Market report North Rhine-Westphalia full-year 2023

The market for rental and owner-occupied industrial and logistics properties in North Rhine-Westphalia continued the downward trend of the previous year, albeit at a slower rate. Take-up by all market participants amounted to 885,600 m² in 2023.

The market does not have any large-scale new-build developments – in either the speculative or the built-to-suit segment. This is also hampering the ongoing development of companies in the retail, manufacturing and logistics sectors that want to expand or consolidate in ESG-compliant properties. The last time that take-up by all market participants fell below the 1 million m² mark was in 2018 (971,000 m²). After 753,000 m² in 2017, 2023 was the second-lowest year as a whole on our records.

Decline in new-build utilisation of approximately 30%
Lettings of existing properties took the lead in 2023, accounting for take-up of 505,600 m² or 57.1% (2022: 555,688 m² or 53.7%), a year-on-year decrease of around 50,000 m² (down 9%). Rentals and owner-occupancy in new-builds accounted for just 261,800 m² or 29.6% overall (2022: 370,900 m² or 35.9%) and, down by around 110,000 m² or 29.4%, were largely responsible for what was a weak year overall on the NRW market. Brownfields accounted for 118,200 m² or 13.3% (2022: 107,440 m²), making them the only category to achieve growth with an increase of 10,760 m² or 10%.

Sub-market rankings: Ruhr area still number 1
The NRW sub-market with the highest take-up was once again the Ruhrarea with 450,440 m² or 50.9% (2022: 519,430 m² or 50.2%). One in every two square metres of take-up on the three top NRW logistics and commercial property sub-markets was located in this region in 2023. Take-up in Düsseldorf amounted to 267,100 m² or 30.2% in 2023 (2022: 265,200 m² or 25.6%), followed by the Cologne sub-market at 168,100 m² or 19%.

Big box properties accounted for more than two thirds of total take-up, i.e. 597,000 m² or 67.4% (2022: 720,000 m² or 69.6%). Properties not allocated to either big box or business parks came in second at 216,100 m² or 24.4% (2022: 234,000 m² or 22.6%). Business parks again ranked third at 72,500 m² or 8.2% (2022: 79,895 m² or 7.7%). The biggest year-on-year difference is the lack of lettings or owner-occupancy in big box properties, which declined by 123,000 m². Other properties were down by just 7,395 m² and business parks by 17,938 m².

At 853,400 m² or 96.4%, the logistics and commercial property market in NRW was once again predominantly a tenants’ market (2022: 895,130 m² or 86.6%). Owner-occupier contracts remained rare, representing just 32,200 m² or 3.6% of the market. This is also true of the 2022 comparative period, when owner-occupiers accounted for 138,900 m² or 13.4% of market share.

This means that take-up was only around half of the previous year’s level, and the shortfall on the average for the past five years of 55.6% also reflects the high level of restraint in the sector. The biggest contribution to take-up within the retail category was made by traditional retail with 114,700 m² or 58.5% (2022: 177,300 m² or 44.3%, down 35%). Companies in the e-commerce sector accounted for just 81,300 m² or 41.5% (2022: 223,170 m² or 55.7%, down 64%).

In thirdplace and therefore moving up one place was the miscellaneous “Other” category at 146,200 m² or 16.5%, up from 50,610 m² or 4.9%. Virtually tripling to 95,500 m², this was the most significant increase of all sectors. Manufacturing is currently in last place at 122,500 m² or 13.8% (2022: 116,110 m² or 11.2%).

The commercial and logistics property owner-occupier and rental market in NRW is still dominated by large properties. Almost 70% of take up, or 598,800 m², is accounted for by the category of 10,001 m² and above. However, this size category – as already outlined in the building classification – has seen by far the sharpest decline, falling by around 200,000 m² from 797,600 m² or 77.1% in 2022. Take-up in 2023 was around a quarter lower.

The category of larger to large spaces between 5,001 and 10,000 m² accounts for the second-largest share at 138,800 m² or 15.7%. Up from around 100,000 m² in 2022, this marks an increase of around 38,800 m² or 38%. Spaces between 3,001 and 5,000 m² are in thirdplace at 73,000 m² or 8.2% (2022: 52,000 m² or 5%). Small to medium-sized properties of between 1,000 and 3,000 m² are in fourthplace with 67,800 m² or 7.7% (2022: 61,760 m² or 6%), while micro spaces of less than 1,000 m² remain in lastplace with 7,200 m² or 0.8% (2022: 21,930 m² or 2.1%).

