German Logistics Market

Across Europe, there is an increasing demand for logistics space, resulting in rising rents, healthy returns for investors and extremely low vacancy rates.

Due to Germany’s geographic location and size, along with its impressive infrastructure and access to technology, it has become the most important logistics market in Europe. Cushman & Wakefield have reported that around 25% of Europe’s total logistic turnover is generated in Germany.

The rise of e-commerce has been a major driver for occupier demand with the rapid, ongoing growth of online shopping. German online retail is expected to grow by 9% in 2019 to reach €58.5 bn, and will therefore, remain a key logistics driver.

Logistics and industrial property in Germany changed hands for approximately €6.7bn last year, exceeding the last 5 year average of €5bn. Some large acquisitions include:

• Swiss Life Asset Managers purchase of the “Laetita” portfolio, comprising of 32 properties with 538,000 sqm of rental space. The properties are primarily located across the top 7 locations and around 95% of the space is already let to well-known companies.
• Helaba Invests acquisition of 21 commercial properties throughout Germany. The portfolio totalled an investment volume over €500m and will deliver around 565,000 sqm of lettable space.
• The Luxembourg-based Alpha Industrial Holding SA sold the largest part of its logistics and light industrial property holdings with 600,000 sqm of total space across Germany and Austria to Frasers Property Europe.
• AEW acquired Europaring 34-30 in Kerpen, a sought after location within Germany’s central distribution network. AEW plan to add value and reposition the asset to benefit from the robust demand for logistics space.
• M&G Real Estate acquired a 40,000 sqm warehouse in Karlsruhe, fully leased to office product retailer, Otto Office. The asset is in a prime location in southwest Germany with three core logistics network corridors on its doorstep.

The demand for space continues this year with some large deals already underway:

• Patrizia Immobilien logistics fund has purchased a €59m portfolio in Germany from Cromwell Property Group.
• The global real estate investment, development and management firm, Hines, has announced their plans to invest an additional €400m into German logistics by the end of 2020.
• Bayerische Versorgungskammer (BVK) has bought a 71,000sqm German logistics portfolio for €72bn.

It is clear the demand for space isn’t slowing, making the German market a lucrative location for property investors, developers and managers alike. Large assets in prime locations continue to be sought after, with new concepts coming through pressuring assets to develop to be equipped with the latest technologies, energy-saving facilities and flexible designs.

New technologies have fundamentally changed the sector with automated stock management, IT-based supply chain management and numerous processes quickly becoming optimised to be technologically controlled. This change has resulted in well-networked and automated assets becoming increasingly sought after, which are more commonly better developed in new-build assets. In addition, new-build developments are much more efficient to run in terms of space and energy, making them much more economically viable and a sustainable investment. This shift has made new developments or repositioned assets fantastic investment opportunities.

Across Europe, demand is only continuing – outweighing supply – and the current strength of the logistics and industrial property asset class is quickly rising. New concepts and technologies are increasingly sought after, large assets quickly snapped off the market and there is a growing demand for smaller, inner-city assets to meet local supply-demand – expected to develop further this year.

The market is experiencing a boom. It’s a lucrative and fast-paced sector to be involved with and we’re looking forward to watching it develop further this year. If you’re looking for a move into this sector, check out our latest job opportunities here.