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NAI apollo: Frankfurt office lettings market treads water in Q3

Frankfurt am Main, 16th October 2019 – The Frankfurt market for office space including Eschborn and Offenbach-Kaiserlei experienced a temporary lull in the third quarter of 2019 following a strong first half, according to the latest report by owner-managed real estate consultancy NAI apollo. Space take-up by tenants and owner-occupiers amounted to 101,400 sqm during this period. “Expected deals, such as the rental of more than 25,000 sqm by the City of Frankfurt in CityWest, have yet to be finalised. Thus the recent quarterly result was about 14 % below the ten-year average for third quarters,” explained Andreas Wende, Managing Director of NAI apollo.

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NAI apollo on the residential investment market: above-average result in the third quarter increases transaction volume to almost €14 billion

Frankfurt am Main, 15 October 2019 – The investment market for residential portfolios in Germany is on target for its third-best annual result following record figures in 2015 and 2018, according to an analysis by the owner-operated real estate consultancy firm NAI apollo. Due to the very good quarterly result, which, at €5.8 billion, is significantly higher than the results of the two preceding quarters (Q1 2019: €3.9 billion, Q2 2019: €4.2 billion), the traded volume in the first nine months of the year grew to €13.9 billion. As such, it is only €1.8 billion below the very good result for the whole of 2017. However, this sum falls short of the €14.7 billion recorded for the same period of the previous year. The purchases of shares by TLG in Aroundtown and by Adler Real Estate in Ado Properties are not included in the analysis. For the revenue calculation, only share deals in the form of an acquisition of shares in a property or real estate company in which a controlling interest is achieved are deemed indirect investments by NAI apollo. “If the two share acquisitions had been included, which amount to 13% and 33% respectively, the revenue threshold of €15 billion would already have been passed in the third quarter,” comments Andreas Wende, Managing Partner of NAI apollo. “Compared to the mid-point of the year, the number of residential units traded has also jumped by more than 35,000 to a new total of around 95,000. But this still falls short of the around 108,500 units traded during the same period of the previous year,” adds Dr Konrad Kanzler, Head of Research at the NAI apollo group.

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NAI apollo brokers sale of commercial property to tile centre

Wiesbaden, 11 October 2019 – NAI apollo has sold a commercial property with an area of around 2,500 sqm to a tile centre on behalf of a private seller. The showroom building with warehouse will be owner-operated in the future and is located in Borsigstraße 3a in Wiesbaden-Nordenstadt. The property therefore has good infrastructure links directly to the “Wiesbadener Kreuz” intersection with the A66 autobahn, which offers a connection to Frankfurt am Main, and the A3 autobahn.

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NAI apollo: Office lettings market in Frankfurt am Main takes a breather

Frankfurt am Main, 1 October 2019 – The market for office space in Frankfurt, including Eschborn and Offenbach-Kaiserlei, took a small breather in the third quarter of 2019 following a strong first half of the year. This is the conclusion of the owner-operated real estate consultancy company NAI apollo. Space take-up by tenants and owner-occupiers amounted to 101,400 sqm during this period. “Expected deals such as the City of Frankfurt’s lease of more than 25,000 sqm of office space in the City West have not yet been finalised. Accordingly, the result for this quarter is around 14 % below the ten-year average for third quarters,” comments Andreas Wende, Managing Partner of NAI apollo, on the result.

The accumulated take-up for the first nine months of 2019 is 364,100 sqm. Although this figure falls more than 17 % short of the previous year’s value of 440,900 sqm, it is still almost 5 % above the long-term average of around 347,000 sqm. Lease renewals after active market screening enjoyed significant growth to 113,100 sqm, the highest volume since 2014.

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NAI apollo on EXPO REAL 2019: German real estate markets between a new cycle and political interventions

Frankfurt, 30 September 2019 – On the occasion of EXPO REAL 2019, NAI apollo forecasts above-average revenue on both the rental and investment markets despite the end of the economic boom. As such, the company anticipates a commercial transaction volume of €55 to 60 billion in Germany for 2019 as a whole. The largest share of this will be contributed by outstanding major and portfolio deals, which represent the high point of the current phase of the cycle. In the market for residential portfolio transactions, too, another above-average annual result of significantly above €15 billion is expected.

“Demand on the real estate markets remains high despite the challenging market environment. However, a possible economic downturn and deteriorating business sentiment could have a negative impact on the commercial rental markets. We can see this not least in the retail segment, which is facing severe difficulties due to the rise in e-commerce,” comments Andreas Wende, Managing Partner of NAI apollo. “The investment market is more robust, in particular as a result of the enormous excess demand which will not disappear overnight. But it remains to be seen what impact the major political uncertainties of our times will have: Brexit, the smouldering trade war or the arguments within the European Union are just a few examples of these. Although the initial position is positive, the real estate industry is currently negotiating much rougher waters.”

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Frankfurt am Main / Hamburg, 2 September 2019 – The medium-sized real estate consultancy firm NAI apollo is opening a new branch in Hamburg. This will be the company’s third location, alongside its headquarters in Frankfurt and another office in Munich. Andreas Wende will manage the new branch in his home city in addition to his role as Managing Partner of NAI apollo. In addition, Kevin Korts will take over as Director Hamburg at the new location, while NAI apollo has also gained the services of Christin Diedrich as Senior Consultant and Veronika Ehrhardt as Executive Assistant. In Hamburg, NAI apollo will concentrate on letting and investment, initially in the office segment. Its activities are then to be expanded to include further asset classes in the medium term. The Hamburg team will move into SPACES Kallmorgen Tower in Willy-Brandt-Straße 23-25, 20457 Hamburg.



