BulwienGesa
Tobias Kassner - BulwienGesa
According to Kassner, “International investors accounted for the bulk of it. Their market entry has caused the sum total committed in "Unternehmensimmobilien“ portfolios to multiply. Accordingly, the record-breaking transaction volumes recently seen in the asset class of "Unternehmensimmobilien“ is closely linked to the intense market presence of international investors.”
Light industrial deals hit a new high in Germany last year at €3bn, a 27% increase on the former record in 2015, according to a report published this month by Bulwiengesa, ‘Initiative Unternehmensimmobilien 2H 2017’.
The growth in Unternehmensimmobilien,or light industrial properties, has been driven by the increase in portfolio sales, Tobias Kassner, a business unit manager at Bulwiengesa told REFIRE. Last year, Blackstone and M7 Real Estate agreed to acquire almost the entire European portfolio of UK-based logistics investor Hansteen for a total of €1.3bn. At the time, Morgan Jones, Hansteen’s joint chief executive, described the move as ‘a perfect opportunity to create a chunk of value and lock in that currency benefit’(post-Brexit). Just this month, M7 sold a light industrial property in Sindelfingen, near Stuttgart, on behalf of TEIF Germany, a property company owned by an unnamed US investor, to W2 Development in Stuttgart for an undisclosed sum. The property comprises an 18,000 sqm site with two warehouses of 4,850 sqm and 6,550 sqm.
According to Kassner, ‘the market is becoming more transparent and there’s huge upside potential’: ‘The market in Germany in different to the UK or France – we have far more hotspots in towns and suburbs,’ he said.
‘Transformation’ real estate, or converted properties, including former railway warehouses, and business parks led the charge in the second half of 2017. Converted properties accounted for €325m of deals in the second half. Their ‘vintage industrial charm’ combined with a building design that lendsitself to a variety of uses, along with their primelocations in major cities, makes them easy to let, hence their popularity, according to Bulwiengesa.
‘There’s high demand from tenants for properties like these because they tend to be close to the city fringe,’ Kassner said. ‘The spaces are also very flexible – they might be home to an ad agency and a 3D printing company.’
Business parks came in second, accounting for €243m in deals.Business parks remain attractive investment targets, largely because they tend to occupy very favourable locations.
Fund managers/private equity investors lead investment pack
Asset, fund manager and private equity groups have dominated the market for the past five years, accounting for €1.5b in deals last year. Institutional funds—the runner up—lagged far behind with an investment volume of around €554m. The high management costs of light industrial assets, coupled with the specialised know-how they require, are easier for bigger buyers like this to handle, according to the report. Public property companies/REITS accounted for an additional €211m in deals last year, taking advantage of the current market cycle to disinvest.
Take-up hampered by lack of supply
There was more than one million square metres of light industrial take-up in Germany last year, an increase of 12%, according to Bulwiengesa.However, take-up is being hampered by the undersupply of assets coming to market. ‘It’s hard to say what the deal volume could be this year,’ said Kassner. ‘Could we beat the €3bn reached last year? I think we’ll see some sizeable deals but it’s too early to say.’ (sk)
