German, European logistics market heading for full-year record
The transaction volume for German logistics properties has exceeded last year's volume by 45% and, at €2.1bn for the first six months, marks a new half-year record for the asset class.
According to property advisers Colliers, logistics has doubled its share of German commercial investment volume to 12% compared to its average of recent years. The gross initial yield in the prime segment of the top markets has fallen over the past year by as much as 65 basis points to an average of 5.65%. In smaller cities, such as Bremen, Leipzig, Kassel and Nuremberg yields are more like 5.85%.
The shortage of available prime properties means investors are shifting to higher risk properties, as well as locations outside the traditional top centres. Light industrial properties and business parks now command multiples of 14 to 16. Foreign investors' share of investment is down compared to the prior year and made up only 45% of the deal volume over the period, according to Colliers' Hubert Reck, head of industrial and logistics investment for Germany.
Among the biggest deals have been Gramercy Europe's acquisition of a pan-European portfolio from Goodman, as well as Blackstone subsidiary Logicor's takeover of a 12-asset Goodman package, of which about half with 362,00 sqm are located in Germany, mainly around Berlin and Cologne. Other active buyers have been the Dutch group Geneba and AEW Europe.
New projects coming on stream include a new retail logistics park being built by listed German retailer Metro in Marl in North Rhine-Westphalia – at 220,000 sqm the largest retail logistics park in the country. The facility will service the company's own stores of Metro Cash & Carry and its REAL hypermarkets. In part it replaces seven former Metro logistics hubs which are being restructured into two larger schemes.
Panattoni Europe is also developing a new facility for logistics group Dachser in Häsfeld in Saarland, near the French border. The 24,000 sqm Häsfeld site will have 10,530 sqm of warehousing and 600 sqm of offices, with the possibility of adding a further 20,000 sqm of storage space. Construction has just started and should be finished by October this year.
Meanwhile, the Wiesbaden-based Aaareal Bank is providing €368m of financing for a German logistics portfolio. The borrowers are subsidiaries of a joint venture between Belgian developer VGP and Allianz Real Estate, the property arm of the German insurer.
According to Aareal, the bank acted as lender, arranger and agent for the 10-year financing on the portfolio, located across eight separate locations, which is fully let. It includes newly-built assets with excellent connectivity to the traffic infrastructure, Aareal said. Christof Winkelmann, managing director for Special Property Finance said the transaction is one of the largest logistics property portfolio financings in Germany so far this year.
It's not just Germany where logistics is a key driver of letting investment this year. Across all of Europe, logistics take-up is headed for a record year, which should climb 6.7% to 18m sqm, albeit growth rates do appear to be slowing down.
Last year's take-up volume of 17.1m sqm was already up 11.4% on 2014. In the first quarter of this year it was 4.1m sqm, up year-on-year from 3.6m sqm the year earlier, according to property adviser JLL’s inaugural Supply Chain Activity Index report. The index is composed of economic and supply chain variables to forecast short-term corporate demand for logistics space across Europe.
“These forecasts are underpinned by robust supply chain activity … reflecting further expansion in EU trade volumes, positive GDP growth, and economic sentiment which is stronger than the historical average. However, the Supply Chain Activity Index has been dragged down by conditions in the commodities market as reflected in commodity prices,” according to the report. JLL also noted that the forecasts were subject to revision depending on the outcome of the Brexit vote – so more caution is probably now advisable.