Increasing pressure to refurbish logistics properties in Germany

57 per cent of properties in Germany are more than ten years old

FRANKFURT, 6 June 2024 - Numerous industrial and logistics properties in Europe are at risk of no longer being able to meet users' requirements as they get older. Low energy efficiency and high CO2 emissions no longer meet current standards, making it more difficult for occupiers to achieve their ESG goals and forcing them to look for more sustainable properties. Investors must implement appropriate refurbishment measures to ensure that their logistics properties remain competitive and do not become stranded assets.

The JLL report "Warehousing Retrofitting" shows that around 61 per cent of logistics properties in Western and Central Europe are more than ten years old and should therefore be reviewed in terms of their sustainability aspects. In Germany, the figure is 57 per cent. The situation is more pressing in other established western markets: In Belgium, for example, around 82 per cent of logistics properties are more than ten years old, and Italy (79 per cent) and France (75 per cent) also have a high proportion of older existing properties. Although the extensive construction of modern logistics properties only began in many countries in the CEE region when they joined the EU in 2004, older properties are also in the majority there, such as in Hungary (66 per cent) and Slovakia (62 per cent).

The reduction of CO2 is a particular issue for logistics service providers in Germany: at 37 per cent, they account for the largest share with this sustainability goal. The types of use and services are broadly diversified and extend across all sectors. Users from the e-commerce (26 per cent), industry (22 per cent) and retail (14 per cent) segments follow at a distance. Logistics service providers in particular often opt for new buildings, which can generally achieve higher energy efficiency than refurbished properties, but are also associated with higher rental prices.

"Small measures such as the renewal of lighting systems or simple technologies can already be carried out during regular maintenance, and a photovoltaic system can also be installed on a pre-equipped hall roof during ongoing operations," says Sarina Schekahn, Head of Industrial & Logistics Agency JLL Germany. "Tenant changes or periods of vacancy, on the other hand, are ideal for more extensive measures such as the renewal of heating, ventilation or air conditioning technology. The longer period of vacancy is offset by an increase in the capital value of the property, while users benefit from lower utility costs."

Depending on the need, various measures can be taken in different price categories. However, the older the property, the higher the investment required for modernisation. "As a rule, high expenditure only pays off for investors if it results in higher rents and thus an increase in capital value," explains Diana Schumann, Co-Head of Industrial & Logistics Investment JLL Germany. "However, the pressure to refurbish is likely to increase further with increasing regulation. On the one hand, users are likely to increasingly demand ESG-compliant assets, while on the other, financiers are already often restricting loans to those buildings that meet the EU's decarbonisation and energy targets or can achieve them through retrofitting. Sales of unrenovated logistics properties are penalised with price discounts."

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

Contact: Diana Schumann, Co-Head of Industrial & Logistics Investment JLL Germany
Phone: +49 (0) 211 13006 410
Email: diana.schumann@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