Warehouse Market Snapshot
Warehouse market in Germany is expected to grow in the coming years due to increasing e-commerce activities and demand for efficient and fast delivery of goods. The country has a well-developed logistics infrastructure, making it an attractive location for companies looking to set up fulfillment centers. The rise of omnichannel retail and the increasing trend of same-day and next-day delivery are expected to drive demand for fulfillment warehouses in Germany. However, the market may also face challenges such as rising labor and real estate costs.
Demand for Space Remains High
The German market for warehousing and logistics space recorded a total take-up result of around 8.5 million sqm in 2022. However, despite falling just short of the previous year’s record result (8.67 million sqm), it still exceeded the five-year average by 19%.
Most demand for space came from distribution / logistics companies with 34%, followed by retailers with 29%. Manufacturers assumed third place, increasing their share of total take-up from 19% in 2021 to 27% in 2022, with two transactions of more than 100,000 sqm contributing to this result: the securing of planning permission by Tesla for the construction of its new 327,000 sqm plant in Grünheide (registered in the first quarter); and the start of construction of a factory by NOKERA AG for the production of timber construction residential buildings in Möckern, Saxony-Anhalt.
Demand for space remains high with many companies expanding their production, storage and distribution capacities in Germany to achieve greater independence from global developments. However, the shortage of space is still a major challenge, with a distinct lack of modern logistics space and land available at short notice in many regions.
Rents in Major Logistics Regions
The main logistics regions in Germany are Hamburg, Berlin, Hannover, Münster, Bremen, Leipzig, Kassel, Düsseldorf, Frankfurt, Nuremberg, Mannheim, Karlsruhe, Stuttgart, Munich.
Besides the shortage of space, increased construction costs have been a major factor behind the rise in prime rents for warehousing space larger than 5,000 sqm in all Big 5 regions over the last twelve months. The prime rent has now exceeded €7.00/sqm p.m. in all Big 5 markets, with the strongest rises recorded in Munich (by 40% to €10.50/sqm p.m.), Berlin (by 36% to €7.50/sqm p.m.) and Düsseldorf (by 29% to €7.75/sqm p.m.). In Hamburg, it has risen by 23% to €8.00/sqm p.m. over the past twelve months and in Frankfurt, by 12% to €7.30/sqm p.m. We also expect prime rents to continue to rise in 2023.
Below we have summarized regional specifics for logistics space in Germany.
Warehouse Market In Berlin
Although the second half of 2022 was weaker than the first in terms of take-up, 2022 as a whole was very successful for the Berlin market. Around 1,119,300 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals, up 82% on the previous year (615,900 sqm).
A major contributor to the above-average result was the Tesla plant in Grünheide, with 327,000 sqm included in the figures for the first half of the year due to the receipt of planning permission (well after the start of construction). But even without Tesla, at 338,900 sqm, take-up in the second half of 2022 was slightly higher than in the corresponding period in 2021 (333,800 sqm). The industry ranking in 2022 as a whole was led by manufacturing with 43%. Retailers and E-commerce companies followed in second place with 28%, thanks to the conclusion of a number of deals including lettings by Sonepar of around 41,300 sqm and Lidl of around 39,000 sqm in Werder, and the deal struck by Picnic in Ludwigsfelde (approx. 32,000 sqm). The largest deals in the distribution / logistics sector were concluded by Schnellecke Logistics in Rangsdorf with around 32,700 sqm and VAH Jager in Oberkrämer with around 30,000 sqm.
Completions were also at record levels in 2022 at 580,600 sqm, up 186% on 2021 (203,000 sqm). There is currently around 301,600 sqm of warehousing space under construction in the region, with just 100,200 sqm of this still vacant. Available space in existing properties is also scarce and supply is very limited, especially in the urban area. The prime rent for warehousing space larger than 5,000 sqm increased from €6.25/sqm p.m. to €7.50/sqm p.m. due to the increasing space shortage.
Warehouse Market In Hamburg
Hamburg boasts a universal port in which goods of all kinds are handled. City is strategically important location for many logistics companies.
Around 475,000 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals in the Hamburg region* in 2022, 25% less space than in 2021. However, the result was just 1% down on the five-year average. The strongest demand came from retailers (39%) and distribution / logistics companies (37%), including the three largest deals of the year in which Aldi leased approx. 42,400 sqm in Stelle, Airbus Logistik approx. 29,500 sqm in Geesthacht and Pfaff Logistik approx. 29,600 sqm in Hamburg-Waltershof. The expansive demand from eCommerce companies has weakened slightly, as consumers are more hesitant to spend and order volumes are down due to rising inflation.
Around 426,000 sqm of warehousing space was completed in 2022, all of which has already been secured by tenants or owner-occupiers. This includes the speculatively built two-storey Mach 2 logistics property with 114,000 sqm, which was constructed by Four Parx in Hamburg’s Wilhelmsburg district and confirms the strength of demand for modern logistics space.
A further around 288,000 sqm of space is currently under construction with a third of this volume still available to the market, which could improve the supply situation. The space shortage, which is encouraging many companies to renew their existing leases instead of relocating, and increased construction costs have driven up rents. At €8.00/sqm p.m., the prime rent for warehousing space larger than 5,000 sqm has increased by €1.50/sqm p.m. since the end of 2021 and reached its highest-ever level.
Warehouse Market In Stuttgart
The economic strength of Stuttgart area is reflected in the growing demand for logistics space.
Main industries competing for space are manufacturing industry (incl automotive), followed by trading companies and logistics industry.
