Market Report Industrial and Logistics Markets Overview

Home , Bergisch Gladbach, Neu Wulmstorf, Offenbach am Main, Witzhave

GERMANY MARKET REPORT INDUSTRIAL AND LOGISTICS MARKETS OVERVIEW

2018 / 2019 HIGH DEMAND FACES LOW SUPPLY

The run on industrial and logistics real Current excess demand has triggered an estate continues. The German industrial increase in speculative property develop- and logistics real estate market ments in Germany’s key logistics regions. experienced another strong year in 2018. The only thing putting the brakes on this This asset class is now the third strongest trend is a lack of available land sites. on the overall commercial investment In light of strong demand pushing up land market and has won over even the most site prices and construction costs, steadfast critics. With a total investment property developers are under pressure volume of €6.8 bn, German industrial and to secure building sites as fast as possible Peter Kunz FRICS logistics assets recorded an excellent to fill the development pipeline. HEAD OF INDUSTRIAL & result in 2018, securing second place in Neighboring regions with relatively LOGISTICS EMEA Europe behind the UK (around €8.7 bn). moderate prices and higher availability [email protected] of development sites may soon begin However, with the supply of new prime to benefit from the supply bottleneck core assets quite limited, investors are in top markets such as Hamburg, Munich turning towards alternative investment and Stuttgart. opportunities. Industrial assets attracted particularly strong demand in 2018, recording a share of around 42%, or €3 bn, in total investment volume. For the first time, high-volume light industrial port folios accounted for two of the three largest transactions with volumes of over Hubert Reck €500m. A first for the industrial and HEAD OF INDUSTRIAL & LOGISTICS logistics market! Ongoing limited supply INVESTMENT GERMANY of logistics assets is likely to keep this [email protected] trend strong throughout 2019 as well. 3

CONTENTS CONTENTS | 2018 Industrial and 4

Logistics in Germany Logistics / Logistics Regions in Germany 5 2019 Markets

Market Data 6 Overview

Leasing Market | Colliers International

Germany 8

Berlin / Brandenburg 11

Düsseldorf 14

Frankfurt/Rhine-Main 17

Hamburg 20

Cologne 23

Leipzig 26

Munich 29

Stuttgart 32

Investment 35

Glossary 38

Contacts /Locations 39 4 LOGISTICS IN GERMANY 2019 / Germany is one of the most attractive has to compete for available space with logistics markets worldwide thanks to other asset classes like residential and its central location in Europe, excellent office. And, despite numerous image Colliers Colliers International | infrastructure, high technological campaigns, the sector is still often asso- standards and excellent building quality. ciated with traffic, noise and low wages.

Overview The logistics sector is one of Germany’s key economic engines with a turnover The lack of space and development sites i cs n Ge rma y | 2018 o gi st L Markets Markets of around €274 bn. The sector, however, can be felt in almost all of Germany’s top 8 is also facing significant challenges. logistics markets. However, trends and drivers such as the thriving e-commerce Limited supply of space and a shortage sector will continue to ensure high of workers are the greatest threats to demand for logistics properties. Ongoing

Industrial and Logistics growth. Companies on the lookout for economic growth accompanied by current space are increasingly taking the demographic trends will further limit the availability of labor and local business supply of labor. tax policies into consideration in their decisions. Although space is in short supply in densely populated areas, secondary locations still have relatively high space potential. These locations, however, are often not competitive due to a lack of available human resources. What’s more, the logistics sector also LOGISTICS REGIONS IN GERMANY 5 L Industrial o gi st i cs r e gi ons n Ge rma y | 2018 and Logistics Markets

23 21 Overview Rostock 20 19

Hamburg | Colliers International / Bremerhaven 2019 6.00 28 4.85 Bremen 24 39 260 11 4.60 27

3.60 Berlin 60 Hannover Wolfsburg 1 5.70 Braunschweig 4.50 30 4.70 2 5.00 5.25 31 Osnabrück Magdeburg 13 4.00 3.80 200 4.20 Münster 395 43 100 80 14 110 15 33 Dortmund Duisburg 38 Leipzig Mönchen- Düsseldorf Kassel / Bad Hersfeld 52 4.60 gladbach 5.75 Dresden 4.50 49 Erfurt 3.70 72 Cologne 4.75 4.50 3.70 4 17 45 4.30 70 6.50 220 3.60 5.50 75 485 3.10 Gießen 5.20 80 4.50 Zwickau 60 300 Prime rent in € / sqm/month 180 4.00 71 66 9 ∅ rent in €/sqm/month 48 60 5.30 3.50 Frankfurt 73 Land price in €/sqm 4.30 70 70 Trier Aschaffenburg DEFINITION 140 67 Würzburg 3 93 Prime headline rents for logistics 63 Mannheim and distribution space: Nuremberg > 3,000 sqm Class-A properties ( > 10 m under beam height, 2–3 docking Saarbrücken 62 gates/1,000 sqm, sprinkler system, share 65 5.00 of office space < 10 %) in a prime location 6 Regensburg 4.30 Karlsruhe 4.50 Average rents for logistics 7 and distribution space: 3.30 200 5.50 8 Stuttgart > 3,000 sqm with multifunctional usage 92 ( > 7 m under beam height, 1–2 docking 85 Ingolstadt 4.60 gates / 1,000 sqm, limited share of office 6.50 space) in a traffic-favorable location 175 Ulm / Neu-Ulm 5.20 81 Land price: 4.50 Augsburg 94 Undeveloped commercial/industrial areas, 5 300 Munich ( > 20,000 sqm, mainly flat and rectangular, no / limited usage restrictions) 3.90 7.00 Status January 2019 130 95 96 6.60 Airport 350 Freight transport centre

Harbour 6 MARKET DATA 2019 /

a | 2018 Location Information t

Colliers Colliers International Germany Berlin Düsseldorf Frankfurt Hamburg Cologne Leipzig Munich Stuttgart | Population in 1,000 82,792 3,613 617 747 1,831 1,080 582 1,456 633 M ark et Da Employees Paying Social Security 32,660 1,464 416 580 969 568 267 865 413 Overview Contributions in 1,000

Markets Markets Unemployment Rate in % 4.8 7.6 6.5 5.0 6.0 7.4 6.1 3.4 4.0

Per Capita Disposable Income in € 23,322 21,720 28,317 26,696 25,228 25,364 21,128 30,004 26,837

Sources: Federal Statistical Office, Land Statistical Offices, Federal Employment Agency, Nexiga GmbH

Industrial & Logistics Leasing Industrial and Logistics

TOP 8 Berlin / Düsseldorf Frankfurt / Hamburg Cologne Leipzig Munich Stuttgart Brandenburg Rhine-Main Take-up 2018 in sqm 2,968,200 422,500 317,600 650,200 484,600 248,100 343,700 201,100 300,400

Change year-on-year in % – 1% – 1% – 27% – 10% 5% 25% 196% – 20% – 24%

Leasing performance 2018 in sqm 2,544,900 322,300 295,600 563,600 393,400 236,100 275,800 201,100 257,000

Change year-on-year in % 2% – 10% – 27% – 17% 14% 44% 380% – 20% 6%

Forecast for 2019

Number of Deals 571 102 66 83 78 37 25 97 83

Average Area Size in sqm 4,862 4,142 4,374 7,122 5,403 6,705 12,497 2,073 3,447

Strongest Branch

Prime Rent in € / sqm / month 5.70 5.75 6.50 6.00 5.50 4.60 7.00 6.50

Forecast for 2019

Average Rent in € / sqm / month 5.00 4.75 5.20 4.85 4.50 3.70 6.60 5.20

Forecast for 2019

Trade Production & Manufacturing Transport & Logistics 7 Industrial DaM ark et and t Logistics Industrial & Logistics Investment – TOP 8* a | 2018

TOP 8 Berlin Düsseldorf Frankfurt Hamburg Cologne Leipzig Munich Stuttgart Markets / Transaction Volume 2018 in m € 2,489 645 412 504 252 206 24 230 217 2019

Change year-on-year in % 39% 179% 31% 24% 93% 9% – 17% – 6% – 10% Overview

Forecast for 2019 | Colliers International * Refers to the defined logistics market areas

Industrial & Logistics Investment – Germany

2013 2014 2015 2016 2017 2018 Transaction Volume 2018 in m € 2,284 3,592 3,972 4,579 8,662 6,814

