Market report Berlin for half year 2022

Market report on letting of logistics properties and industrial sites in the Greater Berlin area for H1 2022

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 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.

Overall, we registered 69 deals, 11 fewer than in the first half of 2021.

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).

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.

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.