MARKET REPORT ON THE LETTING OF LOGISTICS PROPERTIES AND INDUSTRIAL SPACES North Rhine-Westphalia for H1 2019 Market report on the letting of logistics properties and industrial sites in North Rhine-Westphalia* for first half of 2019 n Take-up in NRW sees impressive year-on-year >> Take-up of logistics properties and industrial spaces in North Rhine-Westphalia H1 2019 growth of 22% to around 517,000 sqm n Ruhr region delivers the highest take-up at +88% year-on-year n Logistics, retail and industrial companies in the Cologne and Düsseldorf sub-markets wait in line n New construction activity stalls n Rents relatively stable n Average rent in Cologne climbs by 10% >> Take-up of logistic property and industrial space by regions in North Rhine-Westphalia H1 2019 n Forecast for full-year 2019: solid take-up of between 850,000 and 930,000 sqm The logistics market in North Rhine-Westphalia (NRW) has enjoyed excellent performance once again. With a letting volume of around 517,000 sqm for industrial and logistics space and business parks, one of Germany’s most im- portant logistics markets recorded impressive year-on-year growth of 22% compared with the prior-year figure of 422,200 sqm and achieved its third-best result in the last five years, coming in at 3% above the five-year average (501,600 sqm). >> Lessors with the highest take-up in H1 2019 in the metropolitan region Düsseldorf The Ruhr region rescued the overall picture for 1. Amazon, Kempen, 3. ABC, Düsseldorf NRW, recording the highest level of demand as 22,370 sqm, new building 13,500 sqm, built-to-suit well as the most leases concluded thanks to quick follow-up letting in functional existing buildings. 2. Meyer logistics, Nettetal 4. Topregal, Wesel 13,900 sqm 10,160 sqm The Ruhr region accounted for around 67% of the total result for the first half of the year, with While the market saw a muted start to the year, Rents in this sub-market were unchanged as 18% attributable to the Düsseldorf/Mönchen- with take-up of around 35,000 sqm for industri- against the end of 2018, with the prime rent gladbach/Niederrhein market and 15% to the al, logistics and business park space in the period amounting to EUR 5.60/sqm and an average rent Cologne/Bonn/Aachen market area. from January to March 2019, the second quar- of EUR 4.80/sqm. ter contributed no less than 62% to the half-year result. We believe letting performance of between Düsseldorf/Mönchengladbach/Lower Rhine mar- 200,000 and 220,000 sqm across all market ket area As in the previous year, the retail sector account- participants in the western NRW market to be ed for the highest take-up at 53% or around achievable by the end of 2019. The extremes of With take-up of around 93,000 sqm, the Düssel- 49,600 sqm (H1 2018: 47%; approx. 48,000 sqm), this range would be 22% or 14% lower than dorf/Mönchengladbach/Niederrhein market area followed by the logistics industry at 30% or the full-year result for 2018 (255,000 sqm). In a recorded its weakest result in the last five years, around 27,400 sqm (H1 2018: 25%; approx. market situation where extremely high demand coming in at 28% below the five-year average 25,600 sqm) and production at 11% or around for logistics space is accompanied by low supply (129,440 sqm) and 9% below the same period of 10,000 sqm (H1 2018: 28%; approx. 28,600 sqm); and, in particular, limited opportunities for new the previous year (102,200 sqm). “other” accounted for 6% of take-up. construction, it is always going to be difficult to satisfy demand in an individual sub-market. MARKET REPORT ON THE LETTING OF LOGISTICS PROPERTIES AND INDUSTRIAL SPACES // North Rhine-Westphalia for H1 2019 Cologne/Bonn/Aachen market area At 76,600 sqm, take-up in the Cologne/Bonn/ >> Take-up of logistics properties and industrial spaces by regions in a year-on-year comparison Aachen sub-market in the first half declined by in North Rhine-Westphalia H1 2019 43% year-on-year (previous H1: 135,000 sqm). This represents the fourth-weakest result in the last five years and 30% below the average for that period. Following the first quarter of 2019, which was the weakest on record at around 21,000 sqm on ac- count of the pronounced shortage of supply, the sub-market made up ground in the second quar - ter and contributed around 55,600 sqm (73%) to the half-year result. This was due in particular to two major leases in Kerpen (17,500 sqm) and Bed- burg (approx. 