NAI apollo real estate: Record result in Q2 2017 for logistics and warehouse property market in Rhine-Main area

• Take-up volume reaches all-time high of 255,000 sqm since records began
• Half-year volume rises to 369,000 sqm
• Large contract signings primarily responsible for take-up growth
• More new leases in project developments
• Speculative new building activity eases supply situation
• Volume expected to exceed 600,000 sqm by year-end

Frankfurt am Main, 11.07.2017 – According to the latest analysis by owner-managed real estate consultancy NAI apollo real estate – a partner of the NAI apollo group – the market for logistics and warehouse space in the Rhine-Main area achieved an outstanding result in the April-June period after a somewhat moderate start to the year. "Space take-up by tenants and owner-occupiers of about 255,000 sqm in the second quarter of 2017 represents the best quarterly result we have seen since we first started to collect data," said Dr. Konrad Kanzler, Head of Research at the NAI apollo group. For the first half of 2017, the total volume amounted to 369,000 sqm and was 8.7 % below the previous year's level (H1 2016: 404,000 sqm).

Large units account for 55.8 % of space take-up in first half of the year

According to NAI apollo real estate, the record result achieved in the second quarter was primarily caused by a strong increase in contract signings for spaces larger than 10,000 sqm. Take-up in this segment amounted to 168,000 sqm in the last three months, compared to approximately 38,000 sqm in the first quarter. Included in these deals is the contract signing by the Rossmann drugstore chain for a 33,000-sqm unit in a yet-to-be-developed distribution centre in Bürstadt. NAI apollo real estate acted as the agent in this transaction, and the builder and landlord of the project is Dietz AG from Bensheim.

In general, the rental of units in project developments played a more significant role in the first half of 2017, accounting for 52.2 % or approximately 193,000 sqm of take-up (2016: 27.9 % share / 2015: 27.0 % share). "This development is primarily due to the shortage of existing units that provide adequate space and equipment. The lack of suitable products is driving a growing acceptance of longer implementation periods for new building projects," explained Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo real estate. Lease contracts in or for existing buildings accounted for the second highest share of 145,000 sqm or 39.3 %, but compared to previous years this segment lost significant market share (2016: 45.1 % share / 2015: 54.4 % share). Purchases and building projects by owner-occupiers were responsible for 5.9 % and 2.6 % of take-up respectively in the first half of the year.

Southwestern sub-market keeps dominant position

Large rentals in project developments were primarily responsible for the fact that the southwestern market area, situated between the A63 and A5/A67 motorways and Worms, again occupied the top spot. "With a 48.6 % share of take-up or about 180,000 sqm, this can even be described as a dominant market position. The eastern sub-market is next with 62,000 sqm or a 16.7 % share, with contract signings by Dachser on the former air base in Erlensee or by B+S in Alzenau," said. Dr Konrad Kanzler. The eastern market area is situated east of Frankfurt between the A3 motorway in the south and Hammersbach in the north.

Transport, storage and logistics companies remained by far the biggest consumers of space with a half-year take-up volume of 189,000 sqm or a 51.2 % market share. This sector therefore increased its share by 4.7 % points compared to the first quarter of 2017 or by as much as 14.5 % points compared to 2016. In contrast, retail (17.7 %) and industrial companies (15.3 %) accounted for remarkably low shares.

Positive outlook based on good developments in supply and demand

"We also expect to see strong market activity in the coming months, with continuing high demand for new spaces in project developments. At the same time, the supply of new buildings constructed on a speculative basis has improved," said Michael Weyrauch. "With that in mind, and based on the recent record result, we have upgraded our forecast for the full year. In all likelihood, the market will exceed the 600,000-sqm mark for the fourth year in succession," added Dr. Konrad Kanzler.
Larger (> 5,000 sqm) spaces for first-time occupancy are still available in CentrA5lPark in Weiterstadt as well as at the Dietz logistics centre in Raunheim. Together with M-Port³, the Multipark expansion and the Kolb Red Logistik building project, further (partly) speculative projects with available spaces of over 5,000 sqm were either completed in the second quarter or are under development, especially on the Mönchhof site. "There is also a greater supply of space available to rent in the SEGRO logistics parks being constructed in Bischofsheim and Mörfelden," concluded Michael Weyrauch.