Frankfurt am Main, 8 February 2017 – 2016 ended with satisfactory industrial and logistics take-up results. According to Colliers International, leasing and owner-occupier activity in the German top logistics locations of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart generated total take-up of around 2.73 million sqm, up 400,000 sqm yoy.

The Hamburg region came out on top with take-up of roughly 668,800 sqm (+13%). The Frankfurt Rhine-Main metropolitan region generated a new record high of more than 584,000 sqm, up 27% yoy. Munich (342,400 sqm, +54%) and Cologne (199,500 sqm, +19%) also recorded double-digit growth in logistics take-up. Following a very modest start to the year, the Düsseldorf market was able to match previous year results thanks to a number of large-scale leases, generating total logistics take-up of 343,800 sqm. Two of the German Big 7, however, recorded drops in take-up. The Stuttgart region, characterized by the automotive industry, recorded around 235,000 sqm in total take-up, reflecting a yoy drop of 12%. Berlin was also unable to match previous year results, generating 352,700 sqm in take-up, down 22% yoy. This decrease in take-up can largely be attributed to increasingly scarce supply making it difficult for logistics companies to find large-scale space.

Supply and Demand

Retailers as well as logistics and transportation service providers generated similar shares in total take-up of 35% and 38%, respectively. However, retailers such as Amazon and Dutch online retailer Action were significant forces behind large-volume new-build projects, boosting take-up in those regions. The lease signed by Metro for around 235,000 sqm of new-build space in Marl, North Rhine-Westphalia, was the largest lease signed outside of the Big 7.

Peter Kunz, Head of Industrial & Logistics Germany at Colliers International, says, “High demand for space in the Big 7 has led market participants to rethink their approach. As a result, new types of properties such as multi-story logistics centers are emerging on the market. Development company Segro took the lead, constructing such a property in the east of Munich for an international online retailer. This is the first property of this type to be built in Germany.”

Rents

Despite high demand, rents in the top logistics locations remained largely stable in 2016. Munich, Cologne and Hamburg were the only cities where limited supply caused prime rents to increase slightly. Prime rents for logistics space in Munich increased by €0.10 to a current €6.85 per sqm, making Munich the most expensive location in Germany, followed by Frankfurt (€6.30 per sqm) and Stuttgart (€6.20 per sqm). Hamburg (€5.80 per sqm), Düsseldorf (€5.40 per sqm), Cologne (€5.20 per sqm) and Berlin (€5.00 per sqm) came in at mid-field.

Summary and Outlook

“The German logistics sector is growing very rapidly. The interplay between retail and logistics services is clearly noticeable in many major cities. An increasing number of parcels are being shipped each day. Courier, express and parcel service providers are tapping into an increasing number of markets and are recording higher growth rates in Germany each year. While around 2.9 billion shipments were sent in 2015, the Bundesverband Paket- und Expresslogistik association expects figures to come to considerably above 3.1 billion in Germany in 2016,” says Peter Kunz.

This means that demand for suitable space will remain high in the next few years and market participants in the largest German cities will be rethinking their approach to using space. Tenants and project developers are increasingly focusing on brownfield developments in order to create suitable space. Sustainable integration of small-scale logistics into German city centers is also resulting in an increase in demand for entirely new types of properties. Construction of large-scale logistics properties will have to continue to focus on locations outside of the typical logistics hotspots due to lack of suitable space near cities.

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