Frankfurt am Main, 16.01.2019 – The market for warehouse and logistics property in the Rhine-Main region finished 2018 with the third-best take-up result ever achieved. According to the analysis of the owner-operated real estate consultancy firm NAI apollo – a partner of the NAI apollo group – a total of around 741,000 sqm of logistics and warehouse area were taken up through leasing and owner occupancy last year. This makes it the third year in which this number exceeded 700,000 sqm after 2014 and 2017. As a result, the ten-year average has risen by 34,000 sqm and now stands at 586,000. “The strong take-up figures once again underline the importance of the Rhine-Main region as a central logistics location for Germany and Europe,” comments Andreas Wende, Managing Partner of NAI apollo.
Third-best take-up after 2017 and 2014
“2018 came close to the record results from 2017 and 2014,” says Dr Konrad Kanzler, Head of Research of the NAI apollo group. A total of 753,000 sqm were taken up in 2014, while the figure in 2017 was 769,000 sqm. Growing demand for space among both logistics service providers and retail due primarily to the boom in e-commerce has greatly enhanced the importance of the logistics markets in recent years. “While the five-year take-up figures for the logistics market in the Rhine-Main region were around 705,000 sqm per year on average between 2014 and 2018, the equivalent annual figure for the five years previous to that was 467,000 sqm. This is an increase of more than 50%,” explains Kanzler.
When analysing the overall result for 2018, stronger figures were recorded in the second half of the year. “The first six months were rather average with a take-up of 322,000 sqm. Contrastingly, in the second half of the year, some 419,000 sqm were taken up,” comments Michael Weyrauch, Head of Industrial Letting and Transaction at NAI apollo. With 194,000 sqm, the fourth quarter was the second strongest of the year.
Major transactions responsible for more than half of take-up
The second half of 2018 was primarily characterised by a higher take-up of large-area halls. As such, the 10,000 sqm-plus segment grew from eight deals with a total of 151,000 sqm in the first six months to ten deals with 274,000 sqm in the second half of the year. “For 2018 as a whole, take-up in the large-area segment adds up to around 425,000 sqm, which corresponds to a market share of 57.4%,” explains Weyrauch. “This almost reaches the level of the record year.” (In 2017 the corresponding figures were 445,000 sqm and a market share of 57.9%.) The biggest transactions of the year involved various logistics companies. ID Logistics was responsible for the top deal by leasing more than 40,000 sqm in Hammersbach, followed by logistics service provider RWL with over 39,000 sqm in Trebur and Seifert Logistics in Bürstadt with over 35,000 sqm. By leasing 32,500 sqm in M-Port³ in the Mönchhof area in Kelsterbach, Rewe is the top retail company in the ranking list at fourth place.
Project developments gaining in importance
All the deals mentioned above took place in or through project developments. In the large-area segment in particular, market activities are focusing on new construction. As such, 12 of the 18 deals in the segment for transactions above 10,000 sqm were leases within the scope of new building projects or owner-occupier developments. The share of take-up attributable to project developments in the reporting year 2018 amounts to 51.7% or 382,000 sqm, of which 298,000 sqm were project leases and 84,000 sqm were for owner-occupier developments. “Both absolute take-up and the share of take-up exceed the previous year’s figures. This once again underlines the large and growing market significance of the new build sector,” adds Weyrauch.
Transport, warehousing and logistics companies driving demand for space
The segment with by far the greatest demand for space is the transport, warehousing and logistics sector with a take-up share of 61.0% (452,000 sqm), followed by retail with 17.4% (129,000 sqm) and industrial and commercial enterprises with 10.5% (78,000 sqm). This ranking is the same as in the previous years. “What is new is the wide margin between the transport, warehousing and logistics sector and the others. This is also predominantly based on the market activities of logistics service providers in the large-area segment,” comments Kanzler.
As in previous years, market activities are concentrated in the south of the Rhine-Main region. The south-western submarket situated between the Main river and the A5 and A63 autobahns continues to dominate with a take-up share of 59.4%, which corresponds to around 440,000 sqm. It is followed by the south-east with approximately 109,000 sqm.
Continued high level of market activity expected for 2019
This high level of market activity is currently expected to be maintained in 2019. NAI apollo believes that the looming weakening of economic development will not have an effect on the warehousing and logistics market in Frankfurt and the Rhine-Main region until the end of the year, or in the best case until the following year. “In light of this, we anticipate another good take-up result above the ten-year average of 586,000 sqm. The trend of growing market activity at the peripheries of the market region will also continue,” comments Weyrauch. Due to the lack of suitable existing properties and buildable plots, developers and users will therefore increasingly focus on locations outside the traditional logistics areas. “Good transport connections and the right spaces for flexible and large-area utilisation are the prerequisites for this,” adds Weyrauch.
Read more … NAI apollo: Warehouse and logistics property market passes 700,000-sqm take-up mark in Rhine-Main region
