Chart of the Month October: Boom in the peripheral locations
The recently published study "Logistics and Real Estate 2023" shows: former "second-tier" regions are increasingly in demand - even those outside the classic logistics regions. And the trend is continuing.
The fears of many market players do not seem to be coming true. Many had feared a slump in completion figures for 2023 due to increased financing, construction and energy costs as well as a possible decline in demand, for example from the manufacturing industry. As things stand, however, this will be less severe than many market players feared.
It is noticeable that some logistics regions in the east of the country, such as Halle/Leipzig, A4 Thuringia and Magdeburg, are among the regions with the highest new space additions and are developing positively. More and more speculative construction is taking place here. Even peripheral locations outside the established logistics regions are clearly gaining in importance. Recently, in a conversation with a market player, the following sentence was uttered: "For a modern hall, photovoltaics on the roof and otherwise ESG-compliant, we get at least 6.00-7.00 euros per square metre in the current market environment, regardless of where the hall is located". Admittedly, the sentence is certainly a bit pointed, but it shows a trend that can also be clearly seen in the figures.
Land availability and energy efficiency or ESG compliance are sometimes more important than proximity to a metropolis or belonging to a logistics region. Compared to a share of 23 % held by peripheral locations in the overall development volume on a long-term average (2012-2022), the pipeline in particular shows a very clear trend here.
Similarly, this shift in demand is also evident when looking at the take-up of space in Germany's logistics regions. Former regions of the "second-tier locations" can combine a take-up that equals the average take-up of the A-locations.
Looking at the pipeline, the year 2023 could also achieve a high completion volume. However, it can currently be observed that many project developers of logistics properties are postponing or cancelling planned projects. The more than 6 million sqm of new construction space that bulwiengesa's RIWIS database reported just a few months ago with a completion date of 2023 will most likely not be reached.
Note: You can download the study here free of charge: https://logistics-and-real-estate.com/