Latest figures from the property services provider Grossmann & Berger show take-up of industrial, warehousing and logistics space in Hamburg and its environs at around 90,000 m² in the 1st quarter of 2015. Of the past five years, only one started with an even weaker result, namely 58,000 m² in the 1st quarter of 2013. While ten fewer new lease agreements (20) and the same number of owner-occupier transactions (six) were registered, the take-up of rented space fell to some 63,000 m² and the proportion of owner-occupier transactions slipped slightly to about 30%. “Based on our experience, however, such a start is not indicative of a weak market throughout the year 2015,” says Stefan Harder
, head of the Industrial, Warehousing and Logistics section at Grossmann & Berger.
Large properties dominate the market
As in the same period a year ago, the two biggest size categories accounted for most of the take-up; indeed this year their share was appreciably higher at some 65%. Five new agreements (compared with three the year before) in the size category 5,001 to 10,000 m² accounted for more than 37% of take-up; about 28% came from two contracts (as in the prior year) in the 10,0001 m² plus segment. In the 1st quarter of 2015 the transaction involving the largest amount of space was the purchase of a 12,000 m² site plus 7,000 m² of office space, bought by a company in the logistics/communications/freight forwarding sector (sub-market Hamburg West). The second-biggest transaction was a rental agreement for 10,340 m² plus 1,800 m² of office space signed by aircraft component supplier Diehl Comfort Modules GmbH (Am Genter Ufer 9, sub-market Hamburg South). The third-biggest agreement was the rental of some 6,650 m² in the Eurolog Rade Logistics Park, Wenzendorf, concluded by C.E. Noerpel Logistik GmbH & Co. KG (Otto-Lilienthal-Strasse 1, South-West Environs). Take-up in the size category 1,000 m² or less grew by 62%, more than any other segment, to reach 10% of the total.
Second-highest take-up in the high-end price range
The trend towards a slight softening of rents remained unbroken in the 1st quarter of 2015. Year on year, the premium rent slipped by 10 cents to €5.60/m²/month, average rents stayed as they were at €4.60/m²/month. “Some 20 per cent of agreements were concluded for properties costing between €4.01 and €4.50/m²/month, but the next most frequently agreed price, at some 14% of the total, was €5.51/m²/month or higher”, says Harder
Logistics firms’ take-up around 20% lower
Unlike the same period in the prior year, when logistics firms accounted for more than half of the take-up of space (53%), in the 1st quarter of 2015 the sector logistics/communication/freight forwarding took some 34% (30,200 m²), an amount almost equalled by the trade/retail sector at 32% (28,900 m²). The previously mentioned biggest and third-largest agreements registered for the quarter were major contributors to results for the logistics sector. Thanks to the second and fourth biggest transactions in the 1st quarter of 2015, the manufacturing/industry/craft trades sector was responsible for about 24% of take-up (21,500 m²). The fourth-biggest transaction was the construction start of a 6,000 m² new-build for cable accessories manufacturer HellermannTyton GmbH in the Business Park Tornesch (Grosser Moorweg 45, North-West Environs.)
A third of take-up of space in Hamburg East
Year on year, the distribution of take-up in the various sub-markets was completely changed. Whereas in the prior year take-up of space was spread evenly through the sub-markets, this time the mix was two thirds within Hamburg city limits and one third in the environs. Most activity, some 28% of the total (25,300 m²) was registered in Hamburg East. Totals in Hamburg West (15,800 m²) and Hamburg South (15,400 m²) were very similar at some 17% of take-up each. “The biggest increase in take-up of space was seen in Hamburg West, mainly because it was here that the biggest transaction of the 1st quarter took place,” remarks Harder.
The only sub-market outside Hamburg to attain a double-digit share of take-up was North-West Environs, with about 14% (12,800 m²).
Reserves remain for new buildings in the environs
“Even if first-quarter take-up in the South, West and East Environs was lower than inside Hamburg’s borders, we expect to see these sub-markets become more firmly established thanks to their considerable reserves of sites for new buildings. That might, however, put slightly more pressure on rents in core locations within Hamburg,” Harder
adds. With rents as much as €1.50/m²/month lower than in Hamburg’s core locations, these sub-markets seem set to develop well. Most of the difference in rents can be explained by the lower cost of land in the environs and the less well developed infrastructure.
Long-established firms shy away from the environs
“We are observing greater demand from owner-occupiers whose business involves individual commissions rather than classic logistics operations. Their prime motivation is the low interest rate, but the shortage of sites available within Hamburg city limits is slowing progress. At present, long-established Hamburg companies shy away from a move to the environs because they fear a loss of prestige and a lack of qualified workers in the new location,” says Harder
. During the rest of the year, take-up of space is expected to total some 500,000 m².
Industrial investments: lack of new-builds exacerbates shortage
“The persistently low interest rates and resultant glut of capital continue to fuel demand for investment-grade logistics and industrial properties. However, a lack of new building projects is one of the reasons that classic core products are scarce in Hamburg. Project developers immediately transfer the majority of newly completed buildings into their own in-house funds. And most owner-occupiers retain ownership of their new building by including it on their operating balance. These properties are thus likewise unavailable on the market, leading to an appreciable shortage,” says Harder
of the investment market for logistics properties in Hamburg. “This further boosts demand for value add products, so that an unchanged supply is pushing prices up, albeit modestly.” In the 1st quarter of 2015 the premium gross return for core investments in the logistics and industrial properties sector was just over 6% and the normal market return on value add products settled in the range of 8 to 9.5%.
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