Grossmann & Berger has calculated that the take-up of industrial, warehousing and logistics space in Hamburg and its environs totalled some 400,000 m² at the end of the 3rd quarter. The result is 13% lower than the prior year’s, primarily because there were so few agreements for premises of 10,000 m² or more. The number of such contracts fell from ten to only four. In the 3rd quarter alone 145,000 m² of space was taken up, 20% less than in the 3rd quarter of 2015. “Two large agreements for a total of 105,000 m² are in the pipeline for the fourth quarter. Take-up of space for industrial, warehousing and logistics purposes in Hamburg and its surrounding districts is therefore set to reach 540,000 m² by the end of the year,” predicts Stefan Harder
, head of the industrial, warehousing and logistics properties division at Grossmann & Berger. Year on year the proportion of owner-occupiers showed little change, dropping from 28% to 26.8%.Letting market: Three new agreements for over 10,001 m²
Logistics/industrial property investments: Prime yield subject to further compression
- Completions: In the first nine months of 2016 rental agreements and owner-occupier contracts totalled 125 or 4% more than the year before (2015: 120). Three of the four agreements for more than 10,001 m² of space signed during the year to date were concluded in the 3rd quarter. The biggest transaction of the year so far was the construction start for food discounter Netto, which is building a 35,000 m² logistics centre plus 3,000 m² of office space in Henstedt-Ulzburg (Heideweg, North West Environs). The third-biggest contract was the rental agreement signed by Stute Logistics for 20,710 m² of space in the Prologis Park Hamburg (Georg-Heyken-Strasse 1, Hamburg South), and the fourth-largest was a 12,000 m² construction start in Braak (Alte Landstrasse, North East Environs) where Boltze, which trades in home accessories and gifts, is extending its logistics space.
- Take-up of space by size categories: The most popular size category was that between 5,001 and 10,000 m², which accounted for 31% of take-up. With more space becoming available, strongest growth was seen in the 3,001 to 5,000 m² segment with an increase of 88%, whereas take-up of space in the 10,001 m² sector took the biggest hit, falling by 46%. As Harder explains, “Most of the space in existing properties is already let and there is a shortage of land suitable for big new developments, so that barely any large premises can be found.”
- Rents: At the end of the 3rd quarter the average rent was €4.80/m²/month, and thus 10 cents higher than in the same period a year ago. The premium rent remained unchanged at €5.70/m²/month.
- Take-up of space by industry: Repeating the pattern of the prior year, by far the greatest demand for space came from logistics/forwarding companies (44%) and trade/manufacturing firms (32%). Each of these two sectors of business accounted for two of the four biggest transactions. One of them, the second-biggest to date, was the lease taken in the 2nd quarter by Rieck Logistics Group for 24,000 m² in a new-build in Neu Wulmstorf (Neue Oldendorfer Strasse, South West Environs).
- Take-up of space by sub-markets: With shares of 22% each, the highest levels of take-up were seen in North West Environs, Hamburg East and Hamburg South. The South West Environs are close behind with a share of 18% of total take-up. With the exception of Hamburg East, these results were greatly influenced by the three biggest agreements recorded. Unlike the same period a year ago, when activity was more heavily concentrated in the city, take-up was fairly evenly divided between the areas inside and outside Hamburg city limits.
By the end of the 3rd quarter, logistics and industrial properties located in Hamburg and its environs had been traded for a total of €147m. Compared with the previous year, 48% less was invested in this class of assets. “The logistics and industrial property segment is likewise characterized by excess demand and short supply. Here too, therefore, investors are increasingly buying value-add or less centrally located real estate,” explains Harder
. “However, in view of the current situation we had been expecting to see owner-occupiers entering into sale and lease-back arrangements, but this has not happened so far.” Within the space of one year the prime yield for logistics and industrial properties fell by 0.5 percentage points to 6.00%. In the case of trophy properties this figure falls to 5.25%.Outlook for the letting market
“If demand in the South West Environs stays as high as it is now, land suitable for logistics developments will become scarce there too. The situation is similar in the Hamburg South and the Port sub-markets, where two projects totalling 70 hectares (173 acres) are not due for completion until 2018 and 2019,” says Harder
. “At present, an international investor’s 30,000 m² logistics development is the only project easing some of the pressure on the south part of the port.”
Graphics source: Grossmann & Berger GmbH