The market for industrial, warehousing and logistics space in Hamburg closed the 1st half of 2015 with a plus of some 41% compared with the same period the year before. Research by Grossmann & Berger reveals that the total take-up of space was around 281,000 m². At 191,000 m², the take-up of space in the 2nd quarter is more than twice the amount noted in the 1st quarter, which closed at 90,000 m². The share of total transactions conducted by owner-occupiers fell year on year from 43 to 24%. “It had been expected that owner-occupier transactions would surge thanks to the low interest rates, but that has not happened yet. Take-up of space in the 5,001 to 10,000m² category saw the biggest increase. And the number of agreements registered in this sector rose from five to fourteen, more than in any other,” says Stefan Harder
, head of the industrial, warehousing and logistics properties department of Grossmann & Berger, commenting on the half-yearly result.Take-up of space shoots up in Hamburg South
Industrial and logistics investments
- Take-up of space by size categories: As already mentioned, the lion’s share of take-up, at around 36%, comprised lets in the 5,001 to 10,000 m² size category. Growth of 125% in this sector is also the biggest change compared with figures for the 1st half of 2014. The second most sought after property size was that offering 10,001 m² or more, accounting for 31% and five transactions (four in the prior year).
- Largest agreements: By space occupied, the largest agreement to date was for 30,630 m² of logistics space plus around 1,020 m² of offices in the Prologis Park Hamburg-Waltershof (Am Genter Ufer 6, sub-market Hamburg South), let to a food logistics company. The agreement was registered in the 1st quarter. Likewise located in the Hamburg South sub-market, but about half as big, are the premises that BLG Logistics Group rented at Dradenau Strasse 20 (about 18,050 m² plus around 845 m² of office space).
- Rents: Despite the considerable increase in take-up, premium rents (€5.70/m²/month) and average rates (€4.60/m²/month) showed no change compared with the same period a year earlier. A large portion of the take-up of warehousing space, 27%, was in properties costing between €4.0 and €4.50/m²/month; storage space renting for over €5.51/m²/month accounted for just under 17% of the total.
- Take-up of space by industry: Accounting for 35% each, the main clients for new space in the 1st half year were companies in the logistics/communication/forwarding business and the trading sector. These two industries were each party to two of the five biggest agreements. The third-biggest transaction (logistics) involved around 12,000 m² of hall space in the Hamburg West sub-market, taken by a wholesale and overseas trader. The fourth-biggest agreement was signed by Carl Block (trade) for 11,780 m² of space at Altenwerder Hauptstrasse 4-6 (sub-market Hamburg South).
- Take-up of space by sub-markets: Prospective clients clearly favoured Hamburg South over other districts, resulting in take-up of space at around 38%. Indeed, four out of five transactions for more than 10,001 m² were concluded in this sub-market alone, comprising some 70,800 m² of space taken. “Letting activity in this sub-market, which includes most of the port area too, has started to steam ahead again. Historically, this sub-market has always been much in demand, but over the past twelve to eighteen months, there have been unusually high vacancy rates in the port areas,” says Harder. Grossmann & Berger found that the second most popular sub-market was Hamburg East, with some 16% of take-up. Appreciably more warehousing space was taken up inside Hamburg city limits, where 68% of the total was registered, than in the environs.
Premium returns for core segment investments remained unaltered at some 6.25%. Because the market for new-build logistics properties is increasingly dominated by project developers who incorporate newly completed properties into their own in-house funds, a shortage of supply was a growing trend. Currently, Grossmann & Berger considers 7.25% to be the top return in the core+ segment. It was in this segment that a 1st quarter transaction between two institutional investors took place, involving a sum of around €40m for property in the Hamburg East sub-market. When it comes to value add investments, the latest returns were, depending on the quality of the location and time period involved, between 8.25 and 10%. “We had expected that the extremely positive growth of purchase prices over the past eighteen months would prompt owner-occupiers to use the booming market for sale-and-lease-backs. However, that has not happened,” remarks Harder.
At present, the land-use policies adopted in Hamburg and the surrounding communities have resulted in rising land prices. “The ongoing shortage of suitable logistics sites is causing players on the market to focus increasingly on securing land, a process often referred to as land-banking.”Outlook for the letting market in 2015
“Germany’s domestic economy is trending up. According to the World Economic Institute in Hamburg, anticipated growth this year is 1.9% and 1.7% next year. Strong consumer spending is driving this growth. The collapse of oil prices and the low euro exchange rate, which makes exports outside the euro zone cheaper, act like a business development programme. It is therefore reasonable to expect the year to end with total take-up of space somewhere between last year’s figure (450,000 m²) and the five-year average
(562,000 m²)”, says Harder
. “But of course that will also depend on whether some potential tenants actually decide to rent the properties offering more than 10,000 m² that they are considering in the two sub-markets West and East Environs. We are expecting contracts to be signed in the fourth quarter. Possibly, these agreements might be influenced by a construction project in the East Environs; it is not one-hundred-per-cent certain that this 20,000 m² of space owned by a project developer will be developed and how much will be on spec.”
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Permission is given to reproduce the chart (source: Grossmann & Berger).