Market report Hamburg half year 2024

- About the logistics market in the economic region

On the property and owner side, too, there is currently little evidence of entrepreneurs focusing on opportunities. Project developers are postponing new speculative projectdevelopments and only building to suit. This trend is exacerbated by the fact that there are only a few plots of land available for development for production and distribution space in the Hamburg area and the metropolitan region - despite a growing population.

Downward spiral already started in 2022
The downward spiral in the port metropolis began as early as 2022, with a 21.9% drop in take-up from 320,000 m² to 250,000 m² in 2021 and a delta of -12% to 220,000 m² in 2023. A look at the average figure for the past five first half-years, which currently stands at 219,000 m², reveals a significant difference of 36%.

As in the same period of the previous year, transactions in existing properties accounted for the majority of take-up, but at 82% or 115,000 m², their dominance is increasing (H1 2023: 69.1% or 152,000 m²; in absolute terms, there was a decline of 37,000 m² or 24.3%). Contracts in new-build properties totalled 25,000 m², which corresponds to a 17.9% share of total take-up. Starting from 68,000 m² in the same period of the previous year, the slump in take-up was almost two thirds (-63.2%). The overall weak result is due almost equally to existing properties (-37,000 m² of the total decline or 46%) and new builds. New construction (-43,000 m² of the total year-on-year decline of -80,000 m² or 54%) was hit somewhat harder.

Conversely, transactions in former brownfield space played no role in the past six months, as in the same period of the previous year. The potential for brownfield sites that are suitable for development or ageing properties in the city with Germany's largest seaport is enormous. The market lacks modern, sustainable properties that can be used by third parties.

Renting instead of owner-occupation
In the first half of 2024, Hamburg's industrial and logistics property market is still almost exclusively a tenant's market(132,000 m² or 94%), with owner-occupiers accounting for just 8,000 m² or 6% of the total result (2023: 92% tenant share and 8% owner-occupiers). In absolute terms, take-up by tenants fell by a significant 69,500 m² (from 201,500 m² to currently 132,000 m²), followed by owner-occupiers with -10,500 m² (from 18,500 m² in the first half of 2023 to currently 8,000 m²).

Business parks ahead of big box logistics properties
In terms of building type, businessparks continue to lead the way in the Hamburg metropolitan region (99,000 m² or 70.7%, up from 144,200 m² in H1 2023), followed by big box logistics properties (41,000 m² or 29.3%, up from 75,800 m² in H1 2023). In absolute terms, however, business parks recorded a sharper year-on-year decline in take-up of -45,200 m² or -31.3% than big box deals with -34,800 m² or -45.9%. Just two years ago, almost three quarters of all space taken up, or 182,500 m², was taken up in big box properties. These figures illustrate that companies are currently increasingly focussing on smaller units when signing new leases.

The South region, which has consistently been in first place since H1 2019, fell to second place with 44,500 m² or 31.8% (coming from 81,400 m² or 37%). In absolute terms, this region recorded the second sharpest decline of all regions with a drop of 36,900 m² or 45.3%, and also undercut the 5-year average of 97,480 m² by a significant -54.3%. The two top signings are FW Fulfillment + Logistik GmbH (9,000 m²) and Nefab Packaging Germany GmbH (7,500 m²), which contributed a total of 16,500 m² or 37.1% of the region's take-up.

In third place is the West region with 12,500 m² or 8.9%, coming from 79,200 m² or 36% (-66,700 m² or -84.2%). The 5-year average of 25,740 m² was missed by 51.4%. The top contract signed by DREI-D Direktwerbung GmbH & Co. KG accounted for 7,500 m² and thus around 60% of take-up in the region.

The North region is in last place with 10,500 m² or 7.5%, coming in third place with 33,000 m² or 15%. In percentage terms, this region recorded the second largest year-on-year decline at -68.2% or 22,500 m² in absolute terms, with only around a third of the 5-year average of 32,200 m² currently achieved (67.4% short of the target).

