Realogis publishes report on Greater Frankfurt logistics letting market

According to the latest report from Realogis – a consulting firm for industrial and logistics properties and business parks in Germany, with 70 experts – the Rhine-Main logistics market closed the first half of 2020 with take-up of 279,300 sq m of rental space by all market participants. 

The metropolitan region, which is one of the top seven in Germany, thus saw a gain of 7 per cent year on year, but fell just short (-6 per cent) of the five-year average (around 298,300 sq m) due to the strong outlier years of 2016 and 2017 (H1 2016: 348,000 sq m; H1 2017: 303,000 sq m).

While the office property market tumbled by up to 55 per cent in the first half of the year, due in particular to a weak second quarter, the logistics property market is looking much more robust. 

The months from April to June accounted for 68.3 per cent (190,720 sq m) of the market and thus more than doubled the quarterly take-up compared with the first three months of the year (Q1 2020: 31.7 per cent; 88,600 sq m).

“The Rhine-Main region has performed well despite the setbacks brought about by the coronavirus pandemic and the shortage of space, which has now reached this market as well. After a weak start in the first quarter of 2020, the last three months proved stronger than expected,” says  Borgia, Managing Director of Realogis Immobilien Frankfurt GmbH.

“The good result is partly thanks to two major deals,” reports Borgia. One of these deals relates to logistics space of around 50,000 sq m that Lidl, the supermarket company, is having built in Erlensee (construction by owner-occupier). In the second deal, hall space of around 33,000 sq m near Rüsselsheim was leased by a company in the automotive sector, with Realogis consulting exclusively for the owner.

The logistics property expert attributes the relatively good performance compared with other regions in Germany to the more realistic and more constructive policy to encourage new businesses to settle in the state of Hesse in recent years. “Logistics and e-commerce need space to provide people and businesses with goods – they are part of our everyday lives and will continue to grow thanks to the change in consumer behaviour, which has been reinforced by the pandemic,” says Borgia.

Julian Petri, Managing Director of Realogis Immobilien Frankfurt, also says that the fact that a number of temporary requests for space – primarily from retail companies storing fast-moving consumer goods – were fulfilled “proves once again that logistics property as an asset class can weather any crisis.”

Nevertheless, he is now noting with concern that companies looking to move into the Rhine-Main region will face a growing shortage of space in the future. “Unlike in the last three to five years, we are seeing significantly less new construction around the Frankfurt area,” says Julian Petri. The supply of industrial and logistics properties is growing scarcer, and companies’ searches more difficult.

Regarding the option of including brownfields in a new, viable vision for the future, Adriano Borgia says that such sites have only come onto the market occasionally in the past. But this might change, he says, if not all companies or industries make it through the crisis unscathed and thus have to rethink their property strategy, including the consolidation or relinquishment of older locations. 

“We are watching developments very closely, because, on the other hand, there are lots of companies and business models that can both create a considerable number of new as well as skilled jobs and provide trade tax revenue,” says Borgia. “In addition, new spaces are being built to be increasingly sustainable and thus increasingly energy-efficient. They can replace older, existing buildings, which guzzle energy, while also enhancing the appearance of any commercial district.”