Change year-on-year in % 40 57 11 15 89 – 21

Industrial Properties Share in % 16 27 32 31 12 42

Logistics Properties Share in % 84 73 68 69 88 58

Share in the Commercial 7 9 7 9 15 11 Real Estate Market in %

Share by International Investors in % 46 62 53 38 65 47

Portfolio Transactions in % 40 50 47 40 71 56

Largest Buyer Group in % Open-ended Open-ended Opportunity Asset Open-ended Asset real estate real estate funds / managers / real estate managers / funds / funds / Private Fund funds / Fund Special funds Special funds equity funds managers Special funds managers 29 33 22 30 33 45

Largest Seller Group in % Property Property Property Property Asset Property developers developers developers developers managers / developers Fund managers 29 31 20 26 46 30

Gross Initial Yield in % for 6.90 6.40 5.97 5.50 4.65 4.50 Class-A properties 8 LEASING MARKET GERMANY

Take-up supply as demand in the region remains high. Hamburg came in second, closing Germany’s top logistics regions, Berlin, 2019

/ the gap somewhat over the course of the Düsseldorf, Frankfurt, Hamburg, Cologne, year. Thanks to several large-scale deals, Leipzig, Munich and Stuttgart, generated the Hamburg region managed to keep total take-up (leasing and owner-occu pace with previous year activity Colliers Colliers International piers) of around 3.0 million sqm in 2018, | (484,600 sqm, + 5%). Berlin also kept up in line with previous year results. the momentum of the previous year with a Net leasing performance (excluding

Overview solid result of 422,500 sqm (– 1%). owner-occupiers) kept pace with Düsseldorf (317,600 sqm, – 27%) took the previous year results as well at Markets Markets hardest hit in terms of take-up in 2018,

L e a s i n g M ark et Ge rma n y | 2018 2.6 million sqm (+ 2%). not only due to a lower number of large- scale deals in general but because of The Frankfurt/Rhine-Main region the large-scale deal signed by Amazon continued to defend its strong lead with in 2017 (around 141,000 sqm). Munich around 650,200 sqm in take-up. Although Industrial and Logistics (201,100 sqm, – 20%) and Stuttgart this reflects a decrease of 10% yoy, the (300,400 sqm, – 24%) saw a decrease in drop can be attributed to shortage of

FAST FACTS TOP 8

2018 2017 Change Take-up in sqm 2,968,200 3,000,400 – 1% Leasing Performance in sqm 2,544,900 2,498,600 2% Owner-Occupiers in % 14% 17% – 18% Number of Deals 571 578 – 2% Average Area Size in sqm 4,862 5,010 – 3%

FIGURE 1: Take-up in 1,000 sqm FIGURE 2: Take-up by Size Category in %

600 564 up to 500 0% 7 501–1,000 3% 500 1,001–3,000 11% Others 12% 393 400 3,001–5,000 8% Logistics Service 6 322 Providers 43% 296 300 276 257 236 Trading 201 Companies 24% 200 5,001–10,000 21% 5 Production & 100 86 92 100 68 Manufacturing 43 Companies 21% 22 above 10,000 57% 12 0 0 4 B F C M 2014 2015 2016 2017 2018 D H L S

Leasing Performance Owner-Occupiers Berlin Düsseldorf Frankfurt Hamburg Cologne Leipzig Munich Stuttgart 9

take-up due to limited supply. In contrast, compromise. Demand will likely shift to Ge rma n y | 2018L e a s i n g M ark et Cologne (248,100 sqm) posted a 25% yoy the surrounding areas in the medium to Industrial increase in take-up, thanks in part to sev- long-term, with neighboring logistics

eral property developments that added regions like Hanover and Nuremberg, and

space to the market. The Leipzig logistics which have comparatively favorable Logistics region almost tripled its take-up result prices and higher space potential, set to

yoy to 343,700 sqm thanks to a number of benefit in the future. Demand for business Markets large-scale deals and was able to hold parks with good access to infrastructure

onto its status as one of Germany’s most is on the rise in almost all conurbations Overview popular logistics regions locations. as well. We are also seeing an increase in / 2019

demand for smaller urban logistics space | Colliers International instead of big box options. Supply and Demand

Current excess demand has triggered an Rents increase in speculative property developments in Germany’s key logistics regions. Similar to 2017, rents for logistics units The only thing putting the brakes on this of over 3,000 sqm in Germany’s key trend is a lack of available land sites. regions remained largely stable. Munich Unless new space is added to the market continues to be the most expensive loca- soon, this trend will become even more tion in terms of both average and prime pronounced. In addition, tenants are rents at €7.00 per sqm (+ 2%). Stuttgart proving willing to sign longer-term (€6.50 per sqm), Frankfurt/Rhine-Main leases. With construction and land-site (€6.50 per sqm, + 2%) and Hamburg costs rising, property developers are (€6.00 per sqm, + 3%) follow in the ranks. increasingly stocking up on land sites. High demand combined with limited Tenants with larger space requirements supply in the North Rhine-Westphalian (more than 10,000 sqm) are struggling logistics regions of Düsseldorf to find space in all of Germany’s top 8 and Cologne caused rents levels to rise logistics markets and are having to in 2018. In Düsseldorf, prime rents

FIGURE 3: Take-up by Branch Share in % FIGURE 4: Prime Rents in the TOP 8 in € / sqm

Others 12%

Logistics Service 6 Providers 43%

Trading Companies 24% 5 Production & Manufacturing Companies 21%

4 2014 2015 2016 2017 2018

Berlin Düsseldorf Frankfurt Hamburg

Cologne Leipzig Munich Stuttgart 10

(€5.75 per sqm) and average rents (€4.75 prices, which will likely cause rents to per sqm) both rose by 6%. The situation in continue to rise, particularly for stock 2019

/ the Cologne region was similar with space. Despite the satisfactory market prime and average rents up €0.30 each trend, supply bottlenecks continue to limit (€5.50 per sqm and €4.50 per sqm, take-up, especially in markets like respectively). Rents in Berlin skyrocketed Hamburg, Munich and Stuttgart. In view Colliers Colliers International | due to the attractive market situation. of the slightly weaker economic perfor- Tenants are currently paying up to €6.70 mance expected for 2019, take-up will

Overview per sqm for modern new-build space likely fall short of 2018 results. However, within Berlin city limits, and prime rents we can expect to see leasing performance

Markets Markets in the city outskirts currently come to come in at between 2.1 and 2.3 million L e a s i n g M ark et Ge rma n y | 2018 €4.50 per sqm (southern city outskirts). sqm, a result still well above the long- Comparatively speaking, Leipzig still term average. offers the most attractive rent levels for tenants with prime rents at €4.60 per sqm

Industrial and Logistics (+ 2%).

Summary and Outlook

No end to high-demand is currently in sight. As in previous years, 2018 also saw substantial excess demand for industrial and logistics space. In view of the high pre-leasing rates at new-build developments, we do not expect availability to increase significantly in the next 1 to 2 years. This will put further pressure on

FIGURE 5: Average Rents in the TOP 8 in € / sqm

3 2014 2015 2016 2017 2018

Berlin Düsseldorf Frankfurt Hamburg

Cologne Leipzig Munich Stuttgart BERLIN / BRANDENBURG 11 Industrial B e r l i n / Bra ndenb and Logistics urg | 2018 Markets Overview / 2019 | Colliers International

FAST FACTS

2018 2017 Change Take-up in sqm 422,500 424,800 – 1% Leasing Performance in sqm 322,300 359,800 – 10% Number of Deals 102 80 28% Prime Rent* in €/sqm/month 5.70 5.00 14% Average Rent in €/sqm/month 5.00 4.50 11%

*achievable top rent in new buildings

Take-up according to Location

Submarket Take-up in sqm Share 1 Center 19,500 5%

2 City North 30,800 7%

3 City East 8,500 2%

4 City South 86,000 20%

5 City West 15,900 4%

6 Periphery North 12,500 3%

7 Periphery East 1,000 0%

8 Airport Area BER 10,500 3%

9 Periphery South 219,400 52%

10 Periphery West 18,400 4%

Total 422,500 100% 12

LEASING 2019 / Take-up addition to large-scale owner-occupier developments by Chefs Culinar and The Berlin industrial and logistics real | 2018 urg Deutsche Post, retailers Decathlon Colliers Colliers International estate market recorded a take-up volume | (roughly 40,000 sqm) and DefShop of 422,500 sqm in 2018, in line with the (around 20,000 sqm) as well as an online previous year’s result. Ongoing lively

Overview retailer (around 20,000 sqm) also moved activity in Berlin once again outperformed to the Brandenburg Park.

