German logistics edges towards 2016 record

Germany’s logistics sector is edging close to last year’s take-up record, according to JLL’s German Supply Chain Activity Index, which was published this month.

The index rose by 1.1% in the first quarter to 110.5, following an expansion of 1.2% in the previous quarter. Nonetheless, take-up in the first quarter represented a 10% decrease compared to the same quarter last year, which marked the highest first quarter level during the past five years.

However, despite the good start to the year, growth is expected to be more muted going forward, according to JLL, which estimates growth of 0.2% in the second quarter and just 0.1% in the third quarter, due to a slight slowdown in both GDP and trade growth. As a result, the index forecasts logistics take-up over the nine months to September 2017 to be around 3% lower than the same period last year.

Slower take-up in the first quarter was largely due to an absence of large owner-occupier deals in the range over 50,000 sqm, thereby reflecting both the usual market volatility and the growing difficulty in finding suitable land and getting planning permission for large-size warehousing units.

‘Following four years of continued year-on-year take-up expansion, we expect 2017 to beanother strong year in terms of occupier activity,’ said Frank Weber, Head of JLL’s Industrial Agency Germany. ‘We do not see any risk of fading occupier demand over the next few quarters, with total 2017 take-up anticipated to be largely aligned with last year’s record volume. The occupier side will continue to look for new modern space to manage the much needed supply chain alignment to digital transformation and new city logistics models, thereby keeping overall demand high.’

Interesting – and unlike in the UK and the US – online retailers are not driving the logistics space in Germany. In fact, they only account for between 1% and 2% of the market, according to Weber. ‘Of the €280b in total retail sales in Germany last year, online shopping accounted for just €2.8b, or 1%,’ he said.

Last year, logistics take-up in Germany totalled 6.7m sqm, according to JLL, who is forecasting around 6.5m sqm this year, according to Weber.