Prime rents for logistics properties in Berlin are rising rapidly

While the capital is the second most expensive market, prices are stagnating elsewhere

FRANKFURT, 7 October 2024 - Prime rents on the German market for warehouse and logistics space developed differently in the third quarter of 2024. Compared to the previous quarter, prime rents for space of more than 5,000 m² stagnated in 16 of the 19 markets analysed, while there was no fall in prime rents this time, as was the case in Bremen in the previous quarter. Accordingly, prime rents increased in only three markets. The focus is particularly on Berlin, where a significant increase of almost 24 per cent to EUR 10.50/m² was recorded.

"Berlin is an extremely differentiated market for logistics space," explains Sarina Schekahn, Head of Industrial & Logistics Agency JLL Germany. "Locations outside the city are characterised by comparatively low demand, available supply, low rents and high vacancy rates. By contrast, space close to the city centre, which is usually of a higher quality and more sustainably equipped, is in high demand with little supply, but is also associated with significantly higher rents, which users with high-margin businesses in particular can afford. Tenant changes in such properties were partly responsible for the large jump in prime rents of two euros." Essen followed well behind Berlin with growth of seven per cent to EUR 8.00/m², while the increase in Hanover/Brunswick was lower at three per cent to EUR 6.40/m².

A year-on-year comparison shows a different picture: since the third quarter of 2023, 14 out of 19 markets have recorded an increase in prime rents. With extraordinary growth of 40 per cent (€10.50/m²), Berlin also leads the field here. Leipzig/Halle also recorded double-digit growth at 13 per cent (EUR 6.20/m²) and Magdeburg at ten per cent (EUR 5.30/m²). Dresden was close behind with growth of nine per cent (EUR 6.30/m²), followed by Hanover/Brunswick (EUR 6.40/m²) and Erfurt (EUR 5.40/m²) with growth of eight per cent each.

Bremen was the only market to see a year-on-year fall in prime rents, down four per cent to EUR 5.85/m². According to Schekahn, the market is suffering from a decline in demand, particularly for space of more than 10,000 m². "The reasons for the weak development in Bremen are the decline in handling volumes in the ports there, the persistently low demand from the consumer goods sector and the weakening automotive industry. As the majority of economic indicators and industry prospects for Germany are weak, stagnating prime rents remain a reality and falling prime rents cannot be ruled out. As soon as the economy picks up again, companies will first move into their sublet space before renting new space, which is why a major upturn in prime rents is unlikely to materialise any time soon. Nevertheless, a year-on-year comparison shows that the majority of German logistics markets represent an inflation-proof investment."

Over the past five years, prime rents on all markets have increased by 16 per cent (Hanover/Brunswick) to 91 per cent (Berlin). In ten markets, the increase was at least 50 per cent. Munich remains the most expensive logistics market at EUR 10.70/m², although Berlin is now very close behind at EUR 10.50/m². In addition, the German capital has overtaken Düsseldorf (EUR 9.00/m²) and Stuttgart (EUR 8.75/m²) with the increase and has also left Cologne and Hamburg (EUR 8.50/m² each), which were equally expensive in the previous quarter, behind.

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

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