Warehouse market in Germany in 2020: shifts and trends

2020 was the year of the pandemic and it changed take-up figures for logistics in Germany definitely. It pushed things to a sustained growth of e-commerce as more people used to shop online. Whereas in 2019 manufacturing companies had taken the lead with 40%, in 2020 retail and logistics dominated. This resulted in a scarcity of space, especially in the larger city areas where rents keep going up. Today it’s more than ever important to strive for an optimal use of space.

As a result of growing prime rents a shift to new areas has started since 2019. Companies seek for space in rural areas or cities (f.e. Frankfurt) who could limit the relapse in the two first quarters of 2020. Also remarkable: whereas the structure of take-up went to occupiers-buyers – those who buy and use their own space – in 2019, last year the lettings took over.
Nevertheless the country remains one of the most attractive logistic markets worldwide.

Warehousing take up in Germany

As a result of growing prime rents a shift to new areas has started since 2019. Companies seek for space in rural areas or cities (f.e. Frankfurt) who could limit the relapse in the two first quarters of 2020. Also remarkable: whereas the structure of take-up went to occupiers-buyers – those who buy and use their own space – in 2019, last year the lettings took over.
Nevertheless the country remains one of the most attractive logistic markets worldwide.

Warehouse take-up in Germany (Source: JLL)

Munich logistic space almost saturated, Dusseldorf take-up in decline

A take-up of about 3 million square meters in the first six months of 2020 … Sounds quite well, isn’t it? But it’s still a downfall of 11%, mainly caused by the owners-occupiers (- 23%) whilst lettings only fell by 5%. Still, the effects of the corona pandemic were expected to be much more serious.
But what about the regional differences between major logistic hubs?

The fall of Düsseldorf and Cologne in the warehousing and logistics market
The Düsseldorf region experienced an extremely weak second quarter in the warehousing and logistics market. Take-up fell by 40% in comparison with the same period in the previous year. It was due to the noticeable restraint shown by many companies because of the coronavirus pandemic, but above all to the scarce supply of modern logistics space available.

A similar scenario did take place in the region of Cologne. The trend already started in the previous year and continued into 2020. The second quarter was determined by the scarcity of modern logistics space exacerbated by the effects of the coronavirus pandemic. Take-up fell by 27% and was more than 60% lower than the 5 and 10-year averages for that period. Manufacturing companies have the lead in this region as they accounted for 73%.

Frankfurt on the rise in the second quarter of 2020
The region of Frankfurt signed for a significant increase in take-up in the second quarter. There was an increase of 6% compared to the first half of 2019 and a decrease of 14% compared to the average of that period in the last 5 years. Nevertheless the weak first quarter was compensated by an above-average second quarter, with 70% of total take-up registered between April and June.

Major logistic warehousing regions in Germany
Major logistic regions in Germany (source: BNP Paribas)

Significant scarcity of modern warehousing space in Munich
Munich realized the highest half-year take-up of the past 10 years with 87% above the 5-year average. The coronavirus pandemic had so far little effect in the market.

There is actually a significant scarcity of modern warehousing space available at short notice across the whole region. Take-up will fall dramatically during the second half of 2020. Demand for space will remain greater than supply and will be insufficient to satisfy many letting enquiries. Therefore companies will have to be creative and make optimal use of the available space.

Less owner-occupiers & new build properties

Owner-occupier take-up outside the big five conurbations was down 25% in the first six months of 2020. Letting take-up only lost 9%. Maybe the decline in manufacturing companies (19%) is to blame, because the most active sectors were distribution/logistics (40%) and retailers (38%).

E-commerce is trending since a few years, but the pandemic has been accelerating the growth. E-commerce companies took up approximately 350.000 sqm into the first half of the year. 70% of all space take-up was in new-build properties and development projects. The new-build sector accounted for 100% of all take-up in the ≥ 40.000 sqm size category.

Prime rents for warehousing space in the ≥ 5,000 sqm size category remained stable across all regions in the first half of the year. Munich signed for the highest prime rent (€7,10/sqm/month), followed by Hamburg, Frankfurt and Berlin. Düsseldorf reached the lowest rent (€5,50/sqm/month). But prime and average rent in general has been climbing since years, especially in those top locations due to low supply and ongoing high demand.

Prime rents for warehousing logistic space in Germany

Prime rents for warehousing space in the ≥ 5,000 sqm size category remained stable across all regions in the first half of the year. Munich signed for the highest prime rent (€7,10/sqm/month), followed by Hamburg, Frankfurt and Berlin. Düsseldorf reached the lowest rent (€5,50/sqm/month). But prime and average rent in general has been climbing since years, especially in those top locations due to low supply and ongoing high demand.

(Source: Colliers International)

Future trends: booming e-commerce and rent increase

What about the future? The demand for space will still expand in Germany in the following years. Why? Megatrends like e-commerce and same-day delivery create a boosting demand for suitable core products in conurbations.

New-build construction activity is on the rise, however it will not be enough to meet the anticipated demand. As a result, developers and tenants are being forced to turn to the peripheral areas surrounding major conurbations. smaller logistics regions could benefit from shortage of space as they enjoy comparatively moderate price levels and offer more opportunities for company expansions. At the same time, a number of companies flexible enough to do so are likely to turn to nearby markets that boast greater availability.

Another solution lies in the optimal usage of storage space. Discover how Storeganizer storage system saves you storage space in your warehouse.

You would like to discover our Storeganizer cases and solutions in Germany?
Please contact Richard Schmitt via Richard.schmitt@storeganizer.com or +49 1512 2880332

Sources used:
Germany Market Report – Colliers International
Logistics Market Germany – BNP Paribas
Logistics and Industrial Market Overview – JLL