year H1 average and is 41% lower year-on-year. Looking at the number of contracts concluded, the 26 deals are only slightly below last year's total (-3.0%).
The largest lettings were concluded by the logistics company GXO in Dormagen (36,000 sqm) and by a freight forwarder in Hilden (around 17,000 sqm). Distribution/logistics companies were the most active on the demand-side, accounting for 62% of the space taken up, followed by retailers and manufacturers with 13% and 12%, respectively.
Around 44,000 sqm of warehousing and logistics space was completed in the first half of the year. A further 117,000 sqm of space is currently under construction and scheduled for completion this year or next.
Once again, very little modern space in the region is available at short notice. As a result, the prime rent for warehousing space larger than 5,000 sqm has continued to rise, from €7.75/sqm per month in the final quarter of 2022 to its current level of €8.50/sqm per month
A take-up volume of around 138,000 sqm was registered in the market for warehouse and logistics space in the Frankfurt region* in the first half of 2023. This is 25% down on the same period last year and is the lowest result recorded since 2009. At 46, some 8.0% fewer deals were concluded in the first half of the year, compared to the same period last year.
Two deals for units larger than 10,000 sqm were concluded and involved lettings of around 16,300 sqm by a logistics service provider and around 10,900 sqm by a manufacturer. Distribution/logistics and manufacturing companies each accounted for one third of the demand for space, while retailers accounted for a further 14% of the total take-up volume. The decline in take-up is not due to weakening demand, but to the lack of space that can be acquired at short notice, which has become even more acute in recent months. This applies to both existing properties and development projects. The scarcity of land significantly restricts new construction activities. Just 7.0% of the around 106,000sqm of space built in 2023 was still available at the time of completion. As a result of this and increasing building costs, rising rents are inevitable, with the prime rent for warehousing space larger than 5,000 sqm rising by a further €0.20/sqm per month to €7.50/sqm per month over the past three months.
Around 173,000 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals in the Hamburg region* in the first half of 2023, 40% less than in the same period last year. A different picture emerges when comparing the number of deals concluded. At 49, the figure is 36% higher than last year's result. The largest deal was registered by the logistics company TST GmbH in Neu Wulmstorf with around 21,000 sqm. Other large lettings included 14,600 sqm by Media-Saturn in Industriehafen, 13,600 sqm by Igepa Großhandel in Hamburg's Periphery-East and 11,400 sqm by H-TEC Systems in Periphery North-East. The strongest demand (33%) came from distribution/logistics companies, followed by retailers with 31%. eCommerce companies were less active due to inflation-related, restrained purchasing behaviour.
Around 50,000 sqm of warehousing and logistics space was completed in the first half of 2023 with just 19% of the space still available at the time of completion.
There is currently around 210,000 sqm of space under construction, 43% of which is still available to the market and could help improve the supply situation. The supply shortage, which is encouraging many companies to renew / extend their existing tenancies instead of relocating, and increased building costs have driven up rents. The prime rent for warehousing space larger than 5,000 sqm has increased by €0.25/sqm per month since the end of 2022 to reach its highest-ever level of €8.25/sqm per month
Around 47,000 sqm of warehousing and logistics space larger than 5,000 sqm was taken up in the Cologne region* in the first six months of 2023. This result is due solely to lettings; owner-occupier deals were not registered. The current letting performance represents a decline of 71% compared to the same period last year, and falls 44% short of the five-year H1 average value.
More than half of the take-up was attributed to the distribution/logistics segment. However, the largest deal was concluded by the IT segment and was registered in Kerpen, where the IT service provider Computacenter AG expanded its headquarters by a further 21,000 sqm. The lack of modern space available at short notice is stifling letting and owner-occupier activity.
Since rising by €0.50/sqm per month at the end of 2022, the prime rent for warehousing and logistics space larger than 5,000 sqm has remained stable at €7.50/sqm/month. It is currently achieved in the Cologne urban area and Frechen.
Around 120,000 sqm of warehousing and logistics space was taken up in the Munich region* in the first two quarters of 2023. This result is due solely to lettings; owner-occupier deals were not registered. It is around 8% up on the result registered in the same period last year. At 30,000 sqm, the largest letting was concluded by Siemens Mobility in Allach-Untermenzing and a further 10,000 sqm was leased by the manufacturer Yaskawa in Munich-North.
Enquiries for space in the >5,000 sqm size category are particularly difficult to satisfy, due to the stubbornly low vacancy rate and scarcity of land. Consequently, many companies are currently opting to renew / extend their existing tenancies.
There is very little speculative construction activity in the Munich region and so just 3,000 sqm of the already low completion volume of around 14,000 sqm in the first half of 2023 was still vacant at the time of its completion. As the completion pipeline is limited, with a total volume of around 13,000 sqm anticipated, an improvement in the supply situation is not yet expected.
Since its last significant rise at the end of last year (+24%), the prime rent for space larger than 5,000 sqm has remained stable at €10.50/sqm per month over the past two quarters.
Around 168,000 sqm of warehousing and logistics space larger than 5,000 sqm was taken up in the Ruhr Area in lettings and owner-occupier deals in the first six months of the year. This corresponds to a decrease of 55% year-on-year and falls 48% short of the five-year average.
While three deals above 30,000 sqm were registered in the first half of 2022, the largest deal concluded by the mid-point of 2023 was just 22,000 sqm (Recht Logistik in Bönen). A further seven deals were concluded in the 10,000 - 15,000 sqm size category, the two largest of which were concluded by Bayer in Bergkamen and by a wholesale company in Gladbeck, each with around 15,000 sqm.
Almost 40% of the space taken up was accounted for by distribution/logistics companies, followed by retailers with 33%.
Once again, the robust demand for the dwindling volume of available warehousing and logistics space caused the prime rent to rise to €7.50/sqm per month at the end of 2022. However, the rent has not changed over the past six months and is currently achieved in the Dortmund, Bottrop and Essen submarkets.
Around 80,000 sqm of warehousing and logistics space larger than 5,000 sqm was taken up in the Stuttgart region* in the first half of 2023. This result is due solely to lettings; owner-occupier deals were not registered. Compared to the same period last year, the take-up volume has more than halved. By far, the largest contract for 39,000 sqm was signed by Lidl in Ebersbach; the letting was concluded in a new development scheduled for completion in 2024. In the first half of 2023, 59% of space in the Stuttgart region was taken up by retailers; manufacturers followed with 34%.
There is an extremely tight supply of land and modern warehousing space in the region and construction activity, especially of a speculative nature, is very limited. Due to this and the high demand for space, the prime rent for warehousing space larger than 5,000 sqm has risen sharply, most recently at the end of 2022 to €8.50/sqm per month
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.
Our Industrial and Logistics contacts:
Sarina Schekahn, Head of Industrial Leasing Germany
Diana Schumann, Co Head Industrial Investment Germany
Dominik Thoma, Co Head Industrial Investment Germany
Helge Scheunemann, Head of Research Germany
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