Market report Hamburg full-year 2023

- About the logistics market in the economic region

It is a clear continuation of the negative trend from 2022, which saw a drop of 22.2% or 140,000 m² to 490,000 m² of total take-up following a record year in 2021, in which take-up was 630,000 m². Over the past two years as a whole, the market has fallen by a total of 330,000 m² in newly let space. According to our analysis, the continued negative trend also meant that the five-year average take-up of 460,000 m² was missed by a significant 35%.

The massive decline in space in Hamburg's market for owner-occupied and rented warehouse, logistics and industrial space is primarily due to an uncertain economic environment and geopolitical tensions. User companies are being cautious with their investments, securing existing space and taking a wait-and-see approach. In addition, there are hardly any ESG-compliant products available to companies in the large-volume sector with plans for changes or to expand – either in existing properties or in the near future as part of newbuilds. These spaces have been absorbed by the market in recent months.

In view of the continuing high construction and financing costs, there are currently almost no new large-volume, speculative project developments. Furthermore, there are virtually no properties available for this purpose in the Hamburg market area. Project developers are of necessity holding back on speculative newbuilds, outlining the situation on the market at the start of 2024. Inflation is expected to continue to fall. The central banks are therefore expected to start cutting interest rates from the middle of 2024 onwards. This will increase companies' willingness to invest.

Geopolitical uncertainties and a shortage of available space remain, however. We therefore expect take-up by the end of 2024 to stay at a similar level to 2023, i.e. 300,000 m² up to a maximum of 350,000 m².

Existing properties dominate the market
Lettings in existing properties were the main drivers behind the majority of the take-up in Hamburg's owner-occupier and rental market, accounting for around 70% or 208,500 m². The agreements concluded by the electronics retail chain MediaMarktSaturn for 14,600 m² and the specialist wholesaler IGEPAGroup for 13,500 m² contributed a total of around 25,000 m² or 12% of the take-up of existing properties. Newbuilds accounted for 91,500 m² of take-up, with three of the five top deals contributing a total of 51,300 m² or 56% of newbuild take-up. These include the logistics company TST GmbH with 21,300 m² as well as the jewellery company PandoraGroup and the logistics company NagelGroup, each with 15,000 m². We have not registered any land use in former brownfield sites.

Big-box properties experience high bloodletting - business parks attract large influx
While big-box properties still clocked 76% or 372,400 m² in the previous year of 2022 as a whole, they currently account for only 98,500 m² or 32.8%, a drop of 273,900 m² or 74%. In contrast, the use of business parks saw high growth in 2023. Take-up in this building class almost doubled to 67.2% or 201,500 m² in 2023, up from 102,900 m² or 21% in 2023. Properties that were neither located in business parks nor belong to big boxes currently have no significant market share, coming in at 3% with 14,700 m².

Few transactions by owner-occupiers
The Hamburg market remained a predominantly letting market in 2023. Take-up of 259,000 m² or 86.3% was recorded in the books, down from 328,300 m² or 67% in 2022. Owner-occupiers accounted for 41,000 m² or 13.7% in 2023. They played a much greater role in 2022, contributing almost one in three square metres of take-up at 147,000 m² or 67%.

Two of the top contracts were signed in the south of Hamburg: TSTGmbH's deal for 21,300 m² and MediaMarktSaturn deal for 13,500 m² contributed a total of 36.3% of take-up. Hamburg East once again took second place with 81,000 m² or 27%, losing the second-most take-up after the South in top spot, having started out at 151,900 m² or 31%. The delta is 70,900 m² or 46.7%, meaning that take-up has almost halved. In relative terms, however, the submarket lost only slightly in importance, falling by four percentage points. Three of the five top deals were signed in Hamburg East and contributed a total of 43,500 m² or 53.7% (NagelGroup with 15,000 m², PandoraGroup with 15,000 m² and IGEPAGroup with 13,500 m²).

