NAI APOLLO: WAREHOUSE AND LOGISTICS PROPERTY MARKET WITH MODERATE HALF-YEAR RESULT IN RHINE-MAIN REGION
Moderate first half-year, but with take-up potential
Compared to the previous years, in which one record was broken after the next, the space take-up during the first half of 2019 can be assessed as moderate. The result fell around 14 % short of the equivalent value from the previous year, reaching the lowest level since the second half of 2016. “However, it is too early to conclude that the warehouse and logistics market has weakened. This year there are still numerous companies looking for space, some of them in the large-area market segment, and these could significantly raise space take-up over the coming months if a deal can be concluded,” explains Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo.
Half of space take-up attributable to deals for > 10,000 sqm
Compared to the previous half-year, there were declines in nearly all size categories up to the middle of the year. Only the small warehouse and logistics property segment up to 1,500 sqm recorded growth, increasing by around 13,000 sqm to 44,000 sqm, meaning that its market share grew from 9.6 % (H1 2018) to a current figure of 15.9 %. The 10,000 sqm-plus size category remains the strongest segment: space take-up of approximately 140,000 sqm was generated in eight deals, corresponding to a market share of 50.5 %.
Owner-occupier purchase by Ikea the largest deal
“The largest deal this year so far came about in the second quarter through the retail company Ikea, which purchased part of the Opel site in Rüsselsheim and among other things will use an existing hall with 33,000 sqm as a new goods distribution centre,” says Dr Konrad Kanzler, Head of Research at the NAI apollo group. Amazon in Gernsheim and Coca Cola Deutschland in Bodenheim shared second place, each leasing around 20,000 sqm of hall space. These were followed by the owner-occupier construction projects of Hegro Eichler (approx. 18,000 sqm) in Dietzenbach and Akasol (15,000 sqm) in Darmstadt, as well as the leasing of 12,000 sqm by SLL System Lager Logistik GmbH, which belongs to the Rigterink logistics group, for the second construction stage of the SEGRO Logistics Park in Bischofsheim.
Reduction of available space for new construction projects
Even this list contains two noticeable changes from the previous years that have a significant impact on the take-up result. Firstly, a decline in leasing deals in project developments is particularly evident in the previous quarter, which primarily results from a corresponding fall in available space. “Here we can see that the availability of plots is falling even in outlying areas which are suitable for logistics developments in terms of location and the ease of gaining planning permission,” says Kanzler. Secondly, the warehousing and logistics companies in particular have become less active. As a result, this user group that was dominant in the previous years with a market share of 61.0 % in 2018 has now fallen behind retail companies (38.3 %) and industrial and commercial enterprises (30.0 %) to third place with a share of 23.8 %.
Previously restrained warehousing and logistics companies expected to grow in importance
“However, this should not be considered to be a decline in demand on the part of warehousing and logistics companies. Rather, it is the result of a lack of new constructions that meet the requirements of potential users when it comes to their location and characteristics,” comments Weyrauch. Therefore, he believes that new project developments will soon find takers. Should the plans and commenced projects in this area all be realised, a potential total area of 200,000 sqm can still be rented in the large-area segment from 20,000 sqm by the end of 2020. In light of this, NAI apollo still forecasts an annual take-up in the region of the ten-year mean of 586,000 sqm. However, no new records should be expected for the time being.