Around 272,000 sqm of warehousing and logistics space larger than 5,000 sqm was taken up in lettings and owner-occupier deals in the Stuttgart region* in 2022. The take-up volume has almost doubled compared to the previous year (+91%) and has increased by a significant 63% compared to the five-year average. Focusing only on the second half of 2022, this was weaker overall with a share of 36% of the annual take-up. Two major deals from the first half of the year are therefore decisive for the good annual result. The logistics service provider DSV leased around 60,000 sqm in Möckmühl in the Heilbronn administrative district and the retailer REWE secured around 40,000 sqm in Bondorf in the Böblingen area. In the Stuttgart region, 43% of space was taken up by distribution / logistics companies in 2022. Retailers and manufacturers followed with shares of 31% and 21%, respectively. There is an extremely tight supply of land and modern warehousing space in the region and construction activity, especially of a speculative nature, is very limited. This situation combined with the high demand for space has once again led to a significant rise in prime rents for warehousing space larger than 5,000 sqm in Stuttgart, from €7.65/sqm p.m. at the mid-point of the year to currently €8.30/sqm p.m. In addition to the city of Stuttgart, significant rent rises have also been observed in other locations in the region.
Warehouse Market In Munich
Around 198,000 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals in the Munich region* in 2022. This is around 18% below the previous year’s result and 24% below the five-year average. The largest deal of the year was concluded by an owner-occupier in Germering and involved DHL’s construction of a 14,000 sqm warehouse. At around 67,000 sqm, manufacturers accounted for slightly more than a third of the annual take-up. They were followed by companies from the distribution / logistics and retail sectors, each with an around 13% share. Approximately one third of take-up in 2022 was accounted for by deals involving units larger than 5,000 sqm. The still very low vacancy rate and scarcity of land ensure that enquiries for space in this size range in particular are difficult to meet. The completion of around 148,000 sqm of warehousing and production space in the second half of 2022 will not fundamentally change this situation, as all of this space will be occupied by the time it is completed and there is hardly any speculative construction activity in the Munich region. As the completion pipeline is limited, with a total volume of around 40,000 sqm anticipated for 2023 and 2024, an improvement in the supply situation is not currently to be expected. This demand pressure continues to drive up prime rents, especially for units larger than 5,000 sqm, with a rise in the prime rent to €10.50/sqm p.m. in the second half of the year. This is a very significant increase of 35% compared to €7.75/sqm p.m. at the mid-point of the year.
Warehouse Market in Frankfurt
Around 321,500 sqm of warehousing and logistics space was taken up in lettings and owner-occupier deals in the Frankfurt region* in 2022, the lowest result since 2009. A disappointing first quarter (47,400 sqm) was followed by an average second quarter (136,900 sqm), a weaker third quarter (86,300 sqm) and a very weak fourth quarter (50,900 sqm). Six deals involving units larger than 10,000 sqm were concluded and included lettings by a logistics service provider in Hammersbach (approx. 42,200 sqm) and a retailer in Raunheim (approx. 26,000 sqm). Most demand for space came from the distribution / logistics sector (41%), followed by retail (33%). The decline in take-up is not due to a drop in demand, but to the lack of space that can be acquired at short notice, which has become even more acute in recent months. This applies to both existing properties and development projects. The scarcity of land significantly restricts new construction activities. Of the space built in 2022 (around 171,900 sqm), just 2% was still available at the time of completion. As a result of this and the increased construction costs, rising rents are inevitable; the prime rent for warehousing space larger than 5,000 sqm has risen by 12% year-on-year to €7.30/sqm p.m. and a further rise can be expected over the next few months.
Comparing Warehouse Rents in Germany
Besides the shortage of space, increased construction costs have been a major factor behind the rise in prime rents for warehousing space larger than 5,000 sqm in all Big 5 regions over the last twelve months. The prime rent has now exceeded €7.00/sqm p.m. in all Big 5 markets, with the strongest rises recorded in Munich (by 40% to €10.50/sqm p.m.), Berlin (by 36% to €7.50/sqm p.m.) and Düsseldorf (by 29% to €7.75/sqm p.m.). In Hamburg, it has risen by 23% to €8.00/sqm p.m. over the past twelve months and in Frankfurt, by 12% to €7.30/sqm p.m. We also expect prime rents to continue to rise in 2023.
Top Warehouse Management Systems
The global market for Warehouse Management Systems (WMS) was valued at USD 2.3 billion in 2019 and is expected to reach USD 5.1 billion by 2025, at a CAGR of 16.0% from 2020 to 2025. The top players in the WMS market include Manhattan Associates (US), Blue Yonder (JDA Software) (US), HighJump (Körber) (US), Oracle (US), SAP (Germany), IBM (US), Infor (US), PSI (US), PTC (Germany), Tecsys (Canada), BluJay Solutions (UK), and Epicor Software (US).
In Germany, Austria and Switzerland alone, approximately 130 providers of IT systems can currently be identified as Warehouse Management Systems (WMS) in accordance to VDI Guideline 3601.
Cold Storage Providers
The cold chain logistics market is a fragmented market, and consists of a large number of local players . The following companies provide refrigerated warehousing / cold chain logistics in Germany: BITZER Kuhlmaschinenbau Gmbh., CDS Hackner GmbH., Wagner Group GmbH, Pfenning Logistics and Rite-Hite GmbH, Emder Kühlhaus Logistik.
Waredock in Germany
Waredock offers fulfillment and warehousing in Germany in different regions .Our vision at Waredock is a geographically dispersed fulfillment and warehouse infrastructure that is enabled by data insights across the supply chain. We are working with German 3PL companies, property owners, businesses small and large in a range of industries. We help businesses get greater coverage in more markets. Our network includes every warehouse type, with the certifications and designations to store any specialized product. And, we’ll provide picking, kitting, shipment consolidation, and more. Get started today!
