Market report North Rhine-Westphalia for H1 2022

Following the strong prior-year result of 163,000 m², take-up by all market participants of industrial and logistics properties and business parks for rental in Düsseldorf in the first half of 2022 has declined by a substantial 22.6% year-on-year. Nonetheless, take-up of 126,100 m² of industrial and logistics properties by all market participants is a good result and the second-strongest since 2018. This is also reflected by the five-year average, which is currently 116,914 m² and was topped by 7.9% in the past six months.

Retail is the leading sector for Düsseldorf’s industrial and logistics property market with a share of 71,300 m² or 56.5% (H1 2021: 48,900 m² or 30%). The sector thus made substantial gains in absolute terms, also increasing its relative importance among all sectors the most significantly with a rise of 26.5 percentage points. Picnic, Galaxus and NSB Polymers represent the three biggest deals signed in the retail sector. Combined, they account for 41,000 m² or 57.5% of the sector.

E-commerce is top of the retail category with 49,300 m² or 69.1% ahead of traditional retailwith 22,000 m² or 30.9%.

The logistics/distribution sector takes second place with 46,300 m² or 36.7% (H1 2021: 96,170 m² or 59%), having lost significant ground in terms of absolute take-up and relative importance (decrease of 22.3 percentage points). Three of the top five deals were made in this sector: Wisag Logistics (11,500 m²), Filzhut Lager+Logistik GmbH (11,000 m²) and Rhenus (10,000 m²), representing a combined total of 32,500 m² or 70,2 % of sector take-up.

In third place is manufacturing with 8,500 m² or 6.7% (H1 2021: 13,040 m² or 8%).

Prime rent increases by 18.9%

Prime rent for industrial and logistics properties and business parks reached its highest level to date in the first six months of the year with a substantial increase of 18.9% to EUR 7.25/m² (H1 2021: EUR 6.10/m²). According to our data, this is the biggest increase since records began, with the five-year average of EUR 6.07/m² having been exceeded by a whopping 19.4%.

The market for business parks and industrial and logistics properties in the Cologne metropolitan region has failed to match the strong figures for the first half of the previous year. We saw a decline of 33.7% to 129,200 m² of rental and owner-occupancy space in the first half of 2022.

The half-year result achieved by all market participants is nonetheless a good result following the absolute record in the previous year. Within the last five comparative periods, the take-up achieved between January and June 2022 is only just behind H1 2018’s 135,000 m², and thus the third-strongest of the past five first half-years. This is also shown by the five-year average of 119,791 m², which this time was topped by 8%.

Big boxes – i.e. large spaces upwards of 10,000 m² mainly used for logistics and with a maximum office share of 20% – made the biggest contribution to total take-up at 103,600 m² (80.2%), while business parks are responsible for 11,100 m² (8.6%). Leases for standalone or partial areas not located in either big boxes or business parks account for 14,500 m² (11.2%).

Like on other top NRW markets, most of the contracts in Cologne have terms of between five and ten years (70% of the total number of contracts). Around a seventh (approximately 15%) of deals were for terms of either one to four years or more than ten.

The largest project development is in Düren, where Logic Green is speculatively developing 30,000 m², which is expected to be finished in the first quarter of 2023. This space has already been let by us to the user Hammer GmbH & Co. KG.

Retail claimed 34,000 m² and thus 26.3% of total take-up in the first half of 2022. It has plummeted year-on-year, losing 100,000 m² of take-up in absolute terms or a relative share of 46.7 percentage points. The biggest contribution within the sector came from e-commerce with 32,300 m² (95%), while conventional retail lost took up just 1,700 m² (5%).

In third place is manufacturing with currently just 11,000 m² or 8.5% (H1 2021: 9,750 m² or 5%). In last place is the miscellaneous “Other” category with 1,900 m² (1.5%).

Prime rent increases by 17%

Following the extremely moderate increase in prime rent in the previous first half-year of 0.9% to EUR 5.85/m² in H1 2021, the prime rent has risen faster than ever before over the past half-year. It has increased by 17% to the current high-to-date of EUR 6.85/m². The five-year average of EUR 5.76/m² has also been topped by a significant 18.9%.

Like other top markets in North Rhine-Westphalia, the Ruhr region once again recorded losses in the letting and owner-occupancy of logistics and industrial space and business parks in the first half of 2022. According to our data, the market was unable to match the previous year’s level of 290,000 m² and declined by 8.9% to take-up of 264,200 m² by all market participants in the first half of the current year.

This represents the second-weakest figure in the history of the first halvesof the past five years. Only H1 2018 was lower by around 30% at 185,000 m². However, it is only around 5% below the current five-year average of 278,895 m².

Demand for space among manufacturers, retailers and their logistics providersremains undiminished. However, there is a lack of available space and project developments.

All take-up was in third-party properties, i.e. the market did not record any owner-occupancy deals.

According to our analysis, the majority of take-up is attributable to big boxes with 171,500 m² or 64.9 %, We define this category as 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 account for only 9,200 m² or a share of 3.5%. A total of 83,500 m² or 31.6% of all space was rented in other free-standing properties that cannot be classified as either business parks or big-box properties.

Most leases for industrial and logistics properties and business parks in the Ruhr region were concluded with a term of 5 to 10 years. Around 25% were attributable to terms between 1 and 4 years, while very long-term leases of 10 years or more accounted for around 10%.

In the Ruhr region, logistics/distribution was the leading sector again in the first six months of the year with 190,000 m² or 71.9% (H1 2021: 107,300 m² or 37%). It thus marked the biggest relative increase year-on-year at 34.9 percentage points. The top deals included ITG at 50,000 m², followed by JW Fulfillment at 28,000 m², C & K Logistik at 26,900 m² and JD.com at 16,147 m².

In second place with 23.7% or 62,500 m² was the retail sector, which had come first in the same period of the previous year. Compared to 145,000 m² or 50% in H1 2021, it lost considerable ground in both absolute and relative terms (down 26.3 percentage points). The biggest contribution came from e-commerce with 46,000 m² or 73.6%, followed by traditional retail with 16,500 m² or 26.4%. With the Deichmann deal for 24,226 m², one of the top deals was attributable to the overarching category of retail and accounted for 38.8% of total take-up in this category.

In third place is the manufacturing sector with 11,700 m² or 4.4% (H1 2021: 8,700 m² or 3%).

Prime rent increases by 6.6%