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Frankfurt am Main, 25 July 2019 – A company from the automotive industry has leased around 1,500 square metres of office space and 1,500 square metres of hall space to expand its own location on the premises of Heidelberger Druckmaschinen AG in Gutenbergring in Wiesloch. The lease agreement will commence on 1 November 2019. NAI apollo provided support to the lessee.


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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.



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Frankfurt am Main, 3 July 2019 – BGV GmbH, a Frankfurt-based construction company, has rented 120 sqm of office space at Staufenstraße 4 in Frankfurt am Main. NAI apollo provided support to the company during the leasing process.


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Frankfurt am Main, 2 July 2019 – Within the scope of its quarterly reporting on the German real estate investment market, NAI apollo – a partner of the NAI apollo group – published figures on the German care property market for the first time in the middle of 2019 due to the dynamic development in this segment. NAI apollo includes care homes, assisted living facilities and hybrid forms in the care property asset class.

In the first half of 2019, the real estate consultancy firm recorded a transaction volume of around € 840 million in this segment. “This means that the results for the whole of the years between 2008, the first year for which we recorded figures, to 2015 have already been equalled by the midpoint of the year. Compared to the first six months of 2018, this represents an increase of 3.8 %,” says Andreas Wende, Managing Partner of NAI apollo. NAI apollo anticipates a continued high level of market activity over the coming months, which should produce a result above the five-year average of € 1.6 billion.

Portfolios and single assets with almost identical revenue shares

Portfolio transactions and single-asset sales make an almost identical contribution to the high half-year result. “The large portfolio deals include the French company Primonial REIM’s acquisition of 12 retirement homes in a sale and leaseback transaction and the purchase of five care properties by the new closed-end mutual fund of the INP group, for which € 45 million was paid,” explains Sebastian Deppe, Managing Partner at apollo healthcare GmbH. He adds that the forward deal of real estate company PATRIZIA AG, in which a portfolio consisting of three care properties with an expected completion date of 2020 was purchased for the PATRIZIA Social Care Fund III, also contributed to the strong result. The striking single-asset purchase of the first half year was made by Aachener Grundvermögen, which acquired the Riviera retirement home in the Grünau district of Berlin as part of a forward deal. The project volume for this was most recently valued at € 80 million. “The distribution of the transaction volume by size category reveals that the three categories ‘€ 10 to 25 million’, ‘€ 25 to 50 million’ and ‘€ 50 to 100 million’ are almost identical in importance. The volumes achieved in each of these categories range from around € 240 million to € 250 million, which correspond to market shares of 28.3 % to 29.6 %,” explains Dr Konrad Kanzler, Head of Research at the NAI apollo group. Sales of under € 10 million fall short of this at approximately € 93 million or a market share of 11.1 %.

France and Belgium the strongest international buyer countries

When differentiating by the country of origin, there is an almost equal split between national and international investors. “German buyers make up 50.9 % of the volume traded in the first half-year. In absolute figures, they account for around € 430 million,” says Wende. Among the international investors (49.1 % or € 410 million), France (16.0 %) stands out, in particular due to the Primonial deal and purchases by the French real estate fund Pierval Santé, as well as Belgium (15.4 %) with deals by Aedifica and Cofinimmo. When observing the types of investor, “open-ended real estate funds / special funds” were the strongest group in the first six months of the year with an acquisition volume of around € 317 million (37.7 %). “Asset managers” take second place with around € 242 million (28.8 %), followed by “listed property companies / REITs” (€157 million or 18.6 %).

Increasing demand for care stimulates interest of investors

“The generally high level of interest in commercial real estate in Germany is reflected in a reduction of yields, although some markets are displaying the first signs of a trend towards stabilisation,” comments Wende. In the first half of 2019, the prime yield for care properties was 4.7 %. This represents a steady development compared to the previous year. “The price-to-rent ratios analysed in the same period were concentrated in the region between 16 and 18,” adds Deppe.

Investors’ interest in the asset class of care properties will also remain high in the future. Indeed, the demand for places in care facilities will grow continuously as a result of demographic change. “This further stimulates investor interest. There is not only potential for growth in A or B locations, however: an increase in demand for care facilities is also expected in a large number of C and D markets, as well as in smaller locations with as few as 10,000 inhabitants,” explains Kanzler. Consequently, these assets will become ever more attractive for professional investors. “The greatest bottleneck is the low number of properties in the market, which will ultimately slow down acquisition activities,” adds Kanzler.

Operators and owners of care homes highly fragmented

The special structure of the healthcare and care property market – which was determined as part of a comprehensive survey by apollo healthcare – also has an effect here. “The operator landscape for care homes is currently extremely fragmented,” explains Deppe. Indeed, NAI apollo’s list of the top 100 care home operators shows that the largest 100 operator chains only account for 32.6 % of the approximately 885,000 inpatient care places identified during the analysis. The breakdown of owners is similarly mixed: the influence of institutional real estate investors on the number of care places is currently low due to their share of 10.7 %. Private investors who have acquired care home apartments as part of homeowners’ associations make up a still smaller market share of around 3.3 %. “Development is picking up pace in this area, however. According to our observations, almost every third new care home has a part-ownership model. When it comes to institutional investors, Aviarent’s recently announced cooperation with the Convivo group of companies for the construction of 12 residential homes with a development budget of € 500 million is one example of the increasing activities by these market participants,” continues Deppe.

An above-average transaction volume can again be expected for the investment market for healthcare properties for 2019. As such, NAI apollo forecasts an investment volume above the long-term average of around € 1.6 billion for 2019 as a whole, with the prime yield again stable or with a slight downward trend.



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