NAI apollo: Slump in large off-plan leases reduces take-up in the market for warehouse and logistics space in the Rhine-Main area
- Take-up in first half of 2018 falls almost 13 per cent year-on-year to 322,000 sqm
- Decrease in the segment for “5,000-sqm plus” spaces and off-plan lease contracts
- Acceleration of project completions; new building projects on the starting block
- Forecast: Stabilisation of market activity and a year-end result in line with the long-term average
Frankfurt am Main, 12.07.2018 – Rental activity on the market for warehouse and logistics space in the Rhine-Main region weakened slightly in the second quarter of 2018 following a good start to the year, according to the latest analysis from owner-managed real estate consultancy NAI apollo – partner of the NAI apollo group. Take-up by tenants and owner-occupiers reached about 155,000 sqm in the last three months, a decrease of 7.2 per cent compared to the first quarter of the year. The half-year take-up volume amounted to about 322,000 sqm, which represents a 12.8 per cent decline compared to the first half of 2017.
Decreasing take-up in the “5,000-sqm plus” segment
One difference from previous years that was already noticeable in the first quarter was further exacerbated in the second one: a decline in take-up of large-scale spaces. Some 13 contract signings accounting for a total of 191,000 sqm in the “5,000-sqm plus” category compares with 18 deals and 265,000 sqm in H1 2017 and 19 deals and 263,000 sqm in H1 2016. This corresponds to a 70,000 sqm or almost 30 per cent decline in take-up in this size category, which clearly influenced the overall result. “At the same time, the ‘10,000-sqm plus’ sub-category continued to play an important role on the market in the first half of the year. This segment alone accounts for almost half of the overall take-up volume,” said Dr Konrad Kanzler, Head of Research at the NAI apollo group.
Rewe deal in M-Port³ is biggest lease in first half
The largest deal completed in the past six months is the lease for 32,500 sqm signed by Rewe in M-Port³ on the Mönchhof site in Kelsterbach. This is followed by the 25,000 sqm owner-occupier project being undertaken by logistics company Group7, also on the Mönchhof site. Other large deals include the contracts signed by a logistics company in Biblis for more than 17,500 sqm and by online retailer Gorilla Sports for more than 15,000 sqm. “Also worth noting are two lease contracts signed by toom Baumarkt GmbH in the VGP-Park in Rodgau for a total of 30,000 sqm. NAI apollo was involved in both deals,” said Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo.
Influenced by the large deals, the transport, warehouse and logistics industry remained the most active tenant group with a 44.1 per cent market share or 142,000 sqm, followed by trade with 32.9 per cent or 106,000 sqm and manufacturing with 13.4 per cent or 43,000 sqm.
Decline in off-plan lease contracts reflected in take-up result
“A striking feature of recent months has been the decline in the number of off-plan lease contracts, which had dominated the market in the last few years, particularly in the large-scale segment. This category accounted for 81,000 sqm or a 25.2 per cent share. In the first half of 2017, these types of deals still generated 193,000 sqm or 52.2 per cent,” said Dr Konrad Kanzler. In contrast, the proportion of take-up generated by leases in existing buildings increased from 39.3 per cent (H1 2017 with 145,000 sqm) to 60.9 per cent (H1 2018 with 196,000 sqm). The percentages of owner-occupier projects (11.5 %) and purchases (2.3 %) are small in comparison.
New partially speculative building projects in the pipeline
Many large (partially) speculative project developments are approaching completion, including the first phase of construction of M-Port³, the Nextpark-GG-RheinMain and the "Fliegerhorst" development in Erlensee. "However, further new developments in the large-space segment with space still available to rent are in the pipeline or are already under construction, including projects by Dietz AG in the Hammersbach, Limeshain and Büdingen districts, Panattoni in Rodenbach, and projects in Ginsheim-Gustavsburg by MP Holding among others,” said Michael Weyrauch. Also worth pointing out are the second construction phases of M-Port³ and the SEGRO Logistics Park in Bischofsheim, where large shed spaces can be provided quite quickly.
Market activity expected to stabilise at current levels
Over the coming months, NAI apollo expects to see no significant increase in take-up activity despite the positive economic outlook for the transport industry. Existing space requirements point to a stabilisation at the current level. For this reason, NAI apollo expects the full-year result to be in the range of the 10-year average of 552,000 sqm.