B e r l i n / Bra ndenb the 5-year average (+ 12%). Net take-up Markets Markets (excluding owner-occupiers) came to Available land near the logistics hotspots roughly 322,300 sqm with 95 leases is becoming increasingly scarce. There signed. High-volume owner-occupier are no vacant development sites left at deals such as those signed by wholesaler the Großbeeren freight center and the Chefs Culinar and Deutsche Post at Industrial and Logistics Brandenburg Park in Ludwigsfelde is now Industriepark 4.0 Eichspitze for around almost fully occupied due to several 40,000 sqm each pushed down leasing owner-occupier developments and performance by 10% yoy. additional letting activity. The largest space potential is concentrated in Supply and Demand the city’s southern periphery, mostly in the Schönefeld region and near the The space segment of over 10,000 sqm western motorway ring, which is accounted for more than half of total take- particularly suitable for occupiers with up with five deals even breaching the larger space requirements. New property 20,000 sqm mark. All of these deals were developments such as one for just under signed in the Ludwigsfelde submarket in 38,000 sqm are also adding to the supply the southern Berlin periphery. As such, in Schönefeld. the latter accounted for more than half of total take-up in terms of location. In

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 500 451.4 up to 500 2,400 1% 424.8 422.5 501 – 1,000 21,400 5% 400 352.7 1,001 – 3,000 58,000 14% 314.3 300 3,001 – 5,000 39,300 9% 5,001 – 10,000 84,300 20%

200 above 10,000 217,100 51% Total 422,500 100% 100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 13

Rents Summary and Outlook Industrial B e r l i n / Bra ndenb In 2018, high demand and the increasing In the wake of this dynamic year and with scarcity of space manifested noticeably in the city’s potential still high, Berlin has and higher prices. Prime rent (overall market) solidified its position as one of Germany’s Logistics increased by a substantial 14% to €5.70 most attractive logistics regions. In

per sqm. Average rent was also up by 11% addition to limited supply of land sites, urg | 2018 Markets to €5.00 per sqm due to the increasing companies on the lookout for space are lack of stock properties featuring also having a hard time finding people Overview /

standard market fitout. Berlin is seeing looking for jobs in the city’s southern 2019 the largest difference in prime rents periphery. This can be attributed to |

between the city outskirts and the the fact that unemployment reached a Colliers International municipal area of all Germany’s 8 top new historical low in late 2018. We logistics regions. Due to high demand in expect annual take-up to come close to the city center and the supply bottleneck, 400,000 sqm in 2019 as supply will most tenants are paying prime rents of €6.70 likely continue to fall short of demand per sqm for state-of-the-art new-build despite high development activity. logistics space in the municipal area. The highest rents in the periphery are being paid in Großbeeren and Schönefeld at €4.50 per sqm. This difference suggests that there is still potential for rental growth in the periphery.

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

500 6 451.4 Production & Manufacturing 5.70 424.8 422.5 Companies 10% 400 352.7 5.00 5.00 5.00 314.3 Logistics Service 5 Providers 35% 4.70 300 5.00

Trading 4.50 200 Companies 48% 4.25 4 4.00 4.00 100 Others 7%

0 3 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Whole year Average 2014 – 2018 Prime Rent Average Rent 14 DÜSSELDORF 2019 / Colliers Colliers International | rf | 2018 sseldo Dü Overview Markets Markets Industrial and Logistics

FAST FACTS

2018 2017 Change Take-up in sqm 317,600 435,700 – 27% Leasing Performance in sqm 295,600 405,400 – 27% Number of Deals 66 51 29% Prime Rent* in €/sqm/month 5.75 5.40 6% Average Rent in €/sqm/month 4.75 4.50 6%

*achievable top rent in new buildings

40 40 Take-up according to Location Mühlheim 57 59 an der Ruhr Submarket Take-up in sqm Share 1 Düsseldorf 67,000 21% 5 524

Krefeld 44 2 Neuss 70,700 22%

7 Meerbusch 3 Kaarst 1,500 1%

Ratingen 44 6 4 Willich 26,500 8% illich 52 4 Mettmann Viersen 5 Krefeld 62,100 20% 52 1 Düsseldorf 3 8 6 Meerbusch 400 0% Mnchengladbach Kaarst Erkrath 13 Neuss 7 Ratingen 39,000 12% Korschenbroich 46 14 Hilden 8 Erkrath 0 0% 2 9 9 Hilden 800 0%

61 59 11 10 10 Langenfeld 8,000 3% 540 Dormagen 46 12 Langenfeld Rheinland 11 Dormagen 29,400 9%

Grevenbroich 57 12 Grevenbroich 8,900 3%

Leverkusen 13 Korschenbroich 0 0% 3 14 Mönchengladbach 3,300 1% 44 61 1 Total 317,600 100% 15

LEASING Industrial Dü sseldo rf | 2018

Take-up 30,000 sqm of warehouse space. Another and

11,000 sqm of built-to-suit space is under Logistics The Düsseldorf industrial and logistics development for logistics service real estate market recorded total take-up / Markets provider DSV. In mid-2018, Segro also 2019 (including owner-occupiers) of around started expanding the City Park Düssel- 317,600 sqm in 2018. That means results dorf business park. Construction phases Overview are down by around 27% compared to the 4 and 5 are scheduled for completion previous year, which was, however,

by late 2019 and will bring 12,000 sqm |

heavily affected by Amazon’s new logis- Colliers International of new logistics space to the market. tics center in Mönchengladbach (around 141,000 sqm). Although activity picked up Demand for space in the Düsseldorf in the second half of the year, particularly municipal area mirrored the previous year due to several property development com- in terms of regional distribution of take- pletions, the overall result fell 9% short of up. The neighboring Neuss submarket the 5-year average (348,000 sqm). With a secured first place, however, accounting letting performance of 295,600 sqm, the for 22% of total take-up. This can largely share of owner-occupiers was roughly at be attributed to the large-scale lease the level of the previous year. signed by Seacon Logistics for around 35,000 sqm. The space segment over Supply and Demand 5,000 sqm claimed the lion’s share of total take-up, while the space segment of Several property developments were fully below 5,000 sqm accounted for only let in 2018, further solidifying the regional around one-fifth of the total result. supply bottleneck. In response to lively demand for modern logistics space, Segro launched the expansion of the Krefeld- Süd logistics park with an additional

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 500 435.7 up to 500 1,600 0% 501 – 1,000 11,500 4% 400 346.7 343.8 1,001 – 3,000 28,600 9% 317.6 3,001 – 5,000 20,500 6% 300 268.5 5,001 – 10,000 75,000 24%

200 above 10,000 180,400 57% Total 317,600 100% 100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 16

The availability of land in outskirt loca- Düsseldorf port area. Average rents tions continues to shrink. Property increased by 25 cents to €4.75 per sqm 2019

/ developer Goodman acquired the last due to a lack of stock properties featuring vacant development site at the popular current fitout standards. Regiopark business park in Mönchen gladbach, where it is planning to develop Colliers Colliers International

| Summary and Outlook around 33,000 sqm of logistics space. rf | 2018 sseldo

Dü With similar development opportunities The Düsseldorf market is in good shape

Overview becoming increasingly rare, brownfield as can be seen in the number of specula- development is beginning to play an tive developments. As such, we expect

Markets Markets increasingly significant role in consistently high demand and take-up to replenishing regional supply. Examples match previous year results in 2019. In include projects like the revitalization light of the lack of supply, occupiers are of the former Rhebau Betonwerke site likely to also be more willing to accept in Dormagen where an online retailer longer lease terms. With several

Industrial and Logistics has leased more than 30,000 sqm of scheduled property developments new-build logistics space from property planned, the situation should relax over developer IDI Gazeley. the course of the year, making further rent increases unlikely. Rents

Ongoing demand for modern logistics space combined with moderate construction activity is impacting prices and caused prime and average rents to rise by 6% each. Prime rents for modern logistics space of over 3,000 sqm are being recorded at €5.75 per sqm and are currently being paid for space in the

