Realogis publishes Germany’s Q1 2020 rental map for logistics properties
Between 2018 and 2019 alone, rents for new logistics properties in Germany’s top metropolitan areas rose by more than 8 per cent – significantly higher than the figure for the previous year, when rents grew by approximately 2.5 per cent from 2017 to 2018.
That's according to the Q1 2020 rental map for logistics properties published by Realogis, which provides companies in the retail, e-commerce, commercial and production sectors as well as institutional and private investors with information on current rents for new buildings and existing properties at a total of 32 logistics locations.
This trend is due to the growing scarcity of land fit for development, coupled with a lower tender rate by production, retail and logistics companies because many plots have either been reserved or purchased, and a new construction project can only be implemented by a project developer.
“In the first quarter of 2020, we are currently seeing prices at at least the same level as the end of 2019,” says Oliver Stenzel, Managing Director of Realogis Corporate Solutions GmbH. “However, rents will continue to rise in 2020 because fewer new buildings will be coming onto the market than in the past year.”
Over the last few years, older existing space has increasingly been replaced with newly built properties, for instance due to the centralisation and digitisation of logistics processes. As there is now significant excess demand for new buildings, but they are not widely available, the need for older properties is rising and rents are following suit. At the same time, the need for warehouse and logistics properties is rising in Europe’s manufacturing and export nations in particular – with Germany and France leading the way. However, as zoning laws in Germany are limiting the industrial and logistics properties that can be built in popular metropolitan areas, rents in the new building segment will continue to rise in the years ahead.
“We are urgently appealing to municipalities that have so far been opposed to large production and logistics centres,” says Stenzel, adding that the metropolitan areas already have enough fancy office buildings, which are prone to high volatility and therefore the threat of vacancies. “Out of all commercial property asset classes, logistics properties have the lowest volatility in purchase prices and rents. This means more stable trade tax revenue for municipalities in the long term and also protects jobs."