BNP Paribas Real Estate publishes logistics market figures for the fourth quarter of 2023 - Frankfurt logistics market on track with a strong second half of the year

The Frankfurt logistics market gained significant momentum in the second half of 2023. Following an already dynamic third quarter, take-up rose further to 195,000 m² in the final quarter. This was the strongest quarter of the year in terms of take-up and contributed significantly to the annual result of 440,000 m². Although the long-term average was missed by 18%, the result for 2023 was around 27% higher than the previous year. This is the result of an analysis by BNP Paribas Real Estate.

"The weak economic development has certainly not left the development of demand and take-up on the Frankfurt logistics market completely unaffected, but the excess demand and the pronounced shortage of supply continue to have a much greater impact. On the one hand, there is often a lack of attractive and, above all, adequate alternative space for upcoming rental decisions, and on the other hand, many tenants are opting for contract extensions rather than new leases in view of the continued sharp rise in rent levels," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. In response to the ongoing supply shortage, the prime rent has climbed by almost 8% to €7.85/m², while the average rent has risen by 15.5% to €6.70/m².

Industry/production by far the strongest sector 

The Frankfurt logistics market is broadly based. Four size categories account for shares of 17 % to 19 %. Compared to the previous year, momentum has accelerated in the 5,001 to 8,000 m² segment in particular, whose result is now above the long-term average (+19.5 %) after a weak 2022. The 8,001 to 12,000 m² (+96 %) and 12,001 to 20,000 m² (+83 %) size categories also recorded growth.

It is pleasing to note the increased signing activity in the second half of the year for space over 20,000 m². All four registered contracts were signed in the second half of the year, three of them in Q4. Nevertheless, their result is clearly below average (-61 %). The decline in agreements for over 20,000 m² appears to be partly due to reduced demand from the e-commerce sector. After several very expansive years, a consolidation seems to be emerging in this sector.

The strongest sector by far was industry/production (40% market share). It accounted for three of the four deals of over 20,000 m² and its result of 176,000 m² was 53 % above average. In contrast, take-up by logistics service providers fell for the second year in a row and is around 51 % below average. Retail companies saw an upturn again in 2023 (+22 %), although they also fell well short of the 10-year average by -45 %.  

Prospects

Despite the challenging conditions, the Frankfurt logistics market can look back on a satisfactory year overall with positive signs again and, in particular, rising take-up in the final months of 2023. The great stability of the market gives cause for optimism, as there are currently few signs of a short-term change in market conditions. The economy is not expected to develop noticeably more momentum until later in 2024 and there are no signs of any easing on the supply side either. 

"However, demand for logistics space in the economically above-average Frankfurt region should remain solid and take-up should exceed the 2023 level and return to the long-term average. Nevertheless, supply bottlenecks and lease extensions will continue to have a dampening effect on take-up growth. Speculative developments will continue to be little tackled, not least due to the lack of land, construction cost trends and increased regulatory requirements, meaning that little relief is expected here. The excess demand will ensure further increases in prime and average rents in the Frankfurt market area," says 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

About BNP Paribas Real Estate

BNP Paribas Real Estate is a leading international property services provider that offers its clients comprehensive services in all phases of the property cycle: Transaction, Consulting, Valuation, Property Management, Investment Management and Property Development. With 5,300 employees, the company supports owners, tenants, investors and the public sector in their projects thanks to local expertise in 23 countries (own locations and alliance partners) in Europe, the Middle East and Asia. BNP Paribas Real Estate is part of the BNP Paribas Group, a leading global financial services provider. 

As part of its commitment to sustainable cities, BNP Paribas Real Estate aims to play a leading role in the transition to creating more sustainable real estate that is low-carbon, resilient, inclusive and conducive to well-being. To this end, the company has developed a CSR policy with the following four objectives: to improve the economic performance and use of buildings in an ethical and responsible manner; to enable a low-carbon transition and reduce the environmental footprint; to ensure the development, engagement and well-being of employees; and to be an active player in the property sector, building and promoting local initiatives and partnerships.

Further information: www.realestate.bnpparibas.com/

About BNP Paribas in Germany

BNP Paribas is a leading European bank with an international reach. The BNP Paribas Group has been active in Germany since 1947 and has successfully positioned itself in the market with 12 business units. Private, corporate and institutional clients are served by around 6,000 employees nationwide in all relevant economic regions. www.bnpparibas.de