With a take-up of 267,100 m² of logistics and industrial property space for rent and owner-occupancy achieved by all market participants, the NRW submarket Düsseldorf nearly maintained its result in 2023 at the same level compared to the previous year (2022: 265,200 m²).

The main contribution was made by lettings in existing properties with 148,900 m² or 55.7%, similar to the previous year's period in 2022 with 154,500 m² or 58.3%. Lease agreements or owner-occupancy of new buildings on former brownfield sites account for 118,200 m² or 44.3% and grew their results compared to 2022 with +46,200 m² or +64.2% (2022: 72,000 m² or 27.1%). We did not register any lettings or owner-occupancy of new buildings on greenfield sites last year; in 2022, they still accounted for 38,700 m² or 14.6%.

The main contribution by building type was again made by big-box properties with 206,300 m² or 77.2% (2022: 153,100 m² or 57.7%). They were the only category to record a substantial increase of 53,200 m² or 34.7%. Properties that were not allocated to either the big box or business park category remained in second place with 47,000 m² or 17.6% (2022: 66,500 m² or 25.1%). In third place in 2023 are business parks with only 13,800 m² or 5.2%. Coming from 45,600 m² or 17.2%, this is a decrease of 19,500 m² or 29%.

While big-box properties increased their importance for the Düsseldorf market by around 20 percentage points to more than three quarters of annual take-up, business parks fell by 12 percentage points and other properties by 8 percentage points. The logistics and industrial property market continues to be an almost complete lessor's market, with a share of 98.1% or 261,900 m² in 2023 (2022: 265,200 m² or 100%).

Logistics/distribution is once again the leading sector in terms of take-up. At 143,200 m² or 53.6%, up from 103,800 m² or 39.1% in 2022, it accounts for more than half of the market's total take-up. The result also represents the most significant year-on-year increase in take-up in absolute terms, totalling 39,400 m² or +38%. Manufacturing moved up one place year-on-year to second rank with 72,800 m² or 27.3% (2022: third place with 52,500 m² or 19.8%). This means that the sector is already taking up one in four square metres of total take-up, compared to just one in five in 2022 (growth of 20,300 m² or 38.7%).

The collective category "Other" came in thirdplace with 34,400 m² or 12.9% (2022: 7,400 m² or 2.8%). Retail deals are in last place. In 2023, it plummeted by -84,800 m² or -83.5% and was only almost a fifth of the previous year's figure (2022: 101,500 m² or 38.3%). Retail is also the only sector to rank far below its own five-year average of currently 76,000 m², which was missed by a significant 78% in 2023. Within the industry, e-commerce leads with 13,600 m² or 81.4% (2022: 56,100 m² or 55.3%), ahead of traditional retail with 3,100 m² or 18.6% (2022: 45,400 m² or 44.7%). The significant drop in retail (-84,800 m²) was compensated for by the increase in demand for space from other sectors (86,700 m²), resulting in a small increase of 1,900 m².

The space category between 3,001 and 5,000 m² is in fourth place with 14,100 m² or 5.3% (2022: 28,900 m² or 10.9%). Smaller to medium-sized spaces between 1,000 and 3,001 m² rank third with 28,600 m² or 10.7% (2022: 29,500 m² or 11.1%). The smallest spaces of less than 1,000 m² are still in last place with 1.9% or 5,100 m², coming from 16,600 m² or 6.3% in 2022.

Overall, we observed a concentration on large spaces of 5,001 m² or more on the Düsseldorf market in the past year, which accounted for 82.1% or 219,300 m² of total take-up and increased by 29,100 m² in absolute terms compared to the same period of the previous year.

This development represents the second most significant increase in the last five years. In the previous year, the increase was 13.2% to EUR 6.00/m², up from EUR 5.30/m². The five-year average of EUR 5.52/m² was exceeded by 17.8% in 2023.

The Cologne market for owner-occupied and rented industrial and logistics properties continued the negative trend of the previous year. Recording a drop of 32.6%, the total take-up of 168,100 m² achieved by all market participants in 2023 was lower than the previous year's result of 249,400 m², which was in turn around 20% lower than 2021 (2021: take-up of 313,300 m²). The five-year average, which currently stands at 224,900 m², was missed by a significant 25.3%.