18,100 sqm). At 66% (approx. 51,000 sqm), take-up was n H1 2015 n H1 2016 n H1 2017 n H1 2018 n H1 2019 dominated by the logistics industry in the same way as in the previous year (H1 2018: 76%, 102,600 sqm). Production took second place >> Lessors with the highest take-up in H1 2019 in the metropolitan region Cologne with 13% or around 9,600 sqm (H1 2018: 9%; 12,000 sqm). Retail take-up declined significantly 1. Logistics company, Kerpen 2. Kurt Rothschild, Bedburg 3. City of Cologne, Cologne to just 3,200 sqm (4%) in the period from January 17,500 sqm, new built 18,100 sqm 8,100 sqm, built-to-suit to June 2019 (H1 2018: 15%; 20,250 sqm). As forecast by us at the end of 2018, there re- to between 170,000 and 190,000 sqm for 2019 The prime rent increased slightly by 2% to EUR mains a high level of demand for space ac- as a whole. This result for the sub-market would 5.20/sqm (H1 2018: EUR 5.10/sqm), while the av - companied by low availability. According- be between 24% and 32% lower than the figure erage rent climbed by an impressive 10% to EUR ly, we expect the letting volume for logistics recorded in 2018 (251,000 sqm). 4.60/sqm (H1 2018: EUR 4.20/sqm). and industrial space and business parks to decline Ruhr region market area Building on its impressive take-up of around >> Take-up of logistic property and industrial space by industry in North Rhine-Westphalia H1 2019 150,000 sqm in the first quarter, the NRW sub-market of the Ruhr region saw even more dynamic letting performance in the second quar- ter (Q2: 197,200 sqm) for a half-year result of 347,200 sqm. This represents growth of 88% compared with the same period of the previous year (H1 2018: 185,000 sqm). It is also the second-best result since 2015 – beaten only by H1 2016 at 382,000 sqm – and, at +32%, well in excess of the five-year average (262,235 sqm). Like in the other two NRW sub-markets of Düs- seldorf and Cologne, the last three months have seen a higher level of letting activity: Retail/E-Commerce Manufacturing Logistics/Distribution Supply/Others MARKET REPORT ON THE LETTING OF LOGISTICS PROPERTIES AND INDUSTRIAL SPACES // North Rhine-Westphalia for H1 2019 Q2 2019 accounted for 57% (around 197,200 sqm) of total take-up in the first half of the year. Unlike >> Lessors with the highest take-up in H1 2019 in the Ruhr area in the previous years, which were dominated by new-builds, existing properties made a significant 1. L-Shop Team, Unna 2. Production company, Bochum 3. Amazon, Essen contribution to the letting volume. 55,000 sqm, built-to-suit 22,000 sqm 30,000 sqm, built-to-suit Retail led the sector ranking with 46% (approx. 4. Beverage supplier, Hünxe 5. Bohnen, Werne 159,900 sqm). In contrast to the previous year, 22,000 sqm 16,684 sqm logistics took second place with 28%, or around 98,000 sqm (H1 2018: 45%; 83,250 sqm). Pro- The prime rent of EUR 5.00/sqm and the aver- the pace it recorded in the first half of the duction accounted for around 23% of take-up in agerent of EUR 3.95/sqm were unchanged as year, we expect the positive and lively develop- the Ruhr region (78,700 sqm), meaning its share against the end of 2018. ment to result in full-year take-up of between of total take-up increased by 8 % compared with 480,000 sqm and 520,000 sqm. This would rep- the previous year (H1 2018: 15%, 27,800 sqm). Although the market for industrial and logistics resent an increase of up to 12% compared with space in the Ruhr region will be unable to keep up 2018 (465,000 sqm). Forecast for full-year 2019 Logistics Property Market North Rhine-Westphalia We are seeing companies – particularly in the au- tomotive industry – becoming more cautious with Hamm 2 Friedrichsfeld 31 52 1 2 regard to long-term investments, especially in the A73 Soest 2 Herne new-build segment. Meanwhile, traditional retail Venray 42 Dortmund 44 Oberhausen companies are still in the process of redesigning 42 Bochum Essen Hagen their logistics strategies in response to the gener- Duisburg (Sauerland) 40 Arnsberg ation change and developments in e-commerce. A67 57 Venlo 43 Hagen 46 61 Krefeld Sundern 535 (Sauerland) 45 We expect the NRW logistics market to enjoy A73 3 46 52 Düsseldorf Lüdenscheid solid full-year performance in 2019 and believe Roermond Mönchengladbach Solingen take-up of between 850,000 and 930,000 sqm 46 North Rhine-Westphalia 1 Wipperfürth Attendorn to be achievable.