Logistics market: Space take-up down slightly on 2023, but third quarter confirms positive market trend

BNP Paribas Real Estate publishes data on the logistics market for the first three quarters of 2024

With take-up totalling almost 4 million m² in the first three quarters, the nationwide logistics market was unable to keep pace with its long-term average of around 5 million m² (-22%). However, after a subdued start to the year, there has been a noticeable market revival in recent months, which is reflected in increased demand and a recovery in take-up. This is a pleasing result in view of the continuing challenging economic conditions. These are the findings of an analysis by BNP Paribas Real Estate.

Take-up with an upward trend and significantly more activity

"In the current market environment, the high letting volumes of 2021 and 2022 can no longer be realised despite the broad demand base," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. "While the continuing weak economic development is not providing enough impetus, the falling inflation and the recent interest rate hikes by the ECB and the Fed are sending out positive signals. Against this backdrop, logistics space turnover has fallen by around 12% compared to the same period last year, but a positive trend has been observed since the weak first quarter. The last three months performed slightly better than the second quarter. It is also pleasing to note that the take-up of around 1.5 million m² generated in the past three months is just above the average value of all isolated quarterly results since Q1 2023. It is also particularly noteworthy that the number of registered contracts has risen noticeably over the course of the year and that the third quarter has approached the average of the past five years. In order to achieve a higher sales result, there is currently a lack of large-scale contracts above the 20,000 m² mark, of which there were significantly more in previous years."

In line with this development, both the owner-occupier segment and the new-build segment have recorded above-average declines in take-up compared to the previous year's volume, at -17% in each case. Nevertheless, the highest individual take-up is currently attributable to new-build space, with manufacturing companies such as BMW (150,000 m²) and Mercedes-Benz (100,000 m²) as well as retail companies such as Nordwest-Handel (70,000 m²) and Fressnapf (68,000 m²) in Nörvenich leading the way.

Retail continues to recover, production benefits from the automotive segment

In terms of the distribution of sales across the various sector groups, retail companies stand out in particular, achieving a year-on-year increase in sales of 29% compared to the weak result in 2023. This is a good example of how directly economic and external influencing factors are reflected, both positively and negatively, in the space turnover of individual sectors on the logistics market. While the retail sector generated record volumes during the coronavirus crisis, primarily due to the e-commerce and food sectors, it recorded a historic low in 2023 and is currently on a noticeable recovery path again. Overall, however, the retail sector is currently only in third place with a sales share of just under 28%, behind the two other key pillars of demand. As in the same period last year, production companies are in first place, benefiting from restructuring processes in the automotive sector, among other things, and are closest to their long-term sales average at around 37%. Logistics service providers follow in second place with a good 29%.

Heterogeneous development in the major logistics hubs, only slight decline overall

When analysing the top logistics markets individually, an increase in turnover in three locations contrasts with a lower volume in four logistics agglomerations. Overall, the seven most important markets (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Leipzig and Munich) registered take-up of around 1.4 million m², which means that the result fell by 7% in a 12-month comparison. While Cologne (+93%; 204,000 m²), Frankfurt (+24%; 304,000 m²) and Düsseldorf (+6%; 190,000 m²) recorded noticeable increases, Munich (-48%; 115,000 m²), Leipzig (-31%; 182,000 m²), Hamburg (-28%; 178,000 m²) and Berlin (-6%; 216,000 m²) fell short of their prior-year figures. The overall very heterogeneous developments in the various locations are also reflected in the ranking of the top markets, where Frankfurt is currently clearly in the lead ahead of Berlin and Cologne. The most important agglomerations also include the polycentric logistics region of the Ruhr, which at 228,000 m² achieved a result similar to that of the previous year (-4%).

The strong rental growth of recent years continued only marginally in the first three quarters and largely turned into a sideways movement. Prime rents in the individual logistics centres have not changed compared to the previous quarter - only year-on-year adjustments of 4% on average have been reported across all locations. Munich (€10.50/m²), Hamburg (€8.50/m²) and Berlin (€8.20/m²) remain above the €8/m² mark. However, Frankfurt (€7.95/m²), Düsseldorf (€7.90/m²), Cologne (€7.70/m²) and the Ruhr region (€7.60/m²) are all in the price segment of more than €7.50/m². The Leipzig logistics region, on the other hand, has a significantly lower peak level of €5.90/m². It remains to be seen whether prime rents will continue to rise in one location or another in the coming months.

Prospects

Hardly any significant changes are expected for the further development of the market until the end of the year. "The weak economy and the resulting subdued mood among companies will continue to have a limiting effect on the expected take-up of space," explains Bastian Hafner, Head of Logistics & Industrial Advisory at BNP Paribas Real Estate GmbH. "Nevertheless, the positive trend in the number of contracts and the slight increase in take-up underline the recovery in demand that has been observed over the course of the year. Although many companies are still waiting to see how things develop and, in case of doubt, are remaining in their existing space, there is significantly more movement in the market overall than at the beginning of the year. The resurgent retail sector and the very steady demand from manufacturing companies and logistics providers form a very broad basis for a further upward trend in letting volumes in the final quarter."

To summarise, from today's perspective it cannot be ruled out that the total take-up of space will be closer to 6 million m² by the end of the year than initially expected. However, the most important external influencing factors, such as the development of the global economy in particular, must still be taken into account, as the past has shown how directly the logistics market reacts to this. However, if the general conditions brighten up in the coming quarters, the logistics sector is also poised for a positive market development.

Press contact:
Chantal Schaum - Tel: +49 (0)69-298 99-948, Mobile: +49 (0)174-903 85 77, chantal.schaum@bnpparibas.com
Pia Ewald - Tel: +49 (0)69-298 99-941, Mobile +49 (0)160-905-800-19, pia.ewald@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 5,000 employees, the company supports owners, tenants, investors and the public sector in their projects thanks to local expertise in 24 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. It has around 183,000 employees in 63 countries, including almost 146,000 in Europe. The BNP Paribas Group has been active in Germany since 1947 and has successfully positioned itself on the market with 12 business units. Private clients, companies and institutional clients are served by around 6,000 employees nationwide in all relevant economic regions. The broad range of products and services offered by BNP Paribas corresponds to that of an innovative universal bank. www.bnpparibas.de