Realogis, the sector specialist advisor for industrial and logistics, has said that 2022 saw the Frankfurt logistics market ‘halve’ and that supply is hampering things.
Total take-up of rental space by all market participants came to 317,700 m2 last year compared to the previous year’s result of 655,700 m2 representing a decrease of 51.5%, the biggest ever recorded by Realogis since 2014.
It also fell short of the current five-year average of 524,940 m2 by a substantial 39.5%.
‘The increased shortage of space in the Frankfurt/Rhine-Main market area is taking its toll. In all sectors, take-up declined by roughly half in 2022,’ said Julian Petri, MD.
‘Companies from the retail, industrial and logistics sectors would like to locate closer to their sales and production markets, not least so that they can make better use of the scarce resources of staff availability and petrol prices. However, there is hardly any available space or development sites, forcing users to seek properties outside the market area instead.’
Prime rent for logistics properties increased only slightly in comparison to other metropolitan regions in Germany by 2.8% as against 2021.
Petri said: ‘As a result of the shortage of space, higher construction costs and interest rate increases, the prime rent will also continue to rise in the future.’
At the end of 2022 it came to €7.30/m², its highest level to date, after €7.10/m² in 2021. This was 2.8% higher than the five-year average of €6.98/m².
The lion’s share of industrial and logistics take-up was attributable to the existing properties category at 238,700 m² or 75.2%. By contrast, new-build properties represented only 16.7% of take-up at 53,100 m².
Brownfield sites played a less important role, accounting for 25,800 m² or 8.1% of total take-up. ‘As in other metropolitan regions, brownfields will gain increased significance on the Frankfurt market over the coming years in order to develop new buildings within the market area,’ noted Petri.
Big-box properties – defined as properties upwards of 10,000 m² mainly used for logistics and with an office share of no more than 20% – contributed almost a third of total take-up at 98,700 m² or 31.1% in 2022.
The business parks category accounted for 130,300 m² or 41%. Realogis defines a business park as a contiguous business district that is developed and implemented with a uniform concept and whose infrastructure is used jointly by the companies based there. Other properties that are either big boxes nor business parks, accounted for 88,700 m² or 27.9%.
Biggest deals
Between January and December, Realogis observed a total of 92 deals in the logistics, warehousing and industrial space segment. These included five top deals with a combined total of 98,704 m², representing around a third of total take-up.
The biggest decline in take-up in the reporting period was in the Rhine-Main East region: It also saw the biggest relative decline of 15.8 percentage points. B+S and Breitfeld und Schliekert were the major lessors in the region, accumulating 49,677 m² or 57% of take-up.
In third place was Mainz/Wiesbaden with 24,500 m² or 7.7% after 11,400 m² or 1.7%. Besides Rhine-Main South, this was the only other region to increase its share, in this case by 6.0 percentage points. It was also the only region to augment its take-up in absolute terms, more than doubling this result largely due to the deal with Atrikom.
‘The majority of the weak annual result is attributable to the declines in the two regions of Rhine-Main East and Rhine-Main South. In recent years – as in 2022 – these have always represented between 70% and 80% of take-up of logistics, warehousing and industrial space, although the market in the two regions has declined by 270,000 m²,’ explained Petri.
Logistics/distribution headed the sector ranking in the Frankfurt area again in 2022, with take-up of 152,700 m² or 48.1%.
In second place was retail again with 111,000 m² or 34.6%, after 255,800 m² or 39% in 2021 (a decrease of 52.7% in absolute terms and 4.4 percentage points in relative terms).
