Logistics in Frankfurt and Berlin are best bets for 2018

Logistics in cities such as Frankfurt and Berlin offer the best investment opportunities in 2018, Peter Salostowitz, CEO of German data provider IndustrialPort told REFIRE this week.

‘We’ve created a logistics ‘heat map’ (with Savills),’ Salostowitz said. ‘’For investors looking to invest in German logistics this year, one option could be to invest in logistics spaces close to big cities. In our ‘heat map’,, we think it’s safe to invest in any of the ‘green’ areas, which includes Frankfurt, Berlin, Leipzig, Munich, Stuttgart, Hamburg and Dortmund.’

There is a need for more logistics space near big cities, especially given that more and more people are moving there, he added. Part of the problem is that apartments are being built along Germany’s rivers or former industrial areas where previously there were a lot of warehouses. Those warehouses are being lost.

‘It’s hard to gauge the logistics development pipeline going forward – a property could be built this year or in 10 years’ time. However, what we do know is that the cycle is at the top and the typical cycle lasts 10 years,’ Salostowitz said.

Electric cars are going to have a big impact on logistics because the automotive industry is one of Germany’s three biggest industries, according to Salostowitz. 'The engine of electric cars has just 100 movable parts on average, compared to 1,000 parts in a traditional car,’ he said. ‘That means that car companies need less space to store parts and fewer machines to build the cars which, in turn, means they’ll need less logistics space.’

Last year was a record year for industrial properties in Germany, according to the Cologne Institute for Economic Research’s latest report in conjunction with IndustrialPort. Analyzing around 11,500 properties totaling 100 milllion sqm between 2012 and 2017, the IWIP Index has risen from 100 in 2012 to 120.6 in 2017. This also represents an increase of 9.7% on 2016 on the back of strong demand for logistics, Salostowitz said. (ssk)