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Market report Berlin for half year 2022
- About the logistics market in the economic region
Market report on letting of logistics properties and industrial sites in the Greater Berlin area for H1 2022
According to our data, the Berlin logistics property market reached its absolute all-time high with take-up of 785,300 m² in the first half of 2022. Take-up thus almost tripled year-on-year with growth of 172.3% (H1 2021: 288,400 m²).The level of this record figure is due to the Tesla deal for 327,000 m²in Grünheide in the first quarter of 2022. But even without this deal, the first half of the year would be the strongest ever recorded at 458,300 m², which is 58.9% higher than the previous year’s figure.
The annual average for the past five years is currently 335,840 m², and the development in the first six months was also exceeded by an impressive 133.8%. The Tesla deal alone would almost be enough to reach the five-year average in Berlin.
The Berlin metropolitan region is currently an absolute rental market. Up to ten potential users are interested in one property. The high demand overhang means that space is increasingly going to the highest payer. Proof of good creditworthiness is becoming a mandatory condition for getting any viewing appointments at all.
- New buildings ahead of existing properties in contrast to previous year
- NEW: Analysis of take-up by owner-occupiers/ third-party users
- Highest take-up was in surrounding area east of Berlin
- NEW: Take-up analysis by big box, business park and other
New buildings ahead of existing properties in contrast to previous year
Overall, leases for 655,600 m² of space for new buildings were concluded from January to June this year, corresponding to a market share of 83.5%. This figure thus increased more than sixfold compared to the same period of the previous year (H1 2021: 98,900 m², 34.3% of the total market).
Existing space accounted for 129,700 m² or 16.5%, as compared to 189,500 m² or 65.7% in the same period of the previous year (a 31.6% decline in absolute terms). But even without Tesla, the previous year’s ratio of new buildings to existing properties would have been inverted: Without Tesla, new buildings accounted for 71.7% of take-up and existing properties for 28.3%.
Analysis of take-up by owner-occupiers/ third-party users
In our latest Berlin market report, we analysed how much space is attributable to letting and how much to own use for the first time.
In the first half of the year, the ratio of third-party use/letting to the owners’ ownuse of industrial and logistics space was almost evenly balanced. We registered a total of seven leases with owner-occupiers, adding up to 393,400 m² or 50.1% of total take-up. Spaces not owned by the user amounted to 49.9% or 391,900 m². This third-party user category is much more commonly represented, with a total of 62 leases. Not including the Tesla deal, the market would have been a clear “third-party user” market at 85.5%.
Take-up analysis by big box, business park and other
Another new aspect included in our market report is an analysis of the properties by use/building type. According to our data, 210,300 m² or 17 of the total of 69 deals in the first half of 2022 were attributable to modern “big box” logistics, i.e. the category of large spaces of 10,000 m² or more, with logistics as the main type of use and an office share of no more than 20%.
Business parks accounted for 59,000 m² or 28 deals. We define a business park as a contiguous business district that is developed and implemented by private enterprises with a uniform concept and whose infrastructure is used jointly by the companies based there.
In total 516,000 m² or 24 deals are attributable neither to traditional business parks nor to big box logistics. These include Tesla. The remaining 189,000 m² were mostly let in smaller stand-alone buildings, either as entire individual properties or parts of properties.
Highest take-up was in surrounding area east of Berlin
The highest take-up in H1 2022 was recorded by the surrounding area east of Berlin with a share of just under 46.2% or 363,200 m². This region posted the strongest relative increase of 32.2 percentage points compared to H1 2021 (pro rata take-up in H1 2022), primarily due to the Tesla deal in Grünheide.
In second place was the surrounding area south of Berlin with a share of 23.6% or 185,000 m² of total take-up.
The surrounding area south of Berlin lost ground in terms of relative importance with a decline of 16.4 percentage points (due to the major Tesla deal), but increased its take-up by 61.9% in absolute terms.
Three of the top deals are attributable to the surrounding area south of Berlin and contribute around 44.9% of this region’s take-up with a total of 83,314 m²:
- Picnic with 32,000 m² (new business) in Ludwigsfelde
- Schnellecke with 30,800 m² (new business) in Rangsdorf
- Hive with 20,514 m² (expansion) in Rangsdorf
In third place is the city of Berlin with a share of 18.6% or 145,600 m², which thus increased by around 45,000 m² in absolute terms (around 44.3%). However, it lost the most ground out of all regions in terms of its relative share of take-up, with a year-on-year decline of 16.5 percentage points (H1 2021: share of city of Berlin of 35%; 100,900 m²). This is attributable to the strong result in the surrounding area east of Berlin, due to the Tesla deal.
Within the city of Berlin’, the inner-city area in the south dominated with 51% of take-up or 74,200 m², thus increasing by 18.9 percentage points year-on-year (H1 2021: 32.1% or 32,400 m²). Eastern Berlin accounted for 29.9% or 43,600 m² and northern Berlin for 4.6% or 6,700 m².
In fourth place out of all regions (city of Berlin and surrounding areas to the north, east, south and west) was the surrounding area to the west with a share of 11.6% or 91,000 m². At over 32,738 m² and 26,310 m², the two Lidl deals in Werder and Marquardt together account for the majority of take-up in the region with a total of 59,048 m² or 64.9% (second- and fifth-biggest deals in the first half of 2022).
