Logistics real estate: Worth more now than before the crisis?
Demand has long since expanded to secondary locations, as shown by the recently published "Logistics and Real Estate" study - and this despite the fact that new construction activity for 2021 and 2022 is at a new high. This ensures rising values.
The central question of this year's study edition is: Worth more now than before the crisis? The study attempted answers at various levels - location, building and user. One thing is clear: awareness among the population as a whole that logistics is the backbone of a functioning economic system has increased enormously. Many now value the benefits more highly and no longer look solely at the external costs to the environment such as land sealing and emissions. The demand from investors and users for attractive locations, high building qualities and various logistics services lead to value increases in every respect.
Even the Corona crisis only gave the logistics sector a brief pause; however, it continued its growth course quickly and unimpressed. As a result, investments in logistics real estate in 2020 reached slightly less than 5 billion euros, roughly the same level as in the previous two years. At 3.7 million square meters, the total of newly completed logistics space fell short of the previous year's figure (4.9 million square meters) due to delayed construction starts. Strong new construction activity will ensure new record completion volumes of over 5 million square meters each in 2021 and 2022. Since 2019, peripheral logistics locations have also benefited from rising demand. Their share of total completion volume is rising from a long-term average of 14% to 20% in the current year.
--> Tip: In the video (in German language), you will get to know the partners Berlin Hyp AG, BREMER AG, GARBE Industrial Real Estate GmbH and Savills Immobilien Beratungs-GmbH and learn about important study results in short form!
New construction
In 2020, 3.7 million square meters of new logistics space were completed. The completion volume thus fell significantly short of the previous year's figure (4.9 million square meters) and the volume expected for 2021 (5.3 million square meters). This was due to pandemic-related delays in construction starts, which pushed completions into the following year. For 2021 and 2022, new record completion volumes of just under 5.3 and 5.4 million square meters are expected in view of ongoing construction projects.
When looking at completions by region from 2016 to 2021, the Berlin logistics region (1.7 million square meters) and the Rhine-Ruhr region (1.6 million square meters) will pass the Rein-Main/Frankfurt region (1.4 million square meters) due to high completion figures in the current year (528,000 and 350,000 square meters, respectively). The Bremen and North Sea Ports region also stands out, with 467,000 square meters of new logistics space, a very high level of new construction activity in the current year.
Investment market
In the investment market for German logistics, corporate and industrial real estate, a new all-time high was reached in 2020 with an investment volume of €9.7 billion. The surge in interest in industrial real estate (more than €1.3 billion) and corporate real estate (more than €3.4 billion), which also remained in high demand, were key factors here. By contrast, the sums invested in logistics properties in 2020 were not quite as high as in the previous year, at €4.9 billion, due to the short supply. In the period from 2016 to 2021, GARBE Industrial Real Estate remains the frontrunner among the most active logistics investors with €2.6 billion. Frasers Property follows in second place with €1.8 billion, followed by China Investment Corporation (CIC) with around €1.5 billion in transaction volume, Union Investment (around €1.2 billion) and LIP Invest (just under €1.2 billion). The top 5 investment destinations by region in the period from 2016 to 2021 are the Rhine-Main/Frankfurt, Berlin, Hamburg, Dortmund and Hanover/Brunswick regions. In the first half of 2021, logistics investors were particularly active in the Hamburg and A4 Saxony regions.
About the "Logistics and Real Estate" study
"Logistics and Real Estate" is an independent study series by the Competence Center for Logistics and Real Estate that examines the asset class from various perspectives and has already established itself as the leading study series for logistics real estate in Germany. The analysis and consulting firm bulwiengesa examined market movements in the period from 2012 to 2021 and evaluated them in the four key areas of project development, construction trends, investment and financing.
Note: The study and information material are available here: https://logistics-and-real-estate.com/
Contact: Daniel Sopka, Consultant in Logistics and Corporate Real Estate, sopka@bulwiengesa.de
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