According to analyzes by DIP, the logistics industry will also be one of the winners in the real estate industry in 2022. The logistics market benefited, among other things, from continued strong online and mail order business.
In addition, in 2022 disrupted supply chains due to the corona pandemic and the Ukraine war led to an increasing demand for buffer storage in order to achieve greater resilience in the supply chains and to continue to guarantee the ability to deliver. In addition, market-relevant user groups prefer locations within Germany or in the direct European neighboring countries (re-shoring; near-shoring) due to the changed flow of goods caused by the crisis, in order to reduce dependence on foreign production sites and suppliers and increase flexibility in the event of fluctuating demand.
In addition, in the B2B sector, the ongoing globalization, cross-regional production networking, just-in-time delivery and supply chain management for “Industry 4.0” are increasing the need for modern logistics properties at multimodal transport hubs with national and international connections. All in all, logistics and industrial real estate are moving even more into the focus of investors because they are considered crisis-proof and robust investments.
Top space and investment turnover
These developments are driving demand for space and investors in the logistics segment:
• In 2022, with around 8.2 million m² of logistics space let or newly created for owner-occupiers, an excellent turnover result was again achieved in Germany, which almost reached the record value of the previous year (2021: 8.3 million m²). The 5-year average (Ø 2017-2021: around 7.15 million m² pa) was topped by around 15%.
With around 1.65 million m² of space taken up in 2022, the regions of the “Big Five” again accounted for a significant proportion (2021: around 2.6 million m²). Berlin takes first place with around 562,800 m², followed by Hamburg (406,000 m²), Frankfurt am Main (277,300 m²), Düsseldorf (237,400 m²) and Munich (162,300 m²). All locations of the “Big Five” had to accept significant losses compared to the previous year, the most significant decline was registered in Frankfurt (- 62.5%). However, the background to this development is not falling demand, but rather the acute lack of space in the A locations and the insufficient space allocation, which means that there is a shift to medium-sized and smaller locations.
• Accordingly, the high level of dynamics in the logistics market is also reflected in the high completion volumes, which have been more than 4 million m² of new construction logistics space every year since 2016. According to bulwiengesa, a completion volume of around 5.8 million new logistics areas was achieved in 2022 and thus a new record (2021: around 5.3 million m²).
Irrespective of this, there is still a lack of modern, sustainable logistics properties, especially at efficiently connected locations. In addition, a declining volume of completions is expected for 2023.
• The high demand for logistics real estate in line with the market is also reflected in the investment market. The logistics segment achieved a further increase in 2022 compared to the previous year (2021: around EUR 9.5 billion) and a new record result with a monetary turnover of around EUR 9.9 billion. In addition, logistics properties are the second strongest asset class after the office segment (approx. EUR 21.7 billion) on the German market for real estate investments.
Within the logistics segment, Berlin is the winner in 2022 with around EUR 510 million in sales, followed by Frankfurt (around EUR 400 million).
Trend reversal in prime yields for logistics properties
• Irrespective of the strong demand, the market for logistics investments is also in a pricing or price correction phase due to rising interest rates on loans, with the result that yield levels are rising again for the first time. The prime yield of the 16 DIP locations analyzed (Berlin, Bremen, Dresden, Düsseldorf, Essen, Frankfurt am Main, Freiburg, Hamburg, Hanover, Karlsruhe, Cologne, Leipzig, Magdeburg, Munich, Nuremberg, Stuttgart) increased by 30 on average in 2022 basis points to 4.6% pa
• The yields of the “Big Seven” rose to 4.0% pa in the 2022 reporting year (2021: 3.7% pa).
• The most expensive city, measured by the prime yields for top logistics properties, was Munich with a prime yield of 3.4% pa Hamburg and Frankfurt follow with a prime yield of 3.6% pa each Higher interest rates were paid in Cologne and Hanover with 3 .9% pa and Berlin (4.0% pa).
• Top logistics properties in Bremen and Düsseldorf (each 4.3% pa), Leipzig (4.7% pa) and Freiburg (4.8% pa) are roughly the same as the DIP average (4.6% pa) .
• Top logistics properties in Karlsruhe (5.0% pa), Essen (5.3% pa), Stuttgart and (until the Intel settlement is fully effective) Magdeburg have higher prime yields, each with 5.5% pa. The highest prime yields are achieved in Nuremberg (5.6% pa) and Dresden (5.7% pa).
Rising land price level
In the 16 analyzed DIP markets, the average commercial building land prices in 2022 rose by 4.3% compared to the previous year to EUR 269.00/m² (2021: EUR 258.00/m²):
• The most expensive city is still Munich with an average of EUR 820/m². This is followed by Stuttgart (EUR 570/m²), Frankfurt (EUR 400/m²) and Düsseldorf (EUR 350/m²).
• Hamburg (EUR 270.00/m²), Berlin (EUR 250.00/m²), Nuremberg (EUR 240.00/m²), Cologne (EUR 230.00/m²), Freiburg (EUR 225.00) are in the middle. /m²), Hanover and Karlsruhe with EUR 200.00/m² each.
• Significantly cheaper are: Bremen (EUR 130/m²), Essen (EUR 120/m²), Leipzig (EUR 110/m²) and Dresden (each EUR 95/m²) as well as Magdeburg (EUR 90 ,-/m²). In Magdeburg, however, the price level has already increased by around 30% compared to 2021 (EUR 70.00/m²).
When it comes to the development of property prices, it should be noted that a further significant price increase in central locations is to be expected due to the shortage of space.
Continuously increasing rental level
• The top rent for modern, demand-oriented logistics space increased by 6.8% on average in the DIP locations to around EUR 6.30/m² (2021: EUR 5.90/m²).
• The most expensive logistics locations in terms of top rents are Munich (EUR 8.00/m²) and Berlin (EUR 7.90/m²), followed by Stuttgart and Frankfurt (each EUR 7.30/m²), Düsseldorf and Hamburg (each EUR 7 ,-/m²). In the other locations, top rents range between EUR 6.60 and EUR 5.00/m².
perspectives
• The logistics segment will also face a variety of changes and challenges over the next few years, for example with regard to the provision of suitable space in the metropolitan areas so that high transaction volumes remain possible here in the medium term.
• At the same time, in addition to the “Big Five”, medium-sized locations are also coming into focus in order to relieve the top cities in view of the increasingly limited availability of space.
• At the same time, logistics processes must be optimized by means of creative solutions, eg by using automation technologies and setting up multi-user warehouses, in order to ensure the profitability of logistics companies.
• Environmentally, climate-friendly and traffic-friendly transport within the cities is also gaining in importance due to new decentralized logistics and transport concepts.
