NAI apollo: Market for warehouse and logistics space in Rhine-Main area records positive first quarter

• Space take-up of 167,000 sqm exceeds previous year’s figure by 45.6 %
• NAI apollo participated in two of five large deals
• New leases in existing properties account for 70 % of total take-up
• Outlook: Space take-up to reach above-average level in 2018

Frankfurt am Main, 23.04.2018 – The market for warehouse and logistics space in the Rhine-Main area has made a good start to the year, according to the latest report from owner-managed real estate consultancy NAI apollo – partner of the NAI apollo group. Space take-up by tenants and owner-occupiers amounted to about 167,000 sqm in the first three months, exceeding the previous year’s result by 45.6 % (Q1 2017: 115,000 sqm). However, this was still below the volume of almost 200,000 sqm that was recorded in the first quarter of 2016.

Large deals generate almost half of the take-up volume

The main difference from the first quarter of 2016 is the smaller take-up volume in the segment for large spaces. In the past three months, seven contract signings for above 5,000 sqm took place with a combined space of about 101,000 sqm. In the first quarter of 2016, take-up in this segment amounted to 132,000 sqm, primarily owing to the major contract signed by Action Deutschland for over 83,000 sqm. On the other hand, the result far exceeded the 71,000 sqm that was recorded for the first quarter of 2017 in this segment. The largest deal in the first quarter of 2018 concerned the owner-occupier project of the Group7 logistics company on the Mönchhof site in Kelsterbach with a total area of 25,000 sqm. In addition, a logistics firm leased 17,500 sqm in Biblis, while online retailer Gorilla Sports signed a contract for 15,000 sqm. Gorilla Sports thus rented another unit in a project development on the former Südzucker site in Groß-Gerau after previously leasing 35,000 sqm of hall space here last year. “Further deals included two lease contracts, both supported by NAI apollo, signed by toom Baumarkt GmbH for existing spaces in VGP-Park in Rodgau with a total volume of 30,000 sqm,” said Dr. Konrad Kanzler, Head of Research at the NAI apollo group. Thus, contracts for spaces larger than 10,000 sqm dominated the market with 78,000 sqm in total, accounting for a 46.7 % share of take-up.

Lettings in existing properties account for the largest take-up share at 70 %

In terms of the different forms of take-up, lease contracts signed for spaces in existing buildings accounted for the lion’s share of 69.7 % — which was almost in line with the previous year. Owner-occupier projects grew to 17.6 %, while lease contracts in current project developments lost market share (9.7 % share). Current major developments and planned projects with available space can currently be found on the Mönchhof site including M-Port³, as well as in Gernsheim, Egelsbach and Rodenbach. SEGRO is realising projects in Frankfurt-Rödelheim and Bischofsheim, and MP Holding is carrying our construction work in Wiesbaden-Nordenstadt and Ginsheim-Gustavsburg. In addition, Dietz AG will soon begin work on the speculative construction of an approx. 40,000 sqm logistics hall in Hammersbach. “We expect this project to be completed at the beginning of 2019,” said Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo. Rental opportunities also exist in developments on the former Südzucker site in Groß-Gerau and the former air base in Erlensee.

South market area accounts for about 80 % of space take-up

“The most important sub-market remains the southwest, which stretches between the river Main and the A5 and A63 motorways. Around 91,000 sqm or more than half of the take-up volume was generated here. It is followed by the southeast sub-market that adjoins to the east, with 43,000 sqm or 25.9 %. Thus, the south market area plays a dominant role with a share of about 80 %,” said Dr. Konrad Kanzler.

With regard to the types of users, little has changed in the ranking. Transport, warehouse and logistics service providers continue to represent the strongest group with a share of 53.2 % or 89,000 sqm, followed by trade industry with 34.0 % or 57,000 sqm. The increase in the trade industry share (Q1 2017: 20.4 % share) was at the expense of manufacturing companies, which only accounted for 5.0 % of overall take-up in the first three months of the year.

Outlook: Space take-up to reach above-average level

“The positive market environment and the good economic prospects for the transport industry that were again highlighted by the business survey conducted by the Hesse chamber of industry and commerce indicate that strong market activity is expected in the coming months,” said Michael Weyrauch. For the year as a whole, NAI apollo expects the take-up result to exceed the 10-year average of 552,000 sqm, confirming the forecast made in the year-end report for 2017.