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

6 5.75 Production & Manufacturing Companies 10% 5.40 5.40 5.40 5.40

Trading Companies 29% 5

Logistics Service 4.75 Providers 48% 4.50 4.50 4.50 4 4.00 Others 13%

3 2014 2015 2016 2017 2018

Prime Rent Average Rent FRANKFURT / RHINE-MAIN 17 Industrial FRA N KFUR and T / R H I NE- MAI N | 2018 Logistics Markets Overview / 2019 | Colliers International

FAST FACTS

2018 2017 Change Take-up in sqm 650,200 720,200 – 10% Leasing Performance in sqm 563,600 675,800 – 17% Number of Deals 83 87 – 5% Prime Rent* in €/sqm/month 6.50 6.40 2% Average Rent in €/sqm/month 5.20 5.20 0%

*achievable top rent in new buildings

Take-up according to Location

Submarket Take-up in sqm Share 480 Lauterbach 6 (Hessen) 5.75 Gießen 1 Frankfurt am Main 51,800 8% Fulda etzlar Production & Manufacturing 485 8 Companies 10% 7 5.40 5.40 5.40 5.40 5 2 Offenbach 116,700 18%

Butzbach 3 Darmstadt 44,300 7% Trading Limburg an der Lahn Friedberg 5 66 Companies 29% (Hessen) 9 4 Groß-Gerau 232,900 36% 7 5 Mainz + Wiesbaden 10,700 2% Bad Homburg 4.75 45 10 Logistics Service vor der Hhe 6 Main-Taunus-District 2,600 0% Providers 48% 4.50 4.50 4.50 Gelnhausen Frankfurt 4 Hofheim am Taunus am Main Hanau 7 Hochtaunus-District 25,200 4% 4.00 Wiesbaden 1 Oﬀenbach am Main 66 66 6 8 Gießen 41,200 6% 671 661 2 11 Others 13% 5 Dietzenbach Mainz Karlstadt 9 Wetteraukreis 3,300 0% Ingelheim am Rhein 4 Aschaﬀenburg Groß-Gerau 3 10 Main-Kinzig-District 104,200 16% 3 Darmstadt 67 3 2014 2015 2016 2017 2018 63 11 Aschaffenburg 17,300 3% Gernsheim Alzey Total 650,200 100% Miltenberg Prime Rent Average Rent 61 Heppenheim (Bergstraße) Erbach 81 18

LEASING 2019 / Take-up neck, accounting for around one-third of total take-up combined. The Frankfurt industrial and logistics real

Colliers Colliers International estate market was able to match the | As in the previous year, the space seg- previous year’s record performance in ment over 5,000 sqm claimed the lion’s T / R H I NE- MAI N | 2018 2018. Take-up was recorded at just under

Overview share of total take-up. Leases signed for 650,200 sqm, exceeding the 10-year units larger than 10,000 sqm generated average by 10%. This exceptional result Markets Markets FRA N KFUR three quarters of total-take up alone. In has again put the region in first place in a addition to the Trebur transaction, this Germany-wide comparison. Net take-up result can be attributed to the lease signed (excluding owner-occupiers) came to by logistics service provider ID Logistics roughly 563,600 sqm (-17%). The largest- for around 38,500 sqm of logistics space scale lease was signed in the final quarter Industrial and Logistics in Hammersbach and the lease signed of the year by logistics service provider by REWE for about 32,500 sqm in RWL for a 39,000 sqm logistics new-build Kelsterbach . in Trebur.

Supply at the moment is not sufficient to Supply and Demand meet ongoing high demand. This particularly applies to the large-scale segment, The breakdown of tenant groups was where demand is primarily being satisfied similar to that of the two previous years: by new-build developments. As a result, Almost half of take-up can be attributed to the new-build segment accounted for the transport and logistics sector, fol- almost 71% of total take-up, claiming eight lowed by retailers with a market share of of the year’s ten largest deals. Land sites 20%. Manufacturing companies and other in excess of 30,000 sqm became even sectors came in practically neck-and- harder to find in 2018 as several were

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 800 720.2 up to 500 3,400 1% 677.7 700 650.2 501 – 1,000 8,500 1% 584.0 600 1,001 – 3,000 32,600 5%

500 460.0 3,001 – 5,000 37,300 6%

400 5,001 – 10,000 80,300 12% above 10,000 488,100 75% 300 Total 650,200 100% 200

100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 19

snapped up. Property developers remained stable at €5.20 per sqm. That

and occupiers therefore have to be makes the Rhine-Main region one of the Industrial FRA N KFUR increasingly flexible when it comes to three most expensive logistics locations

location and be willing to accept subpar in Germany along with Munich and and T / R H I NE- MAI N | 2018 options among other drawbacks. Stuttgart. Logistics

This excess demand and shrinking supply Markets Summary and Outlook of land sites is encouraging property

developers to take more risks with specu- Several speculative property develop- Overview /

lative or partly speculative developments. ments available for lease somewhat 2019

One such development is the multi-user eased the tension on the market last year. | Colliers International logistics park, Panattoni Park Frankfurt- The Rhine-Main region is one of Germa- Ost, encompassing around 28,000 sqm of ny’s top logistic regions as well as one of logistics space, which is being developed the most dynamic in terms of property at a filled-in former gravel pit in Roden- developments and new-build activity. bach. Another speculative development is the logistics park being built by property With several developments scheduled developer P3 in Pfungstadt, comprising for completion in the next 12 months, we around 12,500 sqm. expect market activity to remain lively, possibly outperforming the 5-year average of 590,800 sqm. Rents

Prime rents saw a yoy increase of €0.10 to a current €6.50 per sqm due to high demand. Prime rents are no longer only being paid within city limits and around the airport but also at locations boasting excellent infrastructure throughout the entire Rhine-Main region. Average rent

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

800 7 720.2 677.7 Production & Manufacturing 6.50 700 650.2 6.40 Companies 16% 6.30 6.30 6.30 584.0 600 6 500 460.0 Trading Companies 20% 400 Logistics Service 300 Providers 47% 5 5.20 5.20 5.20 5.20 5.10 200 Others 17% 100

0 4 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Whole year Average 2014 – 2018 Prime Rent Average Rent 20 HAMBURG 2019 / | 2018 urg Colliers Colliers International | Ham b Overview Markets Markets Industrial and Logistics

FAST FACTS

2018 2017 Change Take-up in sqm 484,600 460,900 5% Leasing Performance in sqm 393,400 343,800 14% Number of Deals 78 113 – 31% Prime Rent* in €/sqm/month 6.00 5.80 3% Average Rent in €/sqm/month 4.85 4.85 0%

*achievable top rent in new buildings

23 uickborn Bargteheide 21 Take-up according to Location

7 Norderstedt Submarket Take-up in sqm Share Tornesch 6 Tangstedt Ahrensburg 1 City West 4,300 1% Langenhorn Pinneberg 7 Ellerbek Schnelsen 2 City North-West 17,100 3% Rellingen 2 3 Siek Halstenbek Niendorf Ohlsdorf 3 City North-East 12,000 2% Rahlstedt Braak Schenefeld Eidelstedt Stapelfeld Lurup 4 City East 73,100 15% edel Stellingen Rissen Barmbek Barsbüttel itzhave 24 1 5 City South 197,300 41% Glinde Hamburg Oststeinbek 6 Periphery North-West 14,200 3% Billbrook altershof Steinerder 8 Aumühle Moorﬂeet GZ 255 7 Periphery North-East 43,400 9% illhelmsburg 25 Billerder 5 Moorburg Butehude 253 Allermhe 8 Periphery East 28,700 6% Hausbruch Harburg 4 Neu ulmstorf 9 Periphery South-East 3,700 1%

