Rhine-Main logistics market 2016: Second-best take-up result since 2014

NAI apollo group publishes annual report on the warehouse and logistics property market for Frankfurt/Rhine-Main:

• Annual take-up of 635,000 sqm only previously exceeded in the record year of 2014
• Ten-year average increases by 34,000 sqm to 520,000 sqm
• Lease contract signed by Action retail chain represents largest deal of the year
• Purchases by owner-occupiers gain in significance — owner-occupier projects below previous year's level
• Transport, warehouse and logistics companies account for largest share of take-up
• Outlook for 2017: Foundations in place for strong market activity; take-up expected to exceed 10-year average

Frankfurt am Main, 20.01.2017 – The warehouse and logistics market in the Rhine-Main area can look back on a very successful year in 2016, according to the latest analysis by owner-managed real estate advisory network NAI apollo group. Total space take-up by tenants and owner-occupiers amounted to a total of 635,000 sqm, exceeding the 600,000-sqm mark for the third year in succession. Only the record result from 2014 (753,000 sqm) remains unsurpassed.

Lease contract signed by Action retail chain is largest deal of the year
The last three months of the year contributed 118,300 sqm to the overall result and contrasted with stronger take-up of around 200,000 sqm in each of the first two quarters. "The largest deal in 2016, which concerns the lease contract signed by the Action retail company with the support of the NAI apollo group for an 83,000-sqm distribution centre in Biblis, was also closed at the beginning of the year," said Dr. Konrad Kanzler, Head of Research at the NAI apollo group.

Warehouse spaces larger than 10,000 sqm generated a total take-up of 270,000 sqm, equivalent to a 42.5 % share. Thus large deals not only remained the strongest size category but also gained further market share compared to 2015 (32.9 %) as well as 2014 (42.0 %).

Significance of owner-occupier deals increases
Leases in existing buildings accounted for the biggest percentage of take-up with 286,000 sqm and a share of 45.1 %, although this was 9.4 percentage points lower compared to the previous year. Take-up in project developments was virtually unchanged at 176,900 sqm or 27.9 % (+0.9 percentage points), while owner-occupier projects were slightly down on the previous year at 71,200 sqm or 11.2 % (-4.7 percentage points). "The fact that this decline had more to do with the shortage of available spaces than a lack of investor demand is reflected by the increase in purchases by owner-occupiers. In addition, time is becoming an increasingly important factor. While existing properties are usually available at short notice, in the case of new projects the construction period alone takes round six to nine months," said Michael Weyrauch, Head of Industrial Letting and Transaction at the NAI apollo group. In 2016, purchase agreements signed by owner-occupiers therefore accounted for approximately 100,000 sqm of hall space. This represents a share of 15.9 %, which is significantly higher compared to 2015 (13.1 %).

Transport, warehouse and logistics industry overtakes retail at the end of the year
The transport, warehouse and logistics industry again demonstrated the strongest demand, accounting for a 36.7 % market share (232,800 sqm) at the end of the year and thus overtaking the retail industry in the final quarter. Retailers had retained the leading position for much of the year, primarily because of the large contract signing by Action.

There was little change in terms of the preferred locations, with demand again centred on the southern market area (67.0 % share). Dr. Konrad Kanzler: "The South-West sub-market, where the five biggest deals and six deals larger than 10,000 sqm were signed, held a dominant position with a 42.8 % market share."

More than 100,000 sqm of large new warehouse units available in the medium term
There are signs of a further positive market development in 2017, and not only in relation to demand from users. In the Mönchhof area alone, in the immediate vicinity of the airport, major projects with a total of more than 50,000 sqm of warehouse space are (partly) speculatively planned or under construction by several developers. At the start of the year, a combined 60,000 sqm is also still available in VGP-Park Ginsheim-Gustavsburg, which is scheduled for completion in the summer, and in CENTRA5LPARK in Weiterstadt.

"Thus the foundations are in place to support brisk market activity this year," said Michael Weyrauch. The NAI apollo group expects the 10-year average - which has increased by 34,000 sqm this year to 520,000 sqm - to be exceeded again in 2017.