NAI apollo: Market for warehouse and logistics space in the Rhine-Main region on course to reach 2014 record level

• Take-up in Q3 2017 remains at a high level of 214,000 sqm following the record volume in Q2
• Space take-up in first nine months of 2017 increases to 583,000 sqm
• Large contract signings play decisive role in take-up growth
• Rentals in existing properties increase to 48.1 %
• Outlook: Space take-up to reach 2014 record level of about 750,000 sqm

Frankfurt am Main, 13.11.2017 – In the period from July to September 2017, the market for warehouse and logistics space in the Rhine-Main region performed broadly in line with the previous quarter. Space take-up by tenants and owner-occupiers amounted to about 214,000 sqm in the last three months and represents one of the best quarterly results since owner-managed real estate consultancy NAI apollo – partner of the NAI apollo group – began compiling data. Total space take-up in the first nine months of 2017 amounted to about 583,000 sqm – some 68,000 sqm more than in the corresponding period of the previous year.

Large deals generate more than half of space take-up in the third quarter of 2017
"The strong take-up of space in the third quarter of 2017 resulted from the high proportion of deals for over 10,000 sqm of space. The take-up level in this segment amounted to more than 125,000 sqm in the last three months, accounting for more than half of the total quarterly volume," said Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo. The Gorilla Sports deal for 35,000 sqm in a project development on the Südzucker site in Groß-Gerau represented the biggest contract signing during the recent quarter, as well as the second-largest deal in terms of space in the year to date.

In terms of the different types of deals, rentals in existing buildings increased significantly in the third quarter and accounted for 63.3 % of space take-up. In the year to date, this segment increased its share to 48.1 % (280,000 sqm) of the volume, whereby lettings in existing properties achieved the highest space take-up and were in line with previous years (2016: 45.1 % share / 2015: 54.4 % share). Lettings in project developments fell by 12.4 % points compared to the first half of 2017 and accounted for a 39.8 % share (232,000 sqm) of the volume. However, the overall percentage is much higher than in previous years (2016: 27.9 % share / 2015: 27.0 % share). Purchases and projects by owner-occupiers accounted for 10.5 % and 1.6 % of the volume respectively in the first three quarters of 2017.

Geographical focus on southwest sub-market
"The southwest market area remained the most important sub-market with the highest take-up level, primarily due to a high number of large contract signings. At around 290,000 sqm, around half of the market activity in the last three quarters took place in this area," said Dr. Konrad Kanzler, Head of Research at NAI apollo group. The east market area was next in line with a 13.1 % share and around 76,000 sqm.

Companies from the transport, storage and logistics industry continue to represent the biggest users and accounted for space take-up of about 262,000 sqm in the period from January to September in 2017. This corresponds to a 45.0 % share, and indicates a loss of 6.2 % points compared to end-June. In contrast, retail companies registered the biggest growth on the demand side in the last three months. Compared to the first half of the year, this group increased its take-up almost threefold to 192,000 sqm (Q1-Q3 2017) or a 32.9 % share (H1 2017: 65,000 sqm). Industrial companies accounted for a 10.7 % share.

Annual forecast for record level of about 750,000 sqm
Based on the positive market development, NAI apollo has upgraded its forecast from the previous quarter. "Market activity is expected to remain extremely buoyant in the final quarter of the year. The total volume after just nine months is only 50,000 sqm below the entire annual volume recorded in the previous year. For this reason, we expect space take-up in 2017 to attain the record level of 2014," said Dr. Konrad Kanzler. Take-up reached more than 750,000 sqm in 2014. "Large-scale rental opportunities in newly constructed premises are currently available in the Dietz AG development in Raunheim, for example, or in the M Port³ construction project on the Mönchhof site. Other possibilities also include the SEGRO project developments in Bischofsheim and Mörfelden-Walldorf," added Michael Weyrauch. Furthermore, up to 95,000 sqm is being developed in the Deutsche Logistik Holding industrial park in Trebur, of which 43,000 sqm was pre-let in the second quarter.

Captions:
Southwest market area: A market area between the A63 and A5/A67 motorways that stretches as far as Worms.
East market area: A market area that adjoins the Frankfurt city region to the east, and is bordered by the A3 motorway to the south and the Hammersbach municipality to the north.