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  • NAI apollo: Logistics market in Rhine-Main region picks up slightly in Q1 2024

NAI apollo: Logistics market in Rhine-Main region picks up slightly in Q1 2024

Frankfurt am Main, 14th May 2024 – Space take-up by tenants and owner-occupiers on the warehouse and logistics market in the Rhine-Main region amounted to 89,100 sqm during the first three months of the year, according to NAI apollo, partner of NAI Partners Germany. Although this falls far short of the positive prior quarterly result of 172,800 sqm at the end of 2023, the figure was 43.4 % higher compared to the first quarter of 2023. In addition, the latest result compares favourably with the past five years as it is 5.1% higher than the average for this period. However, it remains significantly below the ten-year average, which currently stands at 122,600 sqm (Q1 2024 to Q1 2023).

“New record results such as those last seen in 2021 are currently not easy to achieve. Take-up figures reflect the difficult economic environment and pessimistic growth forecasts. However, user demand on the Rhine-Main warehouse and logistics market continues to exceed the supply of space. The positive take-up result at the end of last year was entirely owing to an increased supply of sublet space. In this context, we can rate as positive the fact that the recent result is above the five-year average,” said Michael Weyrauch, Head of Industrial and Logistics at NAI apollo.

New buildings have highest market share

Subletting in the past three months has not even come close to the level of last year’s quarterly figures. “In contrast, we saw an increase in the new-building segment. Lettings in new developments and owner-occupier projects generated a total of over 51,000 sqm at the start of the year. Such a high level of take-up in this segment has not been seen in a single quarter in the past two years,” said Dr Konrad Kanzler, Head of Research at NAI apollo. Owing to the simultaneous decline in market activity in existing properties, new buildings increased their share of take-up to 57.8 % (Q1 2023: 28.7 %). A key contribution came from the largest deal in the year to date, namely a project development by Bork in Butzbach where a new logistics centre for the Bosch Home Comfort Group is being built and provides more than 30,000 sqm.

Stronger growth registered for large and medium-size spaces

In terms of the different size categories, Bosch’s lease signing in Butzbach also means that the segment above 10,000 sqm accounted for the highest take-up of around 43,000 sqm. Compared to the previous year, this segment has also seen the strongest growth, quadrupling in size. “However, a comparison with the immediately preceding quarter is sobering since large deals then generated a volume of 108,000 sqm. At the same time, subletting agreements played a significant role here,” said Stefan Weyrauch, Co-Head of Industrial and Logistics at NAI apollo. The segment including spaces between 3,000 sqm and 5,000 sqm was in second place with 18,400 sqm in the first three months of 2024. This represented a significant increase compared to both the previous quarter and the previous year. Market shares of all other segments were lower compared to the previous year.

Changes in user demand – industry and manufacturing in the lead

Companies from the industrial and manufacturing sectors had already recorded significant increases in take-up over the course of last year, and also represented by far the most important user group in the first quarter of 2024 with 56,500 sqm or a market share of 63.4 %. Compared to Q1 2023, this equates to more than a tenfold increase in take-up. As a consequence, this sector’s market share increased by almost 55 percentage points compared to the previous year. In contrast, retailers as well as transport, warehousing and logistics companies, the two groups that dominated the market in the past, have lost ground. This particularly applies to the retail sector, where take-up fell by 79 % compared to the previous year. “In previous years, retail often stood out with large lettings above 10,000 sqm, including from the e-commerce sector. However, such deals are currently non-existent. As a result, warehouse and logistics service providers have secured second place with a market share of 19.2 %,” said Kanzler.

Southern submarkets remain strong – major deal in Butzbach puts North-West in leading position

Within the Rhine-Main region, the North-West submarket accounted for the majority of take-up in the first quarter of 2024, to which the Bosch deal in the Butzbach development again made a significant contribution. Warehouse and logistics space take-up here amounted to a total of around 36,600 sqm, which corresponds to a market share of 41.1 %. Other notable locations were the two southern submarkets with a combined market share of 39.4 %, as well as the east with 18.0 %. All other submarkets were of secondary importance in comparison. “While the southern markets, which are close to the airport, benefit from good transport links and are traditionally in high demand, registered a larger number of transactions in existing properties, project lettings were more prevalent in the east, such as in the second construction phase of Alpha Industrial’s business park on Josef-Bautz-Straße in Hanau,” said Stefan Weyrauch.  

Difficult framework conditions and shortage of space remain biggest market obstacles

The economic situation in both Germany and the Rhine-Main region will remain challenging in the coming months. “GDP forecasts for 2024 as a whole have recently been revised significantly downwards, and the results of the latest business report by the Frankfurt am Main Chamber of Industry and Commerce continue to reflect the negative overall sentiment among local companies. Pessimistic views predominate, particularly in the retail, industrial and transport sectors, which are the main users of warehouse and logistics space. It is not uncommon for rental decisions to be reconsidered, postponed or completely abandoned,” said Kanzler.

At the same time, demand for warehouse and logistics space is high. “Particularly in the large-scale segment, it is still the case that requests cannot be met owing to the lack of available space. There is also a shortage of smaller spaces that fulfil user requirements in terms of location, facilities and quality. Large new speculative project developments that would provide short-term relief are also not in sight because of the continuing high construction and financing costs, but primarily owing to the absence of suitable building plots,” said Michael Weyrauch. As expected, this imbalance between supply and demand is reflected in the development of rents. “The prime rent for warehouse and logistics spaces of 5,000 sqm or more has risen further to €7.95/sqm and is now around 9 % or 65 cents higher than the previous year’s rate. It is also likely that the €8 threshold will be exceeded in the coming months,” said Stefan Weyrauch.


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