1 Geesthacht

261 10 Periphery South-West 90,800 19%

10 Hittfeld Total 484,600 100% Stelle 9 insen (Luhe) Hollenstedt 39 enzendorf 7 Buchholz in der Nordheide 21

LEASING Industrial Ham b urg | 2018

Take-up In-Time, for example, started construction and

of its logistics center encompassing Logistics Although the Hamburg industrial and

roughly 28,000 sqm in Buchholz to the / logistics real estate market was able to 2019

south of Hamburg in early 2018. Deals Markets match previous year results (+ 5%) thanks involving units of up to 3,000 sqm to several large-scale deals, take-up accounted for only 10% of total take-up. Overview remained below the 5-year average at In terms of location, City South remained 484,600 sqm (-8%). Net take-up (exclud-

the city’s top submarket, generating |

ing owner-occupiers) was recorded at Colliers International 41% of take-up. The Southwest City Out- 393,400 sqm, up 14% yoy. The two most skirt and City East submarkets followed notable transactions were a lease signed at quite some distance, posting 19% and by forwarding agent Nord Logistics in 15%, respectively. the City South submarket and a lease signed by BOR Consulting in the southern The Hamburg market is struggling to keep port area, both exceeding 29,000 sqm. up with growing demand, and companies are keeping an eye out for additional Supply and Demand space in the form of speculative developments. Hamburg’s city outskirts are also The space segment over 10,000 sqm beginning to be confronted with supply claimed the lion’s share of total take-up. bottlenecks, motivating property A total of 10 deals in this segment developers to start redeveloping outdated accounted for more than half of total take stock properties. Speculative develop- up or about 275,000 sqm. 2018 also saw ments are also becoming increasingly 5 deals exceeding 20,000 sqm, in contrast popular as an opportunity to tap Hamburg’s with 2017 where no activity was seen in full space potential. The two developments this segment. The majority were owner- involved in the Vollhöfner Weiden logistics occupier deals. Logistics company

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 800 up to 500 1,000 0% 700 668.8 501 – 1,000 9,600 2% 593.3 600 1,001 – 3,000 40,800 8% 484.6 500 450.0 460.9 3,001 – 5,000 42,300 9%

400 5,001 – 10,000 115,900 24% above 10,000 275,000 57% 300 Total 484,600 100% 200

100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 22

park’s second construction phase, Summary and Outlook encompassing 12,000 sqm and 5,000 sqm Limited supply continues to put the brakes 2019

/ of modern logistics, mezzanine and office on activity on the Hamburg industrial and space, are excellent examples. logistics real estate market. We do not expect to see a shift in this trend over the | 2018 urg

Colliers Colliers International next few years due to the shrinking num- | Rents Ham b ber of available development sites. Larger Prime rents rose to a current €6.00 units of over 5,000 sqm and sites with

Overview per sqm (+ 3%) over the course of the year easy access to infrastructure are particu- and are being paid by tenants for modern larly scarce. We expect demand to remain Markets Markets logistics space exceeding 3,000 sqm in high in 2019, although much of this will the City East and City South submarkets. not be met due to increasingly limited With the supply of new-build space still supply. limited on the overall market, we could see rents continue to rise over the next

Industrial and Logistics 12 months. In this scenario, average rent, which currently comes to €4.85 per sqm, would be no exception.

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

7 Trading Companies 10% Production & 6.00 Manufacturing 6 5.80 5.80 5.80 Companies 17% 5.70 Logistics Service Providers 58%

Others 15% 5 4.85 4.85 4.75 4.55 4.60

4 2014 2015 2016 2017 2018

Prime Rent Average Rent COLOGNE 23 Industrial C olo g ne | 2018 and Logistics / 2019 Markets Overview | Colliers International

FAST FACTS

2018 2017 Change Take-up in sqm 248,100 198,200 25% Leasing Performance in sqm 236,100 163,400 44% Number of Deals 37 21 76% Prime Rent* in €/sqm/month 5.50 5.20 6% Average Rent in €/sqm/month 4.50 4.20 7%

*achievable top rent in new buildings

46 Take-up according to Location

46 Submarket Take-up in sqm Share 7 59 57 1 Cologne 30,000 12% 540 Trading 542 Companies 10% 3 2 Leverkusen 24,000 10% 2 3 Bergisch Gladbach 0 0% Production & 6.00 44 15 Leverkusen 4 Rösrath 0 0% Manufacturing 6 5.80 5.80 5.80 12 Companies 17% 5.70 Bedburg Pulheim Bergisch 5 Airport Area Cologne/Bonn 0 0% 61 Gladbach 14 3 Logistics Service 1 6 Troisdorf 14,100 6% Bergheim 1 Providers 4 58% Kln 7 Niederkassel 0 0% 11 559 4 8 Wesseling 19,500 8% Frechen 4 5 Rsrath Others 15% Kerpen GZ 13 10 9 Brühl 10,000 4% Hürth 4.85 4.85 555 Flughafen Kln/Bonn 10 Hürth 9,400 4% 4.75 Brühl 5 4.60 9 8 Niederkassel 11 Frechen 36,800 15% 4.55 Düren 6 535 esseling 7 Troisdorf 12 Pulheim 12,200 5% 4 560 13 Kerpen 35,700 14% 2014 2015 2016 2017 2018 59 14 Bergheim 11,400 4% Bonn 562 3 61 15 Bedburg 45,000 18% Prime Rent Average Rent Euskirchen 565 Total 248,100 100% 24

LEASING 2019 / Take-up Bedburg, Frechen and Kerpen submarkets alone generated almost half of total take-up. Following a relatively calm first half of the

Colliers Colliers International year, activity on the Cologne industrial and | g ne | 2018 olo

C Despite five leases signed, the space seg- logistics real estate market picked up speed ment over 10,000 sqm saw take-up decline in Q3. Total take up (including owner-occu-

Overview to the benefit of rising take-up results in the piers) came to roughly 248,100 sqm, the small- and medium-scale space segments. highest result in the past five years. Net Markets Markets This can mainly be attributed to the fact that take-up (excluding owner-occupiers) came demand for space exceeding 10,000 sqm to 236,100 sqm, up 44% yoy. The most can barely be met due to limited availability. significant transactions in 2018 included Leases signed for space of up to 5,000 sqm leases signed by logistics service provider almost doubled their market share yoy in Offergeld in Frechen (total area of around Industrial and Logistics contrast. 35,000 sqm), by Grieshaber Logistik in Bedburg (around 12,000 sqm) and by a Logistics service providers were the most retailer in Kerpen (around 13,000 sqm). active user group by far, accounting for just The expansion of DPI headquarters in Brühl under 147,800 sqm in take-up. Several (around 12,500 sqm) also contributed to high-volume deals including the leases this strong result. signed by Offergeld and Grieshaber helped generate an above-average market share Supply and Demand of about 60%.

While the Cologne metropolitan area regis- Current excess demand is encouraging tered the highest take-up volume in 2017, developers to launch an increasing number peripheral submarkets dominated in 2018 of speculative developments. Property due to limited supply within city limits. The developer Prologis, for example, began

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

248.1 Size in sqm Take-up in sqm Share 250 up to 500 0 0%

197.5 199.4 198.2 501 – 1,000 0 0% 200 167.4 1,001 – 3,000 32,900 13%

150 3,001 – 5,000 23,700 9% 5,001 – 10,000 83,300 34%

100 above 10,000 108,200 44% Total 248,100 100% 50

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 25

construction on a 24,000 sqm logistics Summary and Outlook

facility in Pulheim in 2018. The planned Industrial C Speculative property developments, olo g ne | 2018 logistics park in Cologne-Niehl especially in the Cologne periphery, will

encompassing roughly 55,000 sqm of and relieve tension on the market somewhat warehouse space is speculative as well. Logistics this year and boost the supply of modern /

As only very few sites are available at 2019 logistics space. Nevertheless, space added

competitive prices, even in peripheral Markets to the market by completions will still not be areas, property developers are increasingly enough to meet high demand. This will focusing on revitalizing outdated space. Overview encourage developers to keep tackling Alcaro Invest, for example, is developing a speculative projects in 2019. In light of the

26,000 sqm logistics center on a brown- |

fact that activity on the market remains Colliers International field site in Kerpen. Another logistics lively, 2019 results could come in above the property encompassing 11,000 sqm is long-term average. scheduled for completion by 2020. The development will be constructed on a vacant lot in Cologne-Poll to the right of the Rhine and will be used for city logistics.

Rents

The current supply bottleneck combined with increasing construction costs and land prices have put prices under pressure. Both prime rents and average rents rose by €0.30 in 2018. Prime rents for modern logistics space currently come to €5.50 per sqm. Average rents are recorded at a current €4.50 per sqm due to limited supply of space in stock properties featuring current fitout standards.

