Logistics letting market stagnates at previous year's level

Retail companies dominate the market outside metropolitan areas

FRANKFURT, 30 April 2024 - Around 1.39 million m² (owner-occupiers and lettings) were taken up on the German market for warehouse and logistics space in the first quarter of 2024, with owner-occupiers accounting for around 23% of this figure at 325,000 m². This is the lowest quarterly result since 2012, falling only slightly short of the previous year's level of 1.41 million m², while the five-year average for the first quarters was undercut by around 23% and the ten-year average by 18%. The number of contracts signed also fell by around 15 per cent year-on-year to 150 contracts.

"The economic situation continues to have a dampening effect on the logistics letting market, with some users delaying decisions," says Sarina Schekahn, Head of Industrial & Logistics Agency JLL Germany. "Although individual economic indicators have recently improved again slightly, not all sectors are yet more confident about their situation. If optimism returns in the long term and in other sectors, large-volume requests will also return. However, it will be some time before this is reflected in the figures."

Big 5: Sales growth only in Frankfurt and Munich

Around 328,400 m² was taken up in the five metropolitan areas (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) in the first quarter of 2024. This is six per cent more than in the same quarter of the previous year, but also around a third less than the five-year average. The strongest region in terms of take-up is Frankfurt with 88,800 m², where the letting result more than doubled year-on-year. Munich follows with an increase of twelve per cent to 72,000 m², although a large proportion of this was accounted for by an owner-occupier deal. All other regions suffered year-on-year declines in take-up: In Düsseldorf, the drop was still manageable at five per cent to 44,300 m². The declines were more pronounced in the Hamburg (69,000 m²) and Berlin (54,300 m³) regions at 22 per cent and 21 per cent respectively.

A comparison with the five-year average shows a similar result, with double-digit declines in all regions except Frankfurt (plus 25 per cent) and Munich (plus 37 per cent). The decline in the long-term comparison is primarily due to the fact that fewer large deals were concluded. While only 15 contracts (206,600 m²) were concluded in the 5,000 m² and above segment in 2024, the five-year average was 21 and the ten-year average was 25.

The greatest demand came from companies in the transport, traffic and warehousing sector, which took up 135,700 m², twice as much space as in the first quarter of the previous year and thus accounted for 41 per cent of total take-up. The largest deal in the five conurbations played a significant role in this: Group 7 began construction of a logistics centre of around 60,000 m² in Oberding near Munich as an owner-occupier. Industrial companies accounted for a third of take-up: at around 110,000 m², they took up the same amount of space as in the same period of the previous year. Retail companies, on the other hand, took up 40 per cent less space - at 52,000 m², their share of total take-up was just 16 per cent.

Only around 93,000 m² of warehouse space was completed in the five metropolitan areas in the first quarter, meaning that the volume of new construction more than halved year-on-year (minus 58 per cent). However, all of the space had already been let or allocated to owner-occupiers before completion. Around 574,000 m² is currently under construction, 47 per cent of which is still unlet. The majority of the space is located in the Berlin (around 206,000 m²) and Frankfurt (140,000 m²) regions. "Locations close to city centres are still in demand," says Schekahn. "However, the lack of available space and new developments continues, as a result of which suitable properties are often fully let before completion, and the lack of alternatives inevitably increases users' willingness to pay and with it the prime rents."

Accordingly, prime rents in the 5,000 m² and above category have risen in all five metropolitan areas except Munich, where the highest rents in Germany were achieved at EUR 10.70/m². Frankfurt recorded the strongest increase of 4.6 per cent to EUR 7.95/m². It was followed by Berlin (up 3.1 per cent to EUR 8.25/m²), Hamburg (up three per cent to EUR 8.50/m²) and Düsseldorf (up 2.9 per cent to EUR 9.00/m²).

Outside the five strongholds, retail companies dominate

Around 1.06 million m² was taken up outside the five metropolitan areas in the first quarter of 2024, of which around 23 per cent was accounted for by owner-occupiers. This was four per cent below the previous year's figure of 1.10 million m² and 19 per cent below the five-year average.

At 37%, retail companies are not only responsible for the majority of take-up, but also for the three largest lettings: the Swiss online retailer Galaxus is renting around 90,000 m² in Neuenburg am Rhein, while a logistics centre of around 69,000 m² is being built in Nörvenich for the pet supplies retailer Fressnapf. In Wallersdorf, the Dutch non-food discounter Action is renting around 55,000 m².

"More difficult economic times are typically accompanied by a shift in consumer behaviour towards greater price sensitivity," says Schekahn. "In order to meet the increased demand in the low-price segment with an expanded offering, these retailers are expanding their infrastructure and requesting additional space. Due to the required sizes and lower prices, they are moving to the surrounding areas." Users from the transport, traffic and warehousing sector followed with 30 per cent and industrial companies with 24 per cent.

The most sought-after region in the first quarter was once again the Ruhr area with 68,500 m², although this was much tighter than before. This was closely followed by the Cologne region with 67,100 m² and Leipzig/Halle with 65,800 m². Around 66 per cent of take-up of 5,000 m² or more was in new builds or project developments. In the size segment of more than 50,000 m², the figure was as high as 100 per cent.

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, hotel, 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 106,000 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