Existing properties dominate the market, accounting for 154,900 m² or 92.1%, up from 155,700 m² and 62.4% in 2022. They thus increased their share of total take-up by 29.7 percentage points.According to our analysis, the reason for the further increase in the importance of existing space can be found in the significant slump in new construction activity. With take-up of just 13,200 m² or 7.9%, the slump in rentals of space in new builds is -80,500 m² or -86% (2022: 93,700 m² or 37.6% of market activity). Brownfield developments once again played no role on the Cologne market.

In terms of building type, big-box properties accounted for 63,900 m² or 38% (2022: 163,800 m² or 65.7%), ranking first and well ahead of rentals of space in business parks in third place, which recorded figures of 40,500 m² or 24.1% (2022: 17,700 m² or 7.1%). Properties that are neither big-box properties nor business parks remained in second place with 63,700 m² or 37.9% (2022: 67,900 m² or 27.2%). While big boxes saw take-up decline by around 100,000 m² or 61% and thus experienced the most significant loss in importance of all building types year-on-year in both absolute and relative terms (-27.7 percentage points), business parks were the only category to increase in absolute terms – by 22,800 m² or 128%. In terms of users, Cologne was exclusively a lessor's market in 2023. We did not register a single contract for owner-occupancy.

Retail regained the top spot for the first time since 2021, accounting for 67,500 m² or 40.2% and moving up from the second place it held in 2022 when it recorded 80,200 m² or 32.2%. With the exception of the "Other" category, all sectors saw a decline in take-up, with retail falling the least (-12,700 m² or -15.8%). Within the retail sector, traditional retail dominated with 59.7% or 40,300 m². Moving up from second place where it had recorded 33,200 m² or 41.4%, the sub-category grew by 7,100 m² and overtook e-commerce in the past full year. This sub-category accounted for 27,200 m² of accumulated take-up, or 40.3%, within the retail category (2022: 47,000 m² or 58.6%) at the end of 2023.

The collective category "Other" came in second place with 49,100 m² or 29.2% (2022: 31,300 m² or 12.6%). In third place is the logistics/distribution sector, which typically ranks first or second on the Cologne market, with 44,900 m² or 26.7%, down from 95,400 m² or 38.3%, and which thus recorded the most significant absolute decline of all sectors, falling 50,500 m² or -52.9%. The sector's five-year average of around 80,000 m² was missed by a significant 44%. Manufacturing brought up the rear with 6,600 m² or 3.9% (2022: 42,500 m² or 17%). This comparatively low level was last seen in 2016 when it stood at around 3% or 6,450 m². The sector fell 82% short of its own five-year average (36,000 m²), the largest margin of all.

Just over half of take-up in 2023 was accounted for by large spaces of 10,001 m² or more. Accounting for 85,900 m² or 51.1%, the segment continues to lead the other space categories, but lost 100,100 m² or 53.8% in absolute terms and 23.5% in relative terms (2022: 186,000 m² or 74.6%).

In 2022, almost nine out of ten square metres taken up were in spaces of 5,001 m² or more, whereas the current figure is just over six out of ten. We recorded take-up of 37,500 m² or a share of 22.3% for the category of medium-sized properties between 3,001 and 5,000 m². Coming from fourth place, this category has risen to second place with the largest absolute increase of all size categories – 25,200 m² or +200% – and thus tripling take-up.

Small to medium-sized spaces of between 1,000 and 3,000 m² accounted for the third highest take-up of space at 23,100 m² or 13.7% (2022: 13,700 m² or 5.5%). No deals were registered for the smallest spaces of less than 1,000 m².

In the logistics property segment, the Cologne market has seen the second most significant increase in rents in the last five years, with prime rents rising by a whopping 14.3% to EUR 8.00/m² by the end of 2023. Up from EUR 7.00/m² at the end of 2022, this figure represents the highest value to date. The rate of price increases in the previous year was even higher, however, at 17.6 % after starting out at EUR 5.95/m². The current five-year average of EUR 6.46/m² was exceeded by 24% in 2023.

Average rents rose by 5%, thus seeing a more moderate increase than prime rents, and recorded a new high to date of EUR 6.30/m², up from EUR 6.00/m². The five-year average of EUR 6.68/m² was exceeded by 20%.