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

248.1 250 6 Production & Manufacturing 5.50 Companies 13% 197.5 199.4 198.2 200 5.20 5.20 5.00 167.4 Trading 4.95 Companies 21% 5 150 Logistics Service Providers 60% 4.50 100 4 4.20 4.20 Others 6% 4.00 4.00 50

0 3 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Whole year Average 2014 – 2018 Prime Rent Average Rent 26 LEIPZIG 2019 / Colliers Colliers International | L e i p zig | 2018 Overview Markets Markets Industrial and Logistics

FAST FACTS

2018 2017 Change Take-up in sqm 343,700 116,000 196% Leasing Performance in sqm 275,800 57,400 380% Number of Deals 25 28 – 11% Prime Rent* in €/sqm/month 4.60 4.50 2% Average Rent in €/sqm/month 3.70 3.50 6%

*achievable top rent in new buildings

Magdeburg Take-up according to Location Submarket Take-up in sqm Share 1 Leipzig 118,000 34%

5 2 District Leipzig 5,000 2% Dessau-Rolau Stadt ittenberg 4 3 Nordsachsen 3,300 1% 6

Anhalt-Bitterfeld 4 Wittenberg 0 0%

9 5 Dessau-Roßlau 0 0%

14 3 Nordsachsen 6 Anhalt-Bitterfeld 4,700 1%

7 Halle (Saale) Stadt 7 Halle (Saale) 167,800 49% 143 GZ 8 Saalekreis 44,900 13% Saalekreis 1 38 Leipzig 8 9 Total 343,700 100% 14 38

Landkreis Leipzig

72 27

LEASING Industrial L e i p zig | 2018

Take-up last few years in the wake of several and

major developments. Development sites Logistics

In 2018, Leipzig's industrial and logistics / exceeding 50,000 sqm are in short 2019 real estate market recorded a total take-

supply within city limits and the nearby Markets up of 343,700 sqm, surpassing the periphery. weak result of the previous year by a Overview remarkable 196%. A number of large- Total take-up was fueled in part by (online) scale deals signed for new-build develop-

retailers. Only a few hundred meters |

ments helped put 2018 results over the Colliers International away from the Home24 logistics center, 300,000 sqm mark, which tripled take-up another distribution center encompassing yoy. The largest deal of the year was 35,000 sqm is being developed at Star signed at the Star Park industrial estate Park in Halle for online retailer Zalando. near the city of Halle, where a 65,000 sqm Demand was also high among manu logistics center is currently being facturing companies, primarily from developed for online retailer Home24. the automotive sector. In the immediate Automotive supplier Schaeffler is also vicinity of the Leipzing BMW plant, building a new spare parts warehouse roughly 50,000 sqm of logistics space is encompassing 40,000 sqm at Star Park. currently under development for the BMW Group along with another 20,000 sqm for Supply and Demand Thyssenkrupp Automotive Systems.

Unlike the previous year, the space In terms of regional distribution, activity segment over 10,000 sqm dominated the was highest in the Halle (Saale) region, market, accounting for 85% of total take which accounted for almost half of total up and reflecting high demand for large- take-up. This can be attributed to the new scale rental space. Land sites, however, deals signed at Star Park in Halle men- have become increasingly scarce over the

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 400 up to 500 0 0% 343.7 501 – 1,000 500 0%

300 279.0 1,001 – 3,000 17,700 5% 258.0 3,001 – 5,000 16,300 5% 216.0 200 5,001 – 10,000 18,200 5% above 10,000 291,000 85% 116.0 Total 343,700 100% 100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 28

tioned above, which have drastically caused prime rents to rise to a current reduced the supply of new-build space €4.60 per sqm. Average rents increased 2019

/ currently available in the area. Potential as well, up 6% to a current €3.70 per sqm. has shifted in favor of Leipzig as a result, We can expect this trend to continue in which is expected to offer an increased light of the ongoing high demand and supply of new-build space going forward. steady depletion of available land sites. Colliers Colliers International | L e i p zig | 2018 A new-build property development by Baytree, the company’s largest adjoining Summary & Outlook

Overview new-build development in Leipzig to date, is primarily behind this increased availa- The above-average result generated in

Markets Markets bility and addresses the growing demand 2018 is a clear indication of the growing for automotive logistics space. The importance of Leipzig as a logistics re- development will encompass up to gion. The region’s good economic situa- 100,000 sqm of new-build space, which tion and moderate land and rental prices may be completely taken up by BMW compared to other logistics regions as

Industrial and Logistics and automotive suppliers in the area well as the comparatively large pool of over the next one to two years. available labor in the region all serve to make the location so attractive. With the development pipeline well-filled, we can Rents expect market activity to remain high in Most companies currently on the lookout 2019. However, whether or not 2019 will for space are having to turn to property be able to keep pace with this year’s re- developments due to the limited supply of cord take-up result will largely depend on stock space. The market share generated the number of major deals signed. by property developments has increased significantly yoy with new-builds accounting for almost 85% of take-up. High demand, particularly for modern space within Leipzig city limits, has

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

5 4.60 Logistics Service 4.50 4.50 Providers 27% 4.30 4.30

Trading Companies 35% 4

Production & 3.70 Manufacturing 3.50 3.50 Companies 35% 3 3.20 Others 3% 3.00

2 2014 2015 2016 2017 2018

Prime Rent Average Rent MUNICH 29 M u n i ch | 2018 Industrial and Logistics / 2019 Markets Overview | Colliers International

FAST FACTS

2018 2017 Change Take-up in sqm 201,100 250,700 – 20% Leasing Performance in sqm 201,100 250,700 – 20% Number of Deals 97 113 – 14% Prime Rent* in €/sqm/month 7.00 6.85 € 2% Average Rent in €/sqm/month 6.60 6.50 € 2%

*achievable top rent in new buildings

Freising Take-up according to Location

Submarket Take-up in sqm Share 5

4.60 Hallbergmoos 1 Center 0 0% Logistics Service 4.50 4.50 Erding Neufahrn Providers 27% 4.30 4.30 11 Eching 2 Center North-West 0 0% Sulzemoos 92 nterschleiheim 3 Center North-East 0 0% Oberschleiheim Trading 88 Dachau Garching 12 Companies 35% 4 Bergkirchen 9 4 Center South-East 0 0% 99 Maisach Allach 5 Center South-West 0 0% Olching Production & Milbertshofen Kirchheim bei 3.70 nterfhring Moosach München Poing Manufacturing 3.50 3.50 Fürstenfeldbruck 6 City North-West 5,800 3% Companies 35% 6 2 7 München 3 7 City North-East 7,800 4% 3 99 94 3.20 1 Feldkirchen Others 96 3% 3.00 5 4 Gilching Gräfelfing Vaterstetten 8 City South-East 8,600 4% Sendling 8 8 9

995 9 City South-West 11,000 5%

10 nterhaching 10 Periphery South-West 1,400 1% 2 Baierbrunn 13 11 Periphery North-West 66,100 33% 2014 2015 2016 2017 2018 Brunnthal 952 12 Periphery North-East 88,100 44%

Prime Rent Average Rent 13 Periphery South-East 12,300 6% 95 Total 201,100 100% 30

LEASING 2019 / Take-up Supply and Demand

In 2018, the Munich industrial and logis- The space segment of between 5,000 sqm

Colliers Colliers International tics market generated net take-up totaling and 10,000 sqm recorded about | M u n i ch | 2018 at roughly 201,100 sqm, falling short of 82,500 sqm, accounting for 41% of total previous year take-up levels (-20%). take-up. The only lease exceeding Overview This is the lowest result recorded in the 10,000 sqm in 2018 was that signed by past five years with no significant owner- Schustermann & Borenstein (around Markets Markets occupier deals that could have boosted 12,700 sqm). The space segment of take-up further. This drop in take-up can 10,000 sqm and above saw a 14% yoy drop be attributed to the absence of large-scale due to the low number of leases signed. leases as well as the shortage of stock The space segment of between 1,000 sqm and new-build space available for imme- and 3,000 sqm remained a solid pillar of Industrial and Logistics diate tenancy. As in previous years, market activity with demand high and the majority of take-up (around 85%) was accounted for 29% of total take up. As in generated by deals signed for space at the previous year, almost 80% of take-up stock properties. In addition, very few was generated in the northern outskirts of land sites are currently zoned in the area Munich (North-West and North-East for logistics. The year’s most significant Outskirts submarkets). deals included leases signed by Schuster- mann & Borenstein in Aschheim The breakdown of tenant groups was (12,700 sqm), Rewe Digital in Feldkirchen more homogeneous than in the previous (around 10,000 sqm) and XXXLutz in year. An increasing number of (online) Poing (around 8,800 sqm). retailers are being drawn to Munich thanks to the city’s above-average purchasing power. In 2018 they managed