The West region is mainly responsible for the weak first half of the year in terms of its share of the year-on-year decline totalling 80,000 m² with 52.9% or -66,700 m², followed by the South region with 29.3% (36,900 m²) and the North region with 17.8% (-22,500 m²). The growth of 46,100 m² in the East region was unable to offset the declines in the other regions.

Only the first-placed logistics/distribution sector was able to expand its market share with 86,500 m² or a share of 61.8%, up from 79,600 m² or 36.2% in H1 2023. In absolute terms, the result from the current half-year is 6,900 m² higher than the first half of 2023, while the proportion of total take-up increased by 25.6 percentage points. Nevertheless, the 5-year average of 109,530 could not be maintained and was undercut by 21%. Three of the top five deals fall into the logistics/distribution category and account for a total of 25,500 m² or 29.5% of take-up in the sector.

Both sub-categories are significantly below their respective 5-year averages: the average for traditional retail is 35,067 m² and was missed by 57.2%. E-commerce underperformed its average of 14,933 m² by 43.1% with the current result.

In third place is manufacturing with 20,000 m² or 14.3%, followed by second place with 76,600 m² or 34.8%. In absolute terms, the most significant decline in take-up was recorded here with -56,600 m² or -73.9%. The result is around a quarter of the previous year's figure. Proportionally, the category also lost the most at 20.5 percentage points, falling from a 34.8% share of take-up in H1 2023 to 14.3% currently. In the clearly below-average first half of the year, the 5-year average of 42,120 m² was undercut by a significant 52.5%.

The miscellaneous category is still in last place with 10,000 m² or 7.1%, down from 19,800 m² or 9% (-9,800 m², which is equivalent to a halving and 40.2% below the 5-year average of 16,730 m²).

In terms of the sectors’ share of take-up, companies from the logistics/distribution sector contribute 56,600 m² or 73.9% less space than in the same period last year. At 65.1%, manufacturing is primarily responsible for the total year-on-year decline of -86,900 m². This is followed by retail with a share of 23.6% (or -20,500 m²) and other with 11.3% (-9,800 m²). The growth in logistics/distribution with +6,900 m² or +8.7% could not offset these declines.

Total loss of large spaces

In 2023, as in the same period the previous year, large spaces of 10,001 m² or more accounted for the highest share 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.

Larger spaces between 5,001 and 10,000 m² are thus up one place year-on-year and are currently in first place with 51,500 m² or 36.8%, up from 55,000 m² or 25%. In absolute terms, larger spaces fell by 3,500 m² or 6.4%, but were able to exceed the 5-year average of 43,500 m² by a significant 18.4%. Due to the absence of large deals of over 10,000 m², all categories were able to increase their share of take-up, with the category of 5,001 to 10,000 m² recording the most significant increase of 11.8 percentage points.

Medium to large spaces between 3,001 and 5,000 m² occupy the penultimate, fourth place with 25,000 m² or 17.9 %, coming from last place with 24,200 m² or 11%. In absolute terms, they increased by 800 m² (or 3.3%). The 5-year average of 24,400 m² was exceeded by 2.5%.

Smaller spaces of between 1,000 and 3,000 m² are again in third place with 28,500 m² or 20.4%, up from 33,000 m² or 15%. In absolute terms, the decline amounts to 4,500 m² or 13.6% (second largest decline after large spaces over 10,000 m²). The 5-year average of 34,220 m² was missed by 16.7%.

Very small spaces of less than 1,000 m² recorded a very good first half-year with 35,000 m² or 25% and are in second place, coming in at 32,000 m² or 14.5% (4th place). In absolute terms, they recorded the highest growth of all size categories with 3,000 m² or 9.4%. Of all size categories, they have exceeded their 5-year average of 23,500 m² most significantly at 48.9%.

Outlook

In our observation, the market is turning towards users. In order to reduce vacancies or prevent them from arising in the first place, landlords are increasingly willing to offer incentives for example in the form of rent-free periods. A revitalisation of the market is conceivable, as further interest rate cuts are likely and companies will be able to invest more again. We expect take-up by all market participants to reach around 300,000 m² by the end of 2024.