According to a recent analysis by Realogis, the take-up of space in logistics and industrial properties in Germany, whether for rent or ownership, witnessed a significant decline in 2023.
Overall, 2.5 million square metres were newly rented in the German Top 8 markets, down from 3.5 million square metres in 2022.
“The trend that emerged in 2022 is continuing with increasing intensity. Space take-up in logistics, industry, and business parks is expected to decline by a significant 29.1 percent in 2023. This represents a decrease of around one million square metres compared to the total rental volume of 3.5 million square metres in 2022. To put this into perspective: the nationwide decline is equivalent to the total rental sales of all three top markets in North Rhine-Westphalia during good years,” explains Bülent Alemdag, Managing Director of Realogis Immobilien Düsseldorf GmbH.
Both from a five-year and a ten-year perspective, 2023 represents the weakest year overall.
“After losing its title as the former logistics world champion, this development sends a negative signal for the German economy. The population has grown to almost 85 million in just a few years. However, instead of providing more space to meet the needs of the population, retailers, and manufacturers, the conditions for constructing new modern, sustainable logistics, and industrial areas have significantly worsened over the same period. This is due, among other factors, to increased land prices and financing costs. The scarcity of space and rising construction costs have led to a steep increase in rental prices, which not every company can afford or wants to afford anymore,” emphasises Bülent.
Almost all of the top 8 markets experienced declines in take-up (Ruhr area: -13.3 percent, Stuttgart: -31.1 percent, Cologne: -32.6 percent, Hamburg: -38.8 percent, Berlin: -66.9 percent). Düsseldorf stagnated with a slight increase of 0.7 percent. On the other hand, Frankfurt and Munich were in clear positive territory, with increases of 44.3 percent and 8 percent respectively.
Ownership becoming less relevant
According to Realogis estimates, almost 92 percent of the deals were for properties that are not owned by the users. Owner-occupiers accounted for 8.5 percent, and ownership was unknown in 0.3 percent of the cases.
Logistics/forwarding advanced to first place in terms of take-up by sector with 1.05 million square metres or a share of 41.8 percent of the take-up in the top 8 markets. Retail slipped to second place in 2023 with 646,600 square metres.
“Trade is witnessing the most significant decline among all sectors. This can be attributed to weak consumer sentiment amid increased living costs, which is also reflected in the double-digit decline in online retail sales in Germany compared to 2022,” explains Jörg Lojewski, Managing Director of Realogis Immobilien Hamburg GmbH.
Industry/production came third with 486,300 square metres or a share of 19.4 percent.
Large areas continue to be in demand
“Large areas of 10,001 square metres or more remain the most sought-after in the top 8 locations. These properties are attractive to many companies because they typically offer a variety of multifunctional gates, roller shutters, grilles, and loading ramp solutions, supporting efficient production and goods flow for users,” explains Joel Adam, Managing Director of Realogis Immobilien Stuttgart GmbH.
Large areas accounted for a total of 1.2 million square metres or 48.6 percent of space take-up in 2023 (compared to 63.4 percent or 2.24 million square meters in 2022). The decline compared to the previous year was 45.6 percent.
Other size classes also recorded significant declines: medium to large areas (-15.7 percent), small to medium areas (-16.7 percent), and very small areas (-18.5 percent). Only areas between 5,001 and 10,000 square metres saw an increase in take-up of 18.8 percent year-on-year.
Rental costs characterised by clear regional differences
Rents have increased in all of the top 8 markets, although regional differences are evident.
“Prices for logistics and industrial properties in the top 8 markets continue to rise, both in terms of prime and average rents. No market is stagnating or experiencing a price decrease,” explains Nicolas Werner, Managing Director of Realogis Immobilien München GmbH.
The most expensive location in terms of prime rents remains Munich at 10.80 euros per square metre (an increase of 10.8 percent from 9.75 euros per square metre). Berlin comes second at 9.85 euros per square metre (a 9.4 percent increase from 9.00 euros per square metre), while Stuttgart takes third place at 8.40 euros per square metre.
Rents were cheapest in the Ruhr area at 7.25 euros per square metre, up from 6.50 euros per square metre.
Photo: NGK SPARKPLUG, CC BY-SA 4.0, via Wikimedia Commons