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

Size in sqm Take-up in sqm Share 400 up to 500 7,100 4% 342.4342,4 501 – 1,000 18,100 9%

300 269.0269,0 1,001 – 3,000 58,000 29% 250,7250.7 221,7221.7 3,001 – 5,000 23,300 11% 201.1201,1 200 5,001 – 10,000 82,500 41% above 10,000 12,100 6%

Total 201,100 100% 100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 31

to increase their market share from 5% space currently under development is M u n i ch | 2018 (2017) to 23%. Manufacturing companies being snapped up prior to completion. As Industrial generated only one-third of total take-up, such, vacancy rates remain extremely

down from a market share of 44% in 2017. low. In addition, demand for modern light and

industrial space in and around Munich is Logistics / expected to continue to grow in the 2019 Rents coming years. New-developments Markets With a current vacancy rate of about 1.4%, dedicated solely to logistics will face

very little space is currently available greater challenges than ever before as a Overview on the Munich market and rent levels con- result, as skepticism towards logistics

tinue to rise as a result. Prime rents for developments among the local authorities | Colliers International modern logistics units of over 3,000 sqm and residents in the Munich area is high were up another 2% yoy to a current due to the reputation these properties €7.00 per sqm. Tenants continue to pay have of increasing traffic and noise levels. these prime rents for space in the North- In light of the current market situation and East Outskirts submarket near the the low number of developments in the airport. Rents being paid for modern light pipeline, take-up is expected to come in at industrial space within city limits are around 200,000 sqm in 2019. much higher, with some units going for up to €14 per sqm. Average rents increased as well, climbing another €0.10 yoy to a current €6.60 per sqm.

Summary and Outlook

The tension on the market in terms of supply is unlikely to ease up in 2019 as land sites and rental space continue to be in short supply and some of the new-build

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

400 8 342.4342,4 Logistics Service Providers 12%

300 269.0269,0 Trading 7.00 250,7250.7 Companies 23% 6.85 6.85 7 6.75 221,7221.7 201.1201,1 Production & 6.50 200 Manufacturing Companies 6.60 33% 6.50 6 6.10 100 6.00 Others 32% 5.70

0 5 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Whole year Average 2014 – 2018 Prime Rent Average Rent 32 STUTTGART 2019 / t | 2018 gar Colliers Colliers International | t u tt S Overview Markets Markets Industrial and Logistics

FAST FACTS

2018 2017 Change Take-up in sqm 300,400 393,900 – 24% Leasing Performance in sqm 257,000 242,300 6% Number of Deals 83 85 – 2% Prime Rent* in €/sqm/month 6.50 6.50 0% Average Rent in €/sqm/month 5.20 5.20 0%

*achievable top rent in new buildings

Take-up according to Location 6 Submarket Take-up in sqm Share Heilbronn Schbisch Hall 1 Stuttgart 14,500 5%

2 Ludwigsburg 92,900 31%

81 3 Rems-Murr-District 35,500 12% 2 3 Ludigsburg 4 Göppingen 51,000 17% Pforzheim

aiblingen 5 Esslingen 58,200 19%

Stuttgart 6 Böblingen 48,300 16% 1 Esslingen am Neckar Cal Gppingen Total 300,400 100%

Bblingen

6 8 4 5

Tübingen 81

Reutlingen

Neu-lm 33

LEASING Industrial S t u tt gar

Take-up motive group. The property is located at and t | 2018 Hanns-Klemm-Straße 24/26 and is Logistics The Stuttgart industrial and logistics comprised of several building sections

market (excluding office and common / 2019

featuring warehouse, logistics and pro- Markets areas) posted take-up of roughly duction space. Other large-scale deals 257,000 sqm in 2018, up 6% yoy. Owner- include the lease signed by Schneider Overview occupiers tended to be more hesitant in Logistik in Geislingen an der Steige 2018, only accounting for around

(12,520 sqm) and the lease signed by |

43,400 sqm (2017: 151,600 sqm, -71%), Colliers International logistics service provider Schmal+Schön with total 2018 take-up on the Stuttgart for roughly 13,400 sqm of warehouse industrial and logistics real estate market space in Frickenhausen (Esslingen down 24% as a result to 300,400 sqm. district). Nevertheless, this is still the second best on record in the past 5 years. Logistics service providers and manu facturing companies were the most active As in the previous year, the space segment user groups. Logistics service providers over 10,000 sqm accounted for the lion’s in particular signed more leases than share of total take-up. A total of 8 deals in the previous year, increasing their were signed in this segment, putting take- share of total take-up from 26% to 46% up at 108,400 sqm, or 36% of total results. (139,900 sqm). Manufacturing companies Demand for units ranging from 5,001 sqm were right at their heals with 44% to 10,000 sqm was similarly high (27%), (131,900 sqm). with units larger than 5,000 sqm accounting for around two-thirds of annual take- The district of Ludwigsburg again posted up. Aurelis Real Estate leased around the highest take-up result, accounting for 19,000 sqm of warehouse and office roughly 31%, or just under 92,900 sqm. space in Böblingen to a well-known auto-

FIGURE 1: Take-up in 1.000 sqm Take-up according to Size Category

393.9 Size in sqm Take-up in sqm Share 400 up to 500 1,400 1%

501 – 1,000 11,100 4% 300.4 300 267.6 1,001 – 3,000 54,500 18% 235.0 3,001 – 5,000 42,600 14%

5,001 – 10,000 82,400 27% 200 171.0 above 10,000 108,400 36%

Total 300,400 100% 100

0 2014 2015 2016 2017 2018

Whole year Average 2014 – 2018 34

One-third of all deals signed in 2018 Summary and Outlook involved space in this submarket, with Higher land site and construction costs 2019

/ units averaging at 3,400 sqm. combined with low completion rates will continue to put a damper on take-up in the t | 2018 Rents Stuttgart metropolitan region in 2019. gar Colliers Colliers International Rents are set to continue to rise as a | The popularity of this submarket is also t u tt result. The market is unable at the S reflected in current rent levels, and it is moment to fully satisfy high demand,

Overview currently one of most expensive sub causing companies to increasingly turn markets in the Stuttgart logistics region to more affordable locations somewhat Markets Markets alongside Esslingen, Stuttgart and Böb outside the logistics region but with lingen. Tenants are paying prime rents of excellent access to transportation. up to €6.50 per sqm for logistics space in Average lease terms are getting longer the area. Stuttgart currently shares sec- as well with an increasing number ond place with the Frankfurt/Rhine-Main of leases being signed for five years or Industrial and Logistics region in a nationwide comparison. more. Munich is the only city in Germany with higher prime rents (€7.00 per sqm). The sharp rise in demand and scarcity of land sites and rental space will continue to fuel this trend with no end to rising rent levels in sight for the time being.

FIGURE 2: Take-up by Branch Share in % FIGURE 3: Prime and Average Rents in ¤/sqm

7 Trading Companies 2 % 6.50 6.50

Production & 6.20 6.20 6.20 Manufacturing Companies 44 % 6

Logistics Service Providers 46 % 5 5.20 5.20

Others 8 % 4.80 4.70 4.70

4 2014 2015 2016 2017 2018

Prime Rent Average Rent INVESTMENT 35

Transaction volume Supply and Demand Industrial In v est m ent | 2018 German industrial and logistics assets With their broader risk diversification and generated a transaction volume of over higher rental income compared to logis- and €6.8bn in 2018. Although this result fell tics assets, industrial assets were more Logistics short of the exceptional previous year popular with investors in 2018 than ever (2017: €8.7bn) due to a lack of larger before, attracting an increasing number of / 2019 Markets portfolio deals and takeovers, take-up in both German and foreign investors. Two 2018 was still impressive, particularly of the three highest-volume deals posted Overview compared to the long-term average. The in 2018 were signed in this segment: the transaction volume generated in this Optimus Prime portfolio acquired by |

segment topped the 5-year average by Helaba Invest from Beos (21 light indus- Colliers International a significant 48%, reflecting the second trial assets, 565,000 sqm rental areas) best year-end result after record year for over €500m and a portfolio comprised 2017 despite the severe shortage of of 32 assets sold by Aurelis Real Estate suitable investment opportunities, for over €600m, which was transferred to particularly in the core segment. Beos' first corporate real estate fund CREFG IV. Industrial and logistics assets again claimed a market share of 11%, solidifying The growing demand for light industrial their position as the third-strongest asset assets can mainly be attributed to their class on the German commercial invest- attractive locations in large economic ment market. centers and conurbations with significant upside potential in terms of land value, rent levels and space consolidation, making them an attractive alternative to logistics properties and other asset classes.

