BNP Paribas Real Estate publishes data on the logistics market for the first quarter of 2024 - Stabilisation of prime and average rents on the Frankfurt logistics market

In the first three months of 2024, the Frankfurt warehouse and logistics space market registered take-up of around 77,000 sqm. This result is around 27 % below the long-term average (Ø10 years: 105,000 m²). However, the result for the same quarter of the previous year was exceeded by around 75 %. This is the result of an analysis by BNP Paribas Real Estate.

"Against the backdrop of a relatively weak economic situation and a structurally challenging market environment, the Frankfurt result represents a comparatively solid start to the year," emphasises Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. Demand for rental space in the Frankfurt market area remains stable and slightly exceeds the available supply. The general excess demand is particularly evident for space with short-term availability and short lease terms. Requests from the industrial and transport sectors continue to outweigh those from the retail sector (especially B2C food and e-commerce).

Following an increase in the number of lease options in previous quarters, the number of requests for space has now increased significantly again. However, space is also increasingly being offered for subletting. Compared to previous years, rental price momentum has recently slowed considerably. Both the average rent and the prime rent are unchanged compared to the fourth quarter of 2023 at €6.70/m² and €7.85/m² respectively.

Medium-sized space segments dominate

At just under 54 %, logistics service providers have the highest market share since the first quarter of 2015 (Ø10 years: 35 %). In absolute terms, the 42,000 m² is also 12 % above the long-term average. Industrial and manufacturing companies also have an above-average share of 33% (Ø10 years: 24%). In contrast, a small contribution of just under 6,000 m² or 8 % has so far been registered from retail companies (Ø10 years: 33 %).
        
The distribution by size class shows a concentration of take-up in the two medium-sized segments between 5,000 and 12,000 m². These two segments account for around 79 % of total cumulative take-up (Ø10 years: 33 %). However, no major lettings of over 12,000 m² have yet been reported in the Frankfurt market area.

Prospects

The Frankfurt logistics market can defy the relatively weak economic situation in the first quarter of 2024. The increase in available space and the absorption of space are currently relatively balanced. In general, there is excess demand in the market area. Various project developments are still under construction, but speculative new builds are declining.

Despite a slight fall in construction costs, prime rents remain at a high level due to ongoing inflation, the existing interest rate plateau and the further shortage of building land. From today's perspective, stable rents are the most likely scenario for the remainder of the year.

"In anticipation of an improving economic environment, particularly from the second half of the year onwards, user confidence is likely to return and stability in the market and the number of new applications for space are likely to increase noticeably again. A slight increase in take-up is therefore expected over the course of the year. However, a take-up of space in line with last year's very strong result is likely to be too ambitious a target by the end of the 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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