BNP Paribas Real Estate publishes data on the logistics market for 2023 as a whole - No new exceptional results on the nationwide logistics market, but good overall take-up again despite a challenging environment

It was already clear at the start of 2023 that it would be very difficult to keep pace with the two record results of previous years. Even though, as expected, the nationwide logistics market was unable to do so last year with take-up totalling a good 6.3 million m² (-26% compared to 2022), the demand situation can be considered somewhat more subdued due to the economic and geopolitical uncertainties, but still good overall (only -9% compared to the ten-year average). The fact that significantly higher total volumes than in the past 12 months were only generated in 2022 (almost 8.5 million m²), 2021 (almost 9.2 million m²) and 2018 (around 7.4 million m²) in the period since 2014 underlines the continued positive market sentiment. Investors continue to have confidence in the good development prospects of the logistics sector, which was underlined by the highest investment volume by far among the property types in the fourth quarter compared to other asset classes. The most important determinants for even higher take-up primarily include the difficult conditions for project developments, the further shortage of available space in and outside the major logistics regions and the increased importance of contract extensions in existing properties. BNP Paribas Real Estate has analysed how these factors are reflected in the individual sectors, locations and rents based on the key figures for the nationwide logistics market for 2023. 

Automotive sector as the most important driver due to major deals, logistics service providers are the main focus of demand in the major locations

A very differentiated picture is particularly visible in the letting impulses of the various user groups: as a result of the steadily increasing importance of the e-commerce sector in recent years, retail companies have been among the most important drivers of turnover, while they are currently only in third place in the industry ranking of the three most important pillars of the logistics market with around 21%. In contrast, companies from the automotive sector, which accounted for four of the five largest deals of the past year with Daimler Truck in Halberstadt (260,000 m²), Volkswagen in Salzgitter (210,000 m²), another well-known car manufacturer in Bitterfeld-Wolfen (86,000 m²) and BMW in Pilsting (73,000 m²), are currently generating a very high level of take-up momentum. The automotive sector is responsible for around a fifth of the overall result and thus for a comparable volume (around 1.2 million m²) to the retail sector. Driven by this, the industrial and manufacturing sector was able to repeat its already very high result from the previous year with take-up of around 2.6 million m², which was made possible by the Tesla Gigafactory, among other things, and even achieved the highest market share ever in a long-term comparison at a good 40%, securing first place in the sector ranking. However, logistics service providers are also in strong demand overall, contributing a lower figure than 12 months ago in the nationwide analysis at just under 29%, but at the same time representing the most important demand group in the top markets at almost 39%. This development can be attributed to the increased importance for companies to successively improve their own supply chains in large metropolitan regions and at the same time add city logistics centres. All other sectors account for a further 10% of the result.
 
The decline in total take-up was spread across both the new-build (around 4.2 million m²; -23%) and the existing sector (a good 2.1 million m²; -29%). However, the main reason for this in both segments is the lack of supply: While the shortage of space in the existing property sector is increasingly leading to contract extensions, the volume of new construction is being severely restricted by the challenging environment in the project development segment. Players from the automotive sector also made a decisive contribution to the volume of new-build space with the aforementioned major deals by Daimler Truck, Volkswagen and BMW.

Most of the top markets achieve lower take-up due to supply, upward trend in rents continues

The seven most important German logistics locations (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Leipzig and Munich) were unable to match their previous year's performance in 2023 and, with take-up of around 2 million m², are almost 32% below their 2022 figures. In the city rankings, most of the major logistics regions lost ground, with a few top markets even exceeding their previous year's results and significantly changing the order in the location hierarchy. 
 
In the individual ranking, Frankfurt (around 440,000 sqm; +27%) took the lead at the end of the year and was the only logistics market to break the 400,000 sqm mark. Second place was taken by Berlin (350,000 m²; -66%), followed by Leipzig (around 323,000 m²; -19%), which benefited from the aforementioned major automotive deal signed by a German premium manufacturer in Bitterfeld-Wolfen. Düsseldorf (around 294,000 m²; +14 %), Hamburg (around 272,000 m²; -49 %) and Munich (around 238,000 m²; +5 %) are above the 200,000 m² mark, while Cologne (around 160,000 m²; -38 %) is below it. The polycentric logistics region of the Ruhr, which has recorded a consistently high letting volume for many years now, once again achieved a very good result with around 496,000 m² (-8%). 
 
Overall, it should be noted that the most important metropolises are currently facing similar conditions with tight letting markets and more or less severe space bottlenecks. As a result, it is not surprising that the upward trend in rent levels has continued across all locations over the course of the year. On average, both prime and average rents have risen by a further 9% and 11% respectively over the past 12 months. Munich remains the most expensive location (€10.50/m²), but Hamburg (€8.10/m²) and Berlin (€8.00/m²) have also left the €8/m² mark behind or reached it over the course of the year. Düsseldorf (€7.90/sqm), Frankfurt (€7.85/sqm) and Cologne (€7.70/sqm) followed in second place. Prime rents in the Ruhr region (€7.60/m²) and Leipzig (€5.90/m²) also increased significantly by 27% and 13% respectively. The fact that, with the exception of Munich and Leipzig, all top markets have prime rents in a very narrow range between €7.60/m² and €8.10/m² is a clear indicator that the overall market attractiveness of the major logistics regions is very similar.

Economic outlook and supply situation as determinants of demand development

"In 2023 as a whole, the nationwide logistics market was unable to achieve a result on a par with the two excellent results of the previous year. Nevertheless, the broad and diverse demand base for logistics space in Germany has also been reflected in market activity over the past 12 months, with the manufacturing and automotive sectors leading the user groups after the strong years of the retail sector. While these companies are currently predominantly active outside of the top markets, logistics service providers are generating a high level of demand within the A-locations. As the economic outlook continues to improve, it can also be assumed that the share of take-up in the retail segment is also likely to pick up again," says Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. "In the current year, we have also observed that the letting market has turned in favour of small spaces close to city centres and well-connected medium-sized logistics centres in many larger locations due to supply factors. Although these provide a high level of dynamism, they do not have a decisive impact on take-up like the large big-box lettings. In contrast, large-scale searches generally remain dependent on developments within the new-build sector. In the course of the outlined tightening of the supply-demand ratio, rental prices are also under further upward pressure. However, such a dynamic development as in recent years is no longer to be expected in the future," adds Bastian Hafner, Head of Logistics & Industrial Advisory at BNP Paribas Real Estate GmbH.
 
Press contact:
Chantal Schaum - Tel: +49 (0)69-298 99-948, Mobile: +49 (0)174-903 85 77, chantal.schaum@bnpparibas.com
Viktoria Gomolka - Tel: +49 (0)69-298 99-946, Mobile: +49 (0)173-968 60 86, viktoria.gomolka@bnpparibas.com

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