BNP Paribas Real Estate publishes logistics market data for the first quarter of 2023 - Logistics lettings market starts 2023 with challenges

The German logistics markets have made a subdued start to 2023 overall. Take-up of 1.25 million m² (including owner-occupiers) was recorded in the first three months of the year. As expected, the brilliant record result from the previous year, which included the Tesla construction start in Grünheide near Berlin with 327,000 m² of space, was missed by almost 46%. The current result is also weak in a long-term comparison, as the ten-year average of almost 1.5 million m² was not reached (-16%). The imbalance between supply and demand continues to dominate the market. The continuing high demand is not reflected in corresponding take-up in many places due to the lack of available space. This is the result of an analysis by BNP Paribas Real Estate.

Various factors are responsible for the comparatively moderate start to the year. "The significantly gloomier economic development in the winter months certainly played a not insignificant role in the interim result. Some companies are initially delaying decisions, especially when it comes to large-scale lettings, in order to wait and see how things develop. Due to the noticeable rise in rents, we are also observing that users are increasingly taking options and extending expiring leases where possible, which means there is less movement on the market. At the same time, the tense situation on the supply side is playing a greater role than ever. In the major conurbations, but also increasingly in peripheral locations, there is less and less adequate space available, not least due to the high take-up of space in recent years. The supply shortage affects both well-equipped, large-scale existing buildings and potential plots for new developments," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH.

However, at 60%, the share of new builds in take-up is only slightly below the long-term average, which is probably due to the shortage of supply in the large-scale segment, as large-scale requests can still only be met by new builds. Meanwhile, the trend towards falling owner-occupier shares continues. At currently 26%, this figure is more than 10 percentage points below the ten-year average, although manufacturing companies in particular continue to be very active in this segment.

Fewer major deals in the important logistics markets

The major logistics regions (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Leipzig and Munich) also started the year moderately for the most part. With a combined take-up of 398,000 m², they remain 30 % below the ten-year average. In particular, the lack of major deals has had a major impact on the balance sheet for the first three months. The majority of take-up was generated by deals of up to 12,000 m². While Hamburg recorded the highest take-up of space among the major logistics hubs at 88,000 m² (-30%), Berlin (55,000 m², -89%), Frankfurt (44,000 m², -6%), Leipzig (44,000 m², -51%) and Cologne (30,000 m², -70%) fell short of their prior-year and average figures. Only in Munich was it possible to register a rental agreement above the 20,000 m² mark with Siemens Mobility. This made a significant contribution to the Bavarian capital achieving a record result of 70,000 m², which is 37 % above the previous year's result. Düsseldorf also achieved its best result of the last ten years (67,000 m², +24%) thanks to larger transactions. Although demand in the major logistics regions has fallen somewhat, it continues to exceed supply. Numerous large-scale new-build properties were already completely absorbed by the market last year, meaning that some of the corresponding requests could not be met within the market areas. Outside of the top agglomerations, take-up totalled 852,000 m² and was thus below the results of previous record years - but only 7% below the ten-year average. At 110,000 m², take-up in the Ruhr region almost equalled the long-term average and was only 8% down on the previous year.

Supply shortage keeps rents under upward pressure

The continuing tight supply situation and the significant rise in construction costs over the course of the year have caused rents to rise noticeably over the past twelve months. The average prime rent in the top locations has risen by 11% to €7.37/m². Munich remains the most expensive location at €9.00/m² (+20% year-on-year). For the first time in many years, Hamburg has moved back into second place at €7.90/m² (+17%). Average rents have also risen sustainably in all leading logistics locations over the past 12 months. On average, they have risen by 9%, with an average rent of €5.89/sqm being paid.

Rising market momentum as the year progresses

With the start of spring, the outlook for the German economy is also brightening, and the leading institutes are now all forecasting GDP growth for the year as a whole, albeit moderate but still positive. "The danger of a recession seems to have been averted, supply chains are functioning noticeably better than last year and the Chinese markets have reopened. In the slipstream of a German economy that is picking up speed again, market momentum on the logistics markets is also likely to increase. The extent to which an increase in demand for space will then also lead to higher take-up cannot be definitively answered for the time being, as contract extensions are likely to remain an attractive option for many tenants. "However, it is very likely that we will see an increase in take-up again, particularly in the second half of the year, meaning that the pressure on rent levels is likely to remain, even against the backdrop of continued high construction costs. Prime and average rents are also likely to continue to rise in the logistics sector, not least in view of the increasing ESG requirements," says Bastian Hafner, Head of Logistics & Industrial Advisory at BNP Paribas Real Estate GmbH, summarising the outlook.

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
Melanie Engel - Tel: +49 (0)40-348 48-443, Mobile: +49 (0)151-117 615 50, melanie.engel@bnpparibas.com

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