July 2011, Munich – In the commercial real estate market in Germany, investments of about € 587 million were made in warehouse, logistics and industrial real estate during the first six months of 2011. In contrast to the trend in the overall market, which showed an increased transaction volume of 24% to a total of € 11 billion, the logistics and industrial real estate market saw a decline of 17% in comparison with the previous year. “During the past year, however, the logistics and industry investment market was dominated by the purchase of a large portfolio with a volume of about € 330 million in the second quarter. There was no comparable deal in the first half of 2011,” explains Andreas Trumpp, Head of Research at Colliers International in Germany.
“Still, the acquisition of the ING Industrial Fund by Goodman Trust Australia, with its German share of about € 160 million, puts the logistics and industrial real estate segment among the top 10 largest sales in the overall market during the first half of the year,” he adds. In all, though, this market segment – like hotel real estate, which also achieved about a 5% market share - remains limited to specialized investors.
The German share of the IIF portfolio, amounting to about € 160 million, was by far the largest transaction in the area of logistics and industrial real estate in the first half of 2011. Overall, the portfolio consisted of 60 properties worldwide with a total value of about € 1.8 billion. 44 of these properties were in Australia. Of the 16 properties in Europe, 11 were in Germany. Another noteworthy (individual) transaction in the logistics and industrial real estate area was the sale, concluded at the beginning of the year, of the “Wilhelm-Bergner-Straße” industrial park in Glinde, near Hamburg.
Beos, a Berlin-based real estate company, acquired the property – which was distributed among multiple office, warehouse and manufacturing buildings – from the Carlyle Europe Real Estate Partners fund on behalf of an international investment group. The investment volume was about € 70 million. The purchase price for an approximately 54,000 m² logistics park on Union-Brauerei-Straße in Groß-Gerau was about € 40 million; the Nextparx Group sold this property to a closed-ended fund belonging to Taurus Investment Holding (Deutschland), as part of a private placement. The property, which was completed in 2010, was developed in three building phases and was awarded a silver seal of approval by the DGNB (German Sustainable Building Council). Long-term leases have been concluded with MGL Metro Group Logistic Warehousing GmbH, which leased the first and third building sections, and with Stute Verkehrs GmbH, which occupies 11,000 m² in the second building section.
Based on transaction volume, REITs invested the most capital in logistics and industrial real estate, with € 209 million. Significant transaction volumes were also achieved by open-ended real estate funds and special funds, at just under € 112 million, as well as by closed-ended real estate funds, at about € 81 million. “International investors were the buyers in three of the five largest deals. As a result, investors headquartered outside Germany accounted for two-thirds of the transaction volume – about € 396 million,” says Andreas Trumpp. 45% of the total capital invested during the first half of the year was also invested in portfolio purchases.
REITs were also in the lead on the buyers’ side; with a transaction volume of € 177 million, they came in just ahead of project developers, who had a purchase volume of € 175 million. With a transaction volume of about € 110 million, corporate buyers / owner-occupants completed the three most active sales areas.
“First-class logistics and industrial real estate has grown more expensive in many locations over the last twelve months. This is due to the shortage of suitable properties,” explains Marcus Blumenthal, Senior Consultant for Industry and Logistics at Colliers International in Munich. Because of the unexpectedly strong economic upturn in the last twelve months, rental volumes increased notably and took many properties off the market. Since speculative project development was practically nonexistent during the economic crisis, there is now a shortage in the high-demand core properties.
The most expensive area is the Rhine-Main region, where first-class logistics and industrial real estate is currently being traded at a prime yield of 6.50%. In the Munich and Stuttgart regions, yields increased by 20 basis points in comparison with the previous year, to 7.00% and 7.10% respectively. In Hamburg, the yield is 7.20%, and 7.50% in Düsseldorf. The largest jump was seen in Berlin, where the prime yield moved by 60 basis points, from 8.00% to a current 7.40%. “Because the project development activity remains modest, we assume that prime yields will continue to decrease slightly,” says Marcus Blumenthal.
Investors are especially focusing on the Hamburg region, where the rental market is setting records, and on the Frankfurt region. Many leasing projects that had been on the back burner for the last two years have been concluded, or are now being implemented. “The Rhine-Ruhr metropolitan region is also benefiting from its central location in a strong national and international economic context, which helps it attract high investor interest,” says Marcus Blumenthal.
“In addition to pure logistics and industrial real estate, there is an increasing demand for light industrial properties and industrial parks in good to excellent locations,” he adds. This type of real estate offers investors maximum flexibility for alternate uses, with consistently high demand from medium-sized users in particular.