Previously in last place, the western submarket now sits third with 69,000 m² or 23%, up from 24,500 m² or 5%. It is the only submarket that was able to gain in importance in 2023 (+18 percentage points), and it did this with a significant increase of 44,500 m² (+182%), thus almost tripling in size. This is not only a higher figure compared to the previous year, but also exceeds the five-year average for the Hamburg West submarket of 44,500 m² by 55%.

Previously in third place, the HamburgNorth market drops to last with 51,000 m² or 17% after starting out at 53,900 m² or 11%. In absolute terms, it has moved virtually sideways after recording only a slight decline of 2,900 m² or 5.4%. The submarket gained slightly in importance in relative terms (+ six percentage points), but not enough to hold its own against the Western submarket.

The logistics/distribution sector leads the rankings with 104,000 m² or 34.7%, moving up from second place with 200,000 m² or 41% and taking top spot for the sixth time since 2016. In absolute terms, there was a significant year-on-year decline in take-up totalling 96,000 m² or 48%, although this was only a moderate relative decline of six percentage points. Logistics/distribution gained one place in the rankings in particular because of the significantly poorer performance produced by retail, which still held top spot in 2022 as a whole. Two top deals contributed a total of around 36,300 m² to take-up in the sector, which corresponds to around 35% (TSTGmbH with 21,300 m² and NagelGroup with 15,000 m²).

Currently accounting for just 79,000 m² or 26.3%, the previous leader, the retailsector, drops to third. Starting out at 220,500 m² or 45% in 2022, it lost the majority of take-up in a year-on-year comparison with a delta of 141,500 m² or 64.2%. This means that last year retail recorded around only a third of the previous year's take-up. A drop of 19 percentage points constitutes the largest slump in importance in relative terms, while the long-term five-year average of 144,240 m² has now been undershot by 45.2%.

Within the retail sector, traditionalretail made the largest contribution with 64,500 m² or 81.6%, down from 147,000 m² or 67%. E-commerce currently accounts for 14,500 m² or 18.4% (2022: 73,500 m² or 33 %). The transactions concluded by MediaMarktSaturn for 14,600 m² and by the IGEPAGroupfor 13,500 m² contributed 36% to the take-up of retail space. The miscellaneous category "Other" remains in lastplace with 32,000 m² or 10.7% (2022: 14,500 m² or 3%), which represents an increase of +17,500 m², more than double the previous year's figure and an increase of eight percentage points.

Large spaces down 68%

In 2023, as in the same period the previous year, large spaces of 10,001 m² or more accounted for the highestshare of take-up at 30.3% or 90,800 m², but this is down significantly from 333,200 m² or 68%. In absolute terms, the decline in take-up is a very sizeable 242,400 m² or 72.7%, which means take-up was able to put together around only a quarter of the figures for the previous year, 2022. It also means that the relative importance of large spaces also plummeted by 37.7 percentage points. While these spaces accounted for around 7 out of 10 square metres taken up in the same period in 2022, this figure will be around only 3 out of 10 in 2023 as a whole.

This size category increased by 11,700 m² (+47.8%) in absolute terms and by seven percentage points in relative terms. Medium to smaller spaces of between 1,000 and 3,000 m² combine to account for the thirdmostspace with 51,000 m², remaining in third place but up from 39,200 m² or 8%. It can this point to an increase of 11,800 m² or 30.1% in absolute terms and nine percentage points in relative terms.

Very small spaces of less than 1,000 m² have dropped two ranks and account for 50,500 m² or 16.8% of take-up, leaving this category in fourthplace. In absolute terms, it is the only size category apart from large spaces of 10,001 m² or more to lose space compared to the previous year (-8,300 m², -14.1%), although it was able to make moderate gains in relative terms (+4.8 percentage points).

Prime and average rents are rising due to low vacancy rates and demandexceedingsupply for high-quality space in existing and new buildings.