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Colliers: Record transaction volume for industrial and logistics properties

  • Record result of roughly €5.9bn in transaction volume
  • Logistics with double-digit market share (15%)
  • Portfolio transactions and foreign investment remain scarce
  • Gross yields down to 3.4%

Frankfurt am Main, 11 October 2021 Investors poured a record €5.9bn into German industrial and logistics properties in the first 9 months of the year. According to Colliers, this is the second strongest result ever recorded at the end of a third quarter, second only to record year 2017. Transaction volume was up roughly 19% yoy, exceeding the 4-year average by 18%.

Nicolas Roy, Head of Industrial & Logistics Germany at Colliers, comments, “Market activity in the first nine months of the year was dominated by strong demand from e-commerce companies. The shift in buying behavior brought on by the pandemic has enabled many online grocery retailers and food delivery services to enter the market. These new market entrants are making the logistics segment more attractive to many investors. As a result, logistics properties claimed an impressive market share of 15%, making logistics one of the most interesting asset classes at the moment.”

European investors particularly active

 

Because of the ongoing pandemic and travel restrictions, German investors accounted for roughly 56% of total transaction volume. This is in line with the H1 result and indicates that interest among domestic investors remains extremely high. Patrizia was particularly active in Q3 , acquiring a portfolio consisting of 5 DHL properties. Catella also acquired 4 logistics assets for their special fund. 

The market share claimed by foreign investors remained quite stable at around 44% of total transaction volume. Compared to pre-pandemic levels, this result reflects a roughly 14 percentage points drop from 2019’s results (58%). It is worth noting that around two thirds of foreign capital had its source in Europe. British investors acquired a record number of almost 40 logistics assets in Germany and poured around two thirds of their capital into logistics assets outside the country’s top 7 investment hubs.

 

Single-asset deals post record share

 

The market share claimed by portfolio deals remained stable at roughly 31% yoy. The majority of these deals were signed in Q2 (7 deals) with just 3 high-volume portfolios changing hands in Q3. Swiss Life Asset Managers acquired 10 European logistics properties, 6 of which are located in Germany, for a purchase price in the lower 9-figure range. The properties were part of the 2019 Coldplay portfolio. Europa Capital sold 8 logistics properties, including some that it had acquired only a year prior, to Australia-based Arrow Capital Partners. In a long-term comparison, the market share claimed by portfolio deals was down 7 percentage points, well below the pre-pandemic levels recorded in 2019.

 

The most significant single-asset deals of Q3 include the acquisition of a logistics property in Großbeeren near Berlin. This represents the largest single-asset deal signed in the core logistics segment in Berlin and throughout Germany this year to date. Around two thirds of all single-asset deals recorded in Q3 involved German investors while most portfolios were snapped up by foreign investors.

 

Price competition continues to intensify

 

High demand combined with very limited supply continues to spur competition on the market. Yields for core logistics assets in prime locations under lease to strong-covenant tenants dropped again in Q3 to a current 3.4%, down 50 bps yoy. “Yields have experienced a particularly strong slump since H2 2020, dropping an average of roughly 50 bps each quarter since Q4 2020. The first transactions with a purchase price multiplier of around 30x were recorded at mid-year and we expect to see more similarly priced deals signed in the final quarter of the year,” explains Nicolas Roy.

 

Outlook

 

“In light of current market conditions, we expect to see several attractive deals finalized in Q4 2021. Annual results are likely to exceed the previous year’s record transaction volume. Higher construction prices will continue to drive up purchase prices for property developments. The general economic situation and travel restrictions due to the pandemic will continue to stabilize as the year progresses. As a result, we expect international buyers to become more active, which will further intensify competition around prices,” concludes Nicolas Roy.


Related Experts

Susanne Kiese

Head of Market Intelligence & Foresight | Düsseldorf

Duesseldorf

Susanne joined Colliers International Holding GmbH in February 2016 as Head of Research Germany. Before, she worked as a Senior Research Analyst for Hypothekenbank Frankfurt / Eurohypo, a specialist bank for real estate and public finance for almost 12 years. Susanne was also Research Analyst with Deutsche Gesellschaft für Offene Immobilienfonds (DEGI) GmbH, the property related investment company of Allianz Dresdner Property Group (now part of Aberdeen). 

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Nicolas Roy

Head of Industrial & Logistics | Germany

Munich

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