First market in Germany to record falling prime logistics rents

Only cities in eastern Germany see growth in the second quarter of 2024

FRANKFURT, 8 July 2024 - Growth in prime rents on the German market for warehouse and logistics space has already gradually lost momentum in recent quarters. This trend intensified in the second quarter of 2024: an increase in prime rents compared to the previous quarter was only recorded in four of the 19 markets analysed, where space of more than 5,000 m² is taken into account. Prime rents stagnated in 14 regions, while they even fell in Bremen: up to EUR 5.85/m², four per cent less than in the previous quarter and the same quarter of the previous year, was achieved in the Hanseatic city.

"Bremen has recently had to contend with various developments that have led to a decline in demand, particularly for large spaces," explains Sarina Schekahn, Head of Industrial & Logistics Agency JLL Germany. "Among other things, the subdued consumer mood is causing sales to slump across the board in e-commerce, and the car manufacturer Mercedes-Benz has also cut back production at its plant in Bremen. Among other things, both of these factors are resulting in lower handling of goods in the ports of Bremen and lower demand for logistics. Although this cannot be restored with a lower prime rent, at the right moment it can at least provide a decisive competitive advantage."

Schekahn emphasises that it does not have to be Bremen alone: "There is a potential risk that we will see further declines in prime rents in the current year. Initially, C-locations with significant vacancies are particularly at risk, but other markets may also be affected depending on how demand develops." Ultimately, the impact of the tense macroeconomic situation is being felt throughout Germany. "Automotive in particular is facing numerous challenges: Sales of electric cars from German manufacturers are weakening, while cheap, Asian e-cars are flooding the market. This is creating uncertainties for drive strategies and leading to uncertainties in property decisions."

All markets in which prime rents increased in the second quarter compared to the start of the year are in eastern Germany. The highest growth of five per cent to EUR 6.30/m² was achieved in Dresden, where increasing demand meets a barely increasing supply of space. Berlin achieved a prime rent of 8.50 euros/m², up three per cent, followed by Erfurt (5.40 euros/m²) and Magdeburg (5.30 euros/m²), both with two per cent growth.

In a year-on-year comparison, however, the balance reads much more optimistically with growth in 15 markets: Duisburg (8.00 euros/m²) achieved the highest growth with an increase of 19 per cent. Second place was shared by Cologne, Berlin (both EUR 8.50/m²) and Leipzig/Halle (EUR 6.20/m²) with 13 per cent each. Dresden (up eleven per cent; EUR 6.30/m²) and Magdeburg (up ten per cent; EUR 5.30/m²) have also increased. The highest prime rent by far continues to be achieved in Munich at 10.70 euros/m². The next most expensive markets are Düsseldorf (9.00 euros/m²) and Stuttgart (8.75 euros/m²). Cologne, Hamburg and Berlin are not far behind at EUR 8.50/m² each.

A look at the past five years shows just how much prime rents have risen: the increase was between 24 per cent (Hanover/Brunswick) and 67 per cent (Düsseldorf, Cologne and Essen) and was more than 50 per cent in ten markets. "Under the current economic conditions, the rent level is causing challenges for some users," says Schekahn. "Decisions are being delayed. Occupiers who have currently rented space that they do not need in full accept this cost-intensive situation as long as it pays off compared to renting new space plus high relocation costs or the space can be capitalised by subletting."

Contact: Sarina Schekahn, Head of Industrial & Logistics Agency JLL Germany
Phone: +49 (0) 40 350011 149
Email: sarina.schekahn@jll.com

About JLL

For more than 200 years, JLL (NYSE: JLL), a leading global commercial property and investment management firm, has helped clients acquire, build, occupy, manage and invest in a wide range of commercial, industrial, hospitality, residential and retail properties. As a Fortune 500® company with annual revenues of $20.8 billion and offices in more than 80 countries worldwide, our approximately 108,000 employees offer the power of a global platform combined with local expertise. Driven by our mission to shape the future of property for a better world, we help our clients, employees and society - true to our motto "SEE A BRIGHTER WAY". JLL is the brand name and a registered trademark of Jones Lang LaSalle Incorporated. All contact details and press information for JLL Germany can be found at: jll.de/press