In the first three quarters of 2019, the volume of new construction fell by around 26 per cent compared with the first three quarters of the record year 2018. This is a sign that Germany's economic weakness is also having an impact on the logistics markets.
Logivest acts as consultant and broker in Kamen
The volume of new construction on the logistics real estate market declined again in the third quarter of 2019. The trend of the previous quarters thus continued. In the third quarter of 2019, only around 717,000 square meters were newly built. In the second quarter of 2019 it was still more than one million square meters, in the first quarter of 2019 even 980,000 square meters. This sum of approx. 2.8 million square metres for the first three quarters is well below the level of the previous year's period of 3.7 million square metres. The direct comparison with the third quarter of 2018 is also clear: 1.2 million square metres were created at that time. This is a result of the current logistics property Seismographen, which is published every quarter by the logistics property consultant Logivest.
"New construction on the logistics real estate market has collapsed compared to the previous year," says Kuno Neumeier, Managing Director of Logivest GmbH. "This decline can no longer be explained solely by the shortage of space - many companies are reluctant to build new logistics properties due to the economic situation. "The logistics sector is regarded as a classic indicator for the development of the German economy in the coming months". It therefore remains to be seen whether the declining volume of new construction on the logistics real estate market will also forecast black clouds for the further development of the German economy as a whole. However, there is also good news with regard to the logistics real estate investment market. "The restrained volume of new construction shows that investors are acting prudently despite the high price level and that the danger of a construction bubble in the logistics investment market is low.
Top 3 regions far behind from 2018
Although the shortage of space applies to some high-priced logistics regions such as Hamburg (top rents of around 6.40 euros per square metre) and Munich (top rents of around 8.00 euros per square metre), the volume of new construction there was already rather low in 2018. The three regions with the largest volume of new construction in 2018 were unable to follow this trend in the first three quarters of 2019. The Eastern Ruhr Area, for example, fell from 354,000 square meters in 2018 by around 70 percent to around 103,000 square meters, Rhine-Main by 46 percent to 170,000 square meters and Hanover by 37 percent to 190,000 square meters. The most dynamic regions in terms of new construction volume so far this year were Duisburg/Niederrhein with around 290,000 square meters, followed by Bremen/Bremerhaven with 220,000 square meters and Berlin/Brandenburg with a good 217,000 square meters.
Edeka and Reuter with largest new building developments
EDEKA Rhein-Ruhr in Oberhausen implemented the largest new construction development in the past quarter. On the 279,000 square metre Waldteich site in the north of Oberhausen, a modern logistics centre for supplying food and beverage markets in the Rhine-Ruhr region is being built following the renovation of the former coal warehouse. The second largest logistics location is the e-commerce dealer Reuter in Mönchengladbach-Rheindahlen. A logistics centre measuring around 32,000 square metres is being built on 80,000 square metres of land.
Forecast
"It is now clear that the record level of 2018, with over five million square metres of new construction in 2019, cannot be repeated," summarises Neumeier. "With a view to the final quarter, it remains to be seen whether the four million mark can still be reached. To achieve this, new construction development in the last quarter would have to amount to around 1.2 million square metres. In view of the major projects already announced, this development cannot be ruled out," predicts Neumeier.
