In terms of logistics real estate completions, 2019 is
expected to become yet another bumper year. This is all the more amazing as the major
logistics sites suffer from an acute shortage of space – investors and developers are
increasingly opting for alternative locations on the periphery. But the construction activities
will hardly cover the annual demand of 6.5 to 7 million sqm in additional logistics
accommodation that was identified. Here is another finding of the latest survey: After many
years during which international investors dominated the logistics market, a growing number
of domestic companies are becoming aware of the attractive opportunities this asset class
offers. The top-20 list of leading investors now includes seven German companies.
These are the key findings of “Logistics and Real Estate 2019,” the latest edition of a survey
bulwiengesa just published for the fifth consecutive time in partnership with Berlin Hyp AG,
BREMER AG, Garbe Industrial Real Estate GmbH and Savills Immobilien Beratungs-GmbH.
Facts and figures from the areas building activity, investment and funding were evaluated for
the purposes of the survey. In addition, a number of market experts and insiders where asked
for their opinion on the stability of logistics real estate as an asset class.
The market evidence suggests that 2019 could become the next banner year: By mid-year,
more than 2.3 million sqm of logistics accommodation were already completed. Provided the
projected planning horizons are met, it is by all means realistic that the completions volume
clears the mark of 5 million sqm by year-end. This would once again imply a new record for
logistics asset completions during the period under review (2014 through 2019) and would
exceed the existing record for completed logistics accommodation, set in 2017, by nearly
300,000 sqm. The latest evaluation shows that, while the development of logistics facilities
continues to be centred in the established logistics regions, it gravitates more and more
toward the peripheries even of these regions. Property developers and investors favour
locations close to conurbations. Other factors of importance to them include the proximity of
transport nodes, additional land reserves and the multiple occupancy capacity of a given
For the first time, the mathematical model “GI-Flex lite” that bulwiengesa developed captured
the nationwide demand for logistics accommodation. The outcome reveals a large gap: The
identified annual demand of 6.5 to 7.0 million sqm of additional logistics space in Germany
contrasts with the total of around 5 million sqm in current completions.
The calculation is done, simply put, by matching the job growth relevant to logistics with the
demand for space – because floor space requirements rise in proportion to the number of
people hired. The identifiable extra demand for accommodation is particularly high in some
peripheral regions of the larger states, such as Baden-Württemberg, Lower Saxony and North
Rhine-Westphalia. Unlike in the established logistics regions of the metropolises Hamburg and
Berlin, where demand for additional logistics facilities is also extremely high, these states have
far more options for zoning the required development land.
The investment demand for logistics real estate has regained a high level in 2019. At
c. 3.8 billion euros to date, the investment volume in warehouse/logistics real estate and real
estate of the Unternehmensimmobilien type slightly exceeds the volume of the prior-year
period. Decisive factors included once again the increased building activity, intensified trading
and the persistently low level of interest rates on the investment markets. At the same time,
the keen demand is visibly held back by the fast-dwindling supply in attractive investmentgrade
assets. The fact is reflected in the transaction total at mid-year 2019, among other
things. For it is much lower than the mid-year investment volume of 2018, which in turn
showed a year-on-year decline. Then again, the large number of small-scale transactions are
evidence for brisk market dynamics.
The top 20 list of leading investors now includes seven German companies. However, their
investment total this year to date, which adds up to c. 1.1 billion euros, equals only around
58 % of their year-end total in 2018.
The ranking is currently topped by Blackstone and Frasers Property Europe. Next in line are
China Investment Corporation (CIC) in third place and Garbe, a German logistics property
developer and investor, in place 4 with approximately 1.2 billion euros invested. Goodman
Group ranks fifth. Garbe Group is admittedly the only German market player among the top 5.
But the top 10 list includes another three domestic investors, these being RLI Investors,
Palmira Capital Partners and PATRIZIA.
Logistics firms strive to be near consumers and human resources. This motivates them to
move as close as possible to metropolises. But since there is barely any land available there
anymore, the fastest growth is reported from the more remote regions. Logistics companies
were particularly successful in moving closer to their consumers in the regions of Nuremberg,
Halle/Leipzig and Kassel/Göttingen. Sites in these regions reached an extra 20,000 to 35,000
residents on average during the period that started in 2010.
The completions volume in the top 5 logistics regions equalled 6.2 million sqm between 2014
and 2018. Thus, they account for a 30 % share of the entire new-build logistics facilities
completed in Germany. The ranking of regions by completions continues to be topped by
Rhine-Main/Frankfurt. While the Hamburg logistics region scored second place in last year’s
survey, it lost that spot to the Düsseldorf logistics region during the current period. The Rhine-
Ruhr logistics region scored fourth place.
The gap between facilities in planning or under construction, on the one hand, and demand,
on the other hand, is widest in the established logistics regions of Hamburg, Berlin and
Munich. The keenest demand between now and 2021, comparatively speaking, was identified
in the peripheral regions of Bavaria and in the Rhine-Main/Frankfurt logistics region at around
1.9 million sqm. But not all parts of Germany suffer from short demand: In the logistics regions
A4 motorway Saxony, Augsburg, Bremen and North Sea ports but also in the periphery of
Hesse, demand is already covered to more than 90 %. Inversely, the greatest demand surplus
was identified in the logistics region of Magdeburg (see GI-Flex lite).
“Logistics and Real Estate” is an independent survey series published by the Competence
Centre for Logistics and Real Estate that comprehensively captures the asset class of logistics
real estate from various angles, and that has already become established as leading survey
series for logistics real estate in Germany. The analytics firm bulwiengesa studied the relevant
market movements during the years 2011 through 2018, and evaluated them in four main
subject areas, these being “property development”, “construction trends”, “investment” and
“financing.” The focus subject of 2019 is “shortage and demand.”
The survey thus provides an overview of the most important players on the diversified German
market, and an orientation guideline serving both peer-to-peer and outside audiences.
The commercial real estate lender Berlin Hyp AG, prime contractor BREMER AG, real estate
group Garbe Industrial Real Estate GmbH, and the real estate consultancy firm Savills
Immobilien Beratungs-GmbH have partnered with bulwiengesa to assist with the survey
design and shared valuable insights into their respective market segments.
bulwiengesa is one of the major independent analytics firms for the real estate industry in
Continental Europe. For more than 30 years, bulwiengesa has supported its partners and
clients in real estate industry issues by providing location and market analyses, detailed data
services, strategic consultancy and bespoke expert opinions, among other deliverables. The
data of bulwiengesa are used by Deutsche Bundesbank for the European Central Bank (ECB),
the Bank for International Settlements (BIS) and the OECD, among other clients.
Source : Company