Low supply depresses take-up on the Frankfurt logistics market

BNP Paribas Real Estate publishes logistics market figures for the second quarter of 2023 - Low supply depresses take-up on the Frankfurt logistics market

Frankfurt am Main, 26 July 2023: The Frankfurt warehouse and logistics market achieved take-up of 128,000 m² in the first half of 2023. After a subdued start to the year, the second quarter saw significantly more activity, but the half-year result is nevertheless almost 38 % below the previous year's figure and also around 50 % below the long-term average. This is the result of an analysis by BNP Paribas Real Estate.

"This is primarily due to an insufficient supply of space - in some cases exceeding the market area. One of the main reasons for this is that many occupiers are exercising their lease options and extending their leases. As a result, there is little to no fluctuation, which is directly reflected in the take-up of space. In addition, a slightly weakening economy is also leading many companies to adopt a wait-and-see attitude. The lack of supply is particularly glaring in the core area," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. As a result of the supply shortage, both prime and average rents have risen further and now stand at €7.50/m² and €6.20/m² respectively.

As in most of the leading logistics regions, no major deals above the 20,000 m² mark have yet been registered in the Frankfurt market area. This explains the significant difference to the previous year's result, when more than 90,000 m² was already taken up in this segment. The small and medium-sized size categories, on the other hand, have so far registered take-up roughly in line with the respective long-term average.

The shift in requests for space already observed in the first quarter - from retail companies, which have been strongly represented in recent years, to industrial and manufacturing companies - continued in the second quarter. With an above-average share of around 30 % of take-up, this can be seen in the current figures. Logistics service providers, on the other hand, emphasise their long-standing importance for the market and, at 40%, are in line with their average.

"Despite the subdued economic outlook, demand for space remains at a high level. However, this has so far only been reflected to a limited extent in corresponding take-up. The main reasons for this are the continued low supply coupled with low fluctuation. This year's full-year result is therefore likely to be below the long-term average. As construction activity, particularly of a speculative nature, is expected to decline, the supply and demand situation is likely to tend to worsen. The current combination of inflation, rising interest rates and a further shortage of building land will in all likelihood lead to a further rise in prime and average rents over the course of the year. Properties in the Mönchhof and Raunheim areas in particular, as well as in areas close to the city centre, will in all likelihood be able to achieve prime rents above the current level this year," says Bastian Hafner, Head of Logistics & Industrial Advisory at BNP Paribas Real Estate GmbH.

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
 
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