FIGURE 1: Transaction Volume Industrial & Logistics FIGURE 2: Transaction Volume by Property Type in bn € in bn € 7 Trading Companies 2 % 6.50 6.50 8,000 0 5 10 15 20 25 30 35

Production & 6.20 6.20 6.20 7,000 Oﬃce Manufacturing 6 Companies 44 % 6,000 Retail 5,000 Logistics Service Industrial & Providers 46 % 4,000 Logistics 5 5.20 5.20 Hotel 3,000 Others 8 % 4.80 4.70 4.70 2,000 Building Site Commercial 1,000 4 3,592 3,972 4,579 8,662 6,814 Mixed use 2014 2015 2016 2017 2018 0 2014 2015 2016 2017 2018 Other properties Prime Rent Average Rent Industrial Logistics TAV in total Transaction Volume Germany 36

Unlike 2017, German investors had con- Yields siderably more opportunity in 2018 to Gross prime yields for the latest genera- 2019

/ invest in industrial and logistics assets, tion of Class-A logistics assets with a generating more than half of transaction lease term of 10 years or more again volume as a result (52%). This stands dropped by 15 bps to 4.50% following a in contrast with their 2017 market share Colliers Colliers International period of stability. | of only 35%. m ent | 2018 In v est Yield compression for prime assets out-

Overview Portfolio deals accounted for around 56% side of Germany's top locations continued of total transaction volume, or €3.8bn, as well, down a total of 30 bps over the Markets Markets down 21% yoy. As in previous years, course of the year to 4.60% on average. foreign investors in particular took a However, we do not expect to see any strategic approach, waiting to secure significant changes over the course of most of the larger portfolio deals, while 2019 as there is currently no indication German investors accounted for two that the supply of high-end core products Industrial and Logistics thirds of single-asset transactions, or will pick up any time soon. The trend €1.9bn. Of particular note is US-based around light industrial assets could paint asset manager Blackstone’s takeover of a different picture, however. Current the pan-European logistics joint venture, market conditions point to further MStar Europe, from Starwood and movement in gross prime yields for light M7 Real Estate. The deal involved 22 Ger- industrial assets throughout 2019, which man light industrial assets in the core+ fell by 30 basis points to 5.70% in 2018. and value add risk classes. Blackstone also acquired a portfolio in Q3 2018 from Hines Global REIT comprising 10 logistics assets in Germany and Poland for roughly €450m.

FIGURE 3: Transaction Volume by Size Category FIGURE 4: Transaction Volume by Buyer / Seller Groups in % in bn €

0 1 2 3 4 100 7,0 up € 10m 8% Asset Managers/Fund Managers Open-ended Real Estate Funds/Special Funds 6,5 € 10m to € 30m 15% 80 REITs Closed-ended Real Estate Funds 6,0 60 Property Developers € 30m to € 50m 9% Other Investors 5,5 40 €50m to € 100m 25% Property Developers 5,0 Asset Managers/Fund Managers above € 100m 43% 20 Corporates/Owner-Occupiers 4,5 Open-ended Real Estate Funds/Special Funds Private Investors/Family Oﬃces 0 4,0 Other Investors 2014 2015 2016 2017 2018 4 14 4 15 4 16 4 17 4 18

Buyer Seller National International 37

Summary and Outlook tor calendars are already full could lead to

increases in rental prices for industrial Industrial In v est m ent | 2018 The market has proven more popular with and logistics assets, also outside of prime investors over the past several years than

locations. Even though no major takeo- and ever before. The shift toward alternative vers or mega deals on the industrial and Logistics investment opportunities, the keyword logistics investment market similar to here being “corporate real estate” (light / 2019 those seen in record year 2017 are Markets industrial, business parks, transformation anticipated, total results in 2019 will and production properties) is a clear be above average and industrial and Overview indication that enough capital is currently logistics assets will again place among liquid and that investors continue to

the top 3 asset classes on Germany's |

search for fast, and more importantly, Colliers International overall commercial market. profitable ways to invest in German assets. They are even willing to hazard possible vacancy and renovation works.

Transaction volume in 2019 is expected to come in above the long-term average. Portfolio deals will continue to be a popular option for market players looking to invest in German industrial and logistics properties, although the shortage of suitable products will put a damper on investment activity. Speculative invest- ments, however, could boost the market as a number of potential large-scale tenants are currently on the lookout for space. Sharply rising construction costs combined with the fact that many contrac-

FIGURE 5: Share of International Investors FIGURE 6: Prime Yield Performance (Gross Initial Yield) in % Mean value in %

Buyer Seller National International 38 GLOSSARY

Take-up of space Average Rent Take-up of space is the sum of all spaces Average rent refers to multi-functional 2019 / either newly let, or built by an owner- logistics space exceeding 3,000 sqm occupier within the period under conside- (height > 7 m bottom edge, 1–2 docking ration. The salient date is that on which gates / 1,000 sqm, low office share). | 2018 ary

Colliers Colliers International the lease agreement is signed. The |

Gloss renewal of an existing lease is not coun- Prime Yields ted in the take-up of space. Exclusively

Overview Gross prime yield refers to Class-A logistics and industrial space serves properties (latest generation logistics as the basis of calculation; pro-rata office Markets Markets properties, max. age of building 10 years, and ancillary space is not taken into > 5,000 sqm, height > 10.0 m bottom account. edge with docking gates, long lease terms) in Germany’s top investment Leasing Performance markets.

Industrial and Logistics Leasing performance reflects take-up excluding owner-occupied space. Exclusively logistics and industrial space serves as the basis of calculation; pro-rata office and ancillary space is not taken into account.

Prime Rent Prime rent refers to latest generation logistics space exceeding 3,000 sqm (min. height 10 m bottom edge, 2–3 docking gates / 1,000 sqm, sprinkler system, office share up to 10%). CONTACTS / LOCATIONS

Peter Kunz FRICS Berlin HEAD OF INDUSTRIAL Budapester Straße 50 & LOGISTICS EMEA 10787 Berlin [email protected] Phone +49 30 202993-0

Düsseldorf Königsallee 60 C (Entrance Grünstraße) Hubert Reck 40212 Düsseldorf HEAD OF INDUSTRIAL & Phone +49 211 862062-0 LOGISTICS INVESTMENT [email protected] Frankfurt Thurn-und-Taxis-Platz 6 60313 Frankfurt am Main Phone +49 69 719192-0 Susanne Kiese Hamburg HEAD OF RESEARCH Burchardstraße 17 [email protected] 20095 Hamburg Phone +49 40 328701-0

Cologne Kranhaus 1, Im Zollhafen 18 Nicole Kinne 50678 Cologne RESEARCH INDUSTRIAL Phone +49 221 986537-0 & LOGISTICS Leipzig [email protected] Markgrafenstraße 2 04109 Leipzig Phone +49 341 2182990-0

Manuela Egg Munich RESEARCH INDUSTRIAL Dachauer Straße 63 & LOGISTICS 80335 Munich [email protected] Phone +49 89 624294-0

Stuttgart Königstraße 5 70173 Stuttgart Phone +49 711 22733-0

Photo credits Front page: VGP Park Leipzig, VGP Industriebau GmbH Berlin : Segro Airport Park Berlin, Segro Germany GmbH Düsseldorf : iStock, Acnakelsy Frankfurt : BTS Logistikpark Lorsch, Panattoni Europe Hamburg : Loading Bay, Matic Kuder Cologne : Interior view of a modern logistics property, Thinkstock, Alexey05 Leipzig : VGP Park Leipzig, VGP Industriebau GmbH Munich : NOVA Neufahrn, BEOS AG Stuttgart : iStock, Automotive, Morsa Images CONTACT

RESEARCH Nicole Kinne Manuela Egg Senior Consultant I Research Industrial & Logistics Junior Consultant I Research Industrial & Logistics +49 89 624294-792 + 49 89 624294-794 [email protected] [email protected]

Copyright © 2019 Colliers International Deutschland GmbH Colliers International This document has been prepared by Colliers International for advertising and general information only. Colliers Inter national makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the informa- Deutschland GmbH tion including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake Thurn-und-Taxis-Platz 6 their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or 60313 Frankfurt implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). © 2019. All rights reserved.