Automated guided vehicles (AGV) transferring packages inside a warehouse
Investment in Germany’s logistics quarter soared in the third quarter to €2.6 billion, a massive increase on the €1 billion per quarter transacted in the first half of the year, despite take-up plummeting by 70% in the German capital, according to JLL.
Overall, the logistics investment market recorded a transaction volume of around €4.7 billion in the first nine months and, for the first time after three quarters, is the second-strongest asset class after the living segment with €6.6 billion.
Dominic Thoma, Co-Head, Industrial & Logistics Investment Germany, JLL
‘The significantly higher transaction volume in the third quarter is the result of the resumption of market activity since the beginning of the year,’ said Dominic Thoma, co-head of Industrial & logistics investment JLL Germany. ‘In the second half of 2022, many market participants were still on the sidelines, which meant that significantly fewer sales were brought to the market. This resulted in the weak transaction volume in the first half of 2023. The market has been much more buoyant again since the start of the year and numerous deals have now been brought to the notary.’
Nonetheless, the first nine months of 2023 are around 38% behind the same period of the previous year, although this is essentially attributable to the weak first half of the year. The five-year average was also underperformed by 20%. Compared to the past ten years, however, the quarter showed an increase of 3%.
Logistics start-up Stockoss raises €4 million for logistics network
Venture capitalists are also getting in on the act. Stockoss, a Paris-based logistics technology start-up, announced today (15 November) that it has raised €4 milion in seed funding led by London-based VC Pi Labs. Founded by Laurent Bonnet and Franck Nussbaumer, Stockoss offers 100% digitalised warehousing and logistics services for customers such as Stellantis, Netflix and Jacquemus to meet their ever-growing storage and distribution needs across a fast-growing network of high-quality logistics and warehouse partners in multiple locations.
‘The funding from Pi Labs and our other investors will enable us to take our solution and expand our logistics network to new geographies such as the UK, Germany and Spain, and bolster our team further to continue delivering a better product experience,’ said Laurent Bonnet, founder and CEO at Stockoss. ‘Amazon has profoundly changed the way we think about B2C logistics. Stockoss will have the same impact on B2B logistics.’
By unifying the entire logistics value chain and improving the visibility, efficiency and automation of operations, Stockoss gives independent, localised warehouse owners a platform to operate on a much bigger scale and compete with bigger rivals. For customers, Stockoss provides an Amazon-like user experience enabling them to ship and store their products and stock at the click of a button.
‘Across Europe, 76% of all warehousing space is operated by SMEs, but much of this existing stock is unable to meet customer demands for more flexible, efficient, timely and cost-effective solutions for their storage and distribution needs,’ said Faisal Butt, founder and managing partner at Pi Labs: ‘The way to sustainably meet growing demand is to use technology to upgrade the operations potential of Europe’s existing 35,000+ independent warehouses instead of building new stock.’
The logistics industry is at a crossroads, marked by economic uncertainties and mounting environmental concerns at a time where the re-industrialisation of Europe is leading to the reshoring of warehousing which has increased demand for more sustainable and digitised supply chains.
Take-up sets new record this year but take-up down in Berlin by as much as 70%
Around 4.73 million m² (owner-occupiers and lettings) were taken up in the German market for warehouse and logistics space in the first three quarters of 2023, according to JLL. The third quarter accounted for a significant proportion of this: at 2.04 million m², take-up was significantly higher than the first two quarters of the year with 1.43 m² and 1.26 million m², respectively. This is the first time in four quarters that the two million m² mark has been exceeded.
Sarina Schekahn, Head of Industrial & Logistics Agency Germany, JLL
The stronger third quarter is evidence of sustained demand in the market for warehouse and logistics space. High pre-letting rates and rising rents show that suitable space is in short supply and users are willing to pay correspondingly high rents for a suitable property, according to Sarina Schekahn, head of industrial & logistics agency JLL Germany. ‘Due to the weaker first half of the year, we will not be able to match the annual take-up of previous years, but we are confidently forecasting a good six million m² for 2023 as a whole.’
However, in the five real estate strongholds - Berlin, Düsseldorf, Frankfurt, Hamburg and Munich - around 1.11 million m² was taken up in the first three quarters, down 43% on the first nine months of the previous year and around a third less than the five-year average. The region with the highest take-up was Frankfurt with 298,800 m², marking a year-on-year increase of 10%, according to JLL. All other regions recorded a double-digit percentage drop in the same period: 130,500 m² were taken up in Munich (down 13%), 149,500 m² in Düsseldorf (down 31%) and 248,400 m² in Hamburg (down 34%). In Berlin, the drop was as high as 70% at just 279,200 m².
Top 5 deals account for 31% of total volume
The return of market activity is also reflected in the fact that four of the five largest deals in the year to date were concluded in the third quarter. Deka completed by far the largest transaction with the acquisition of shares in a portfolio from logistics developer VGP. Six project developments from DFI Real Estate were also transferred to the Hansa German Logistics Impact Fund, a joint venture between DFI and Hansainvest Real Assets. Clarion Partners Europe acquired a portfolio of five logistics properties from Blackstone and P3 snapped up the AXA/Baytree portfolio. Three of the four large portfolios are joint ventures. As in the same period of the previous year, the top five deals accounted for around 31% of the total transaction volume.
‘In addition to portfolio streamlining by large portfolio holders who want to create new liquidity, the topic of sale-and-leaseback is becoming increasingly important,’ said Thoma. ‘The financing of many companies is coming to an end and in view of the high interest rates and lack of liquidity, the pressure to activate tied-up capital is increasing significantly.’
Demand for products in the logistics sector is currently high and spread across all risk classes. ‘There are still few core properties on the market. Investors do not want to part with their expensively acquired treasures, especially as there are fewer buyers who are prepared to pay adequate top prices for them. However, this is likely to change again in the long term,’ said Thoma. At 22%, core properties accounted for a much smaller share of the transaction volume than core-plus properties at 64%.
‘Investors are much more liquid in the core-plus segment,’ said Thoma. ‘Numerous new projects have also been developed in B and C locations, while A locations are hardly coming onto the market. Although capital is also available in the value-add segment, financing conditions are more difficult there. Instead, many investors are trying to leverage the potential of their properties themselves to sell them as core-plus.’