There were no deals in the surrounding area to the north.
Lessors with highest take-up
Tesla, approx. 327,000 m² (New business), Manufacturing
Lidl, approx. 32,738 m² (Expansion), Retail
Picnic, approx. 32,000 m² (New business), E-Commerce
Schnellecke, approx. 30,800 m² (New business), Logistics
Lidl, approx. 26,310 m² (Expansion), Retail
Hive, approx. 20,514 m² (Expansion), Logistics
Manufacturing leads sector ranking
In the lead in terms of take-up in the first half of the year was the manufacturing sector with a share of 48.3% or 379,400 m². This was also chiefly due to the Tesla deal. After being in second place in the previous year with 89,100 m² or 30.9%, the sector more than quadrupled its absolute take-up and marked an increase of 17.4 percentage points in relative terms.
It was followed in second place by retail, which accounted for 215,400 m² or 27.4% and thus more than tripled its take-up in absolute terms and increased its relative share by 5.3 percentage points (H1 2021: 63,700 m² or 22.1%).
Three of the top deals were attributable to the retail category, contributing 91,048 m² or around 42% of take-up. Traditional retail accounted for 123,000 m² or 57.1% of take-up. Two of the top deals – Lidl with two leases for 32,738 m² in Werder and for 26,310 m² in Marquardt – were attributable to traditional retail. With a total of 59,048 m², they accounted for around 48% of take-up in this sub-category.
In the H1 2022 reporting period, 92,400 m² of logistics space was newly let by the online retail sector in the Berlin market area. This represents 42.9% of all space taken up by retail. The top deal in the e-commerce category is Picnic with 32,000 m² or around 35%.
In third and fourth place are logistics/distribution with a share of 17.5% or 137,300 m² and the miscellaneous category “Other” with a share of 6.8% or 53,200 m².
Large spaces dominate at 76.1%
Overall, we registered 69 deals, 11 fewer than in the first half of 2021.
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The biggest share of space was accounted for by the category of areas of 10,000 m² or more at 76.1% or 597,500 m². This category had ranked second in the previous year with a share of just 29% or 81,900 m², but had the biggest increase of any size category in the first half of 2022 (up 47.1 percentage points).
There was also a strong increase in absolute terms: Compared to the same period of the previous year, more than seven times as much take-up was attributable to the largest size category in H1 2022. All of the deals with the highest take-up and particularly the Tesla deal were attributable to this segment. With a total of 469,362 m², the six biggest deals in H1 2022 contributed around 79% of take-up in the >10,000 m² category. This category had 12 of the 69 deals in the first half of the year (17%), the second-lowest figure.
Space in the 5,001 to 10,000 m² size category took second place with a share of 14.4% or 113,200 m² and 14 deals attributable to this category. Five deals – seven fewer than in the same period of the previous year – were attributable to the 3,001 to 5,000 m² size category (18,300 m² or 2.4%). The most leases were concluded in the 1,000 to 3,000 m² segment, with 23 deals representing 5.9% or 46,500 m². The smallest spaces of 1,000 m² or less brought up the rear with 9,800 m² or a share of 1.2%; a total of 15 deals were attributable to this segment.
Prime rent increases to EUR 7.90
The prime rent has developed very dynamically over the past five years and reached its highest level to date at EUR 7.90/m² in the first half of 2022. It thus increased by5.3%. By way of comparison, the highest increase in the past five years took place in H1 2018, when the prime rent rose by 19.6% from EUR 5.10/m² to EUR 6.10/m².
The current prime rent is 11.6% higher than the five-year average for the first half of the year of EUR 7.08/m².
Average rent up 15.3%
Average rent saw a similarly dynamic development, consistently becoming more expensive over the past five years with the exception of 2019 (stagnation). It most recently increased by an impressive 15.3% or almost EUR 1/m² to its highest level to date of EUR 6.80/m², compared with EUR 5.90/m² in H1 2021. Here, too, the highest increase was recorded in H1 2018 with growth of 22.2% from EUR 4.50/m² to EUR 5.50/m².
Forecast to 2024
At first glance, potential users have the impression that there is currently still sufficient space available. For the most part, however, they have already been pre-let or finally negotiated and are only waiting for the building permits or the final signatures. The Berlin industrial and logistics space market is developing in a similar way to the Munich metropolitan region, for example, which has not recorded a vacancy for years. Every user who operates logistics keeps his space - also to prevent competitors from expanding their market share.
We assume that in the third quarter of 2022, contracts will be signed for around 100,000 m² of new space in big boxes. The contracts for this have already been signed, but they do not appear in the half-year figures as the building permits are still outstanding. In addition, only a few selected remaining spaces with a volume of around 40,000 m² will be available to users of large spaces in the current year.
According to our estimates, full occupancyof industrial and logistics space larger than 5,000 m² will subsequently be achieved in the fourth quarter of 2022 in the Berlin metropolitan region. All that will remain is the significantly aging stock that can no longer be used for logistics and e-commerce.
The next available new large spaces will not come onto the market until 2023 and 2024.