The past year ranks last in a five-year comparison. In a 10-year comparison, only the 2015 result of 257,000 m² and the 2014 result of 210,000 m² were lower. The long-term average of 614,166 m² was missed by a significant 26.7%. One piece of good news from the Ruhr area is that deals for new builds were at a similarly high level compared to the previous year and, despite the general reluctance on the part of project developers, were even up year-on-year in absolute terms. Since it was founded in 2007, the consulting firm has served the top three logistics markets in NRW, including the Ruhr area, with a team of 11 based in Düsseldorf. In 2023, new buildings contributed 248,600 m² or a share of 55.2% (2022: 238,502 m² or 45.9%), achieving absolute year-on-year growth of 10,098 m² or 4%.

In second place are lettings in existing properties, which accounted for 201,800 m² or 44.8%, down from 245,488 m² or 47.3% in 2022, which marks the most significant absolute decline across all categories (new build, existing property, brownfield) with a drop of 43,688 m² or 18%. Brownfields played no role in the past year as a whole after achieving 35,440 m² or 6.8% in the previous year. Deals in big box properties dominated the market in 2023, accounting for 72.6% of the market at 326,800 m² (2022: 403,197 m² or 77.6%). Although they were the only category to experience an absolute decline, they still held on to the top position with 76,397 m² (down 18.9%).Deals in properties that are neither big boxes nor business parks are in second place, accounting for 105,400 m² or 23.4% (2022: 99,638 m² or 19.2%) and thus achieving a slight increase (up 5,762 m² or 5.8%).

In last place are deals in business parks, which continue to play the least important role in the Ruhr area with a contribution of 18,200 m² or 4%, up from 16,595 m² or 3.2% (slight growth of 1,605 m² or 9.7%). The Ruhr area continues to be predominantly a lessor’s market, with 423,400 m² or 94% of take-up almost entirely accounted for by leases (2022: 419,430 m² or 80.7%). At 27,000 m² or 6%, owner-occupier leases fell by 73,000 m² or 73% in absolute terms and by 13.3 percentage points in relative terms compared to the previous year, when they still accounted for 100,000 m² or 19.3%.

Logistics/distribution was again the strongest sector in 2023. Contributing 232,800 m² or 51.7%, this sector accounts for more than half of take-up in the Ruhr area (2022: 267,623 m² or 51.5%), meaning that its importance remains at the same high level despite a decline of around 35,000 m² or 13% in absolute terms.

Within the sector, the sub-categories of traditional retail and e-commerce swapped places in the Ruhr area in the year-on-year comparison. In 2023, traditional retail led the way with 71,300 m² or 63.8% (2022: 98,702 m² or 45.1%). E-commerce achieved take-up of only 40,500 m² or 36.2% (2022: 120,000 m² or 54.9%). The delta here is around 80,000 m² or 66.3%, meaning that the result constitutes only a third of the previous year’s take-up.

In third place is the miscellaneous “Other” category with a contribution of 62,700 m² or 13.9% (2022: 11,916 m² or 2.3%) and the largest growth of all the sectors in absolute terms with an increase of 50,784 m² or 426% (corresponding to a more than five-fold increase). After occupying third place in 2022, manufacturing brings up the rear, accounting for 43,100 m² or 9.6%, but can boast absolute growth of 21,983 m² or 104.1%, up from 21,117 m² or 4.1%.

Coming from 41,978 m² or 8.1%, this development marks a significant absolute increase of around 42,000 m², which is double the previous year’s figure. The category of medium-sized space between 3,001 and 5,000 m² is in third place with take-up of 21,400 m² or 4.8% (2022: 10,926 m² or 2.1%). Smaller to medium-sized spaces between 1,000 and 3,000 m² accounted for 16,100 m² or 3.6% of take-up (2022: 18,560 m² or also 3.6%). Small areas of less than 1,000 m² contributed only 2,100 m², equivalent to a share of 0.5%.

The rise in prime rents continued with an increase of 11.5% to EUR 7.25/m² compared to EUR 6.50/m² at the end of 2022. The five-year average of EUR 5.92/m² was thus exceeded by 22.5%.

Average rents also rose with a much more dynamic increase than in prime rents but of 16.2% to EUR 6.10/m², up from EUR 5.25/m² in 2022. The five-year average of EUR 4.71/m² was exceeded by 29.5%.