At the end of the 1st half of 2016, take-up of industrial, warehousing and logistics space in Hamburg totalled some 255,000 m². This translates into a year on year decline of 9.3%. Latest figures from Grossmann & Berger point to this conclusion. Take-up of space in the 2nd quarter was 122,000 m². The share of owner-built and occupied industrial and logistics space was about 15%, once again appreciably below the 24% seen in the same period a year before.
“The market is developing in a similar way to the investment market: considerably more space could be taken up if more large properties were available. Companies that require appreciably more than 10,000 m² have trouble finding a suitable location in Hamburg. Project developers and the users of logistics properties who need at least 40,000 m² of land currently have to move out to Gallin on the A24 motorway, Soltau on the A7 or to land near the A1 on the way to Bremen,” says Stefan Harder
, head of the industrial, warehousing and logistics properties division at Grossmann & Berger, commenting on the present state of the market.Letting market: More contracts, fewer for large amounts of space
Logistics/industrial property investments: Transaction volume collapses
- Completions: In the 1st half year a total of 89 contracts were completed for industrial premises in Hamburg. That is a year on year increase of some 26%. The first agreement of the year for more than 10,001 m² was signed in the 2nd quarter. The lease in question was taken by Rieck Holding for 24,000 m² in a new-build in Neu Wulmstorf (Neue Oldendorfer Strasse, South-West Environs sub-market). By this time last year, five agreements had already been completed for properties in this size category for a total of some 87,000 m².
- Take-up of space by size categories: Accounting for 42% of the total, the biggest share of take-up was noted in the 5,001 to 10,000 m² size category (107,000 m²). The share of smaller units of between 3,001 and 5,000 m² almost doubled and accounted for the second highest volume of take-up, 63,800 m² or 25%.
- Rents: Whereas the average rent rose year on year by a modest 20 cents to €4.80/m²/month, the premium rent remained unchanged at €5.70/m²/month.
- Take-up of space by industry: Unlike the same period of 2015, when logistics firms/forwarders and trade/retail played almost identical roles on the market, the first half of 2016 closed with logistics firms/forwarders having taken 47% of the total turnover of space (119,500 m²). Trade/retail firms accounted for a share of 23% and production/industry/trades&crafts for 14%.
- Take-up of space by sub-markets: The districts with the greatest letting activity were also very different from last year’s front runners. Whereas a year ago the Hamburg South sub-market posted the highest amount of take-up at 38%, this year Hamburg East saw 28% of take-up and South-West Environs some 26%. “Three of the four biggest agreements were for properties in South-West Environs, and Hamburg East accounted for seven contracts for between 4,000 and 5,000 m² of space,” says Harder. In terms of take-up of space, the ratio between Hamburg city-state and its environs was nearly even at 53 to 47%.
In the 1st half of the year logistics and industrial properties valued at €30m were traded. Compared with the €117m posted a year before, the transaction volume crashed by about 75%. “These figures illustrate the shortage of properties in the core segment. There is hardly any built to suit business being done in the metropolitan region. If something is built, the property is either transferred to the developer’s own fund, or it is constructed as a joint venture with a final investor,” Harder
reports. “Therefore these properties never come onto the market.”
Due to the permanently low interest rates, demand for logistics properties that can help optimize yields remains high. The prime yield on core segment logistics and industrial property investments sank within the space of one year by 0.5 percentage points and was 6.00% at the end of the 1st half year. The yield spread between industrial and office assets fell by 0.2 percentage points. The yield on value-add properties is somewhere between 7.5 and 8.5%.Outlook for the letting market in 2016
“In view of how the first half year has developed, we now expect the total take-up of space for the year to be 500,000 m²,” says Harder
looking at the coming six months. “If large amounts of the partly speculative projects along the A39 motorway in Winsen and the A1 in Rade are let, the total take-up of space could be 550,000 m². Other building starts for partly speculative projects are not to be expected in the second half of the year.”
Source graphics: Grossmann & Berger GmbH