Market report Stuttgart year 2021

Stuttgart logistics property market doubles take-up in 2021

We expect the demand situation to remain positive in 2022, though with less space available than ever before. 2021 was an exceptional year that more than compensated for 2019 and 2020. While we expect that more new buildings will be developed again in 2022 than in the previous year, they will not be able to satisfy demand by a long way.

Of the top four lessors with highest take-up, three went for existing properties. These are Yahee in Ludwigsburg at 20,804 m², HTL in Ludwigsburg at 15,000 m² and Krannich in Böblingen at 15,000 m².
 
The biggest deal in the past year was by Porsche in Ludwigsburg for an area of 23,000 m², though this was the only major take-up in the new build category. It is also the biggest deal for the whole of the period under review and accounts for more than half of new-build take-up (55%).

In second place is the Esslingen region once again with 77,088 m² or 26% (2020: 38,300 m² or 28.3%). It lost 2.3 percentage points of market share, though the absolute take-up in Esslingen more than doubled as well. Third place goes to Böblingen at 59,558 m² or 20.1%. Having ranked last but one in 2020 at 10,400 m² or 7.7%, Böblingen gained the most market share out of all regions at 12.4 percentage points, not to mention the highest absolute growth of all regions at 473%. Its robust result was helped by one of the top deals (Krannich), which accounts for 25% of take-up in this region.
 
This is followed by the Göppingen district at 23,322 m² or 7.8% (2020: 0 m²), central Stuttgart at 10,580 m² or 3.6% (2020: 17,400 m² or 12.9%, down 9.3 percentage points) and the Rems-Murr district at 8,523 m² or 2.9%. Last year’s number four, the Rems-Murr district had the second-most significant decline in market share after central Stuttgart at 9.2 percentage points (coming from 16,300 m² or 12%, thus halving its standing).

As in the previous year, the biggest take-up was contributed by areas of 10,000 m² or more, which accounted for 33.1% or 98,191 m². However, out of all size classes, this one lost the most relative significance at 9.2 percentage points (coming from a share of 42.3% or 57,300 m²). Five of the 68 deals are in this category.
 
The 5,001 to 10,000 m² category accounted for a share of 30.1% or take-up of 89,291 m², improving its 2020 performance by 8.9 percentage points (21.2% or 28,700 m²). Of all deals 12 were for the account of this segment.

Average rents for logistics properties tend to follow the same pattern as prime rents. However, they were flat at the end of 2021 at the high to date of EUR 5.50/m², which was achieved in 2020. The five-year average of EUR 5.18/m² was exceeded by 6% in 2021.
 
The absolute price gap between average and prime rents has remained largely the same in recent years (difference of around EUR 1.50/m² in the respective years). Prime and average rents are therefore not drifting apart but rather moving in parallel.

Stuttgart is still one of the most interesting investment markets for warehouse, logistics and industrial properties in Germany. Private and institutional investors are still keen to acquire properties in the greater Stuttgart area – but there continue to be hardly any investment opportunities at present – including either undeveloped land or existing properties.
 
The seller structure in the Stuttgart region is still dominated by regional private investors and many former entrepreneurs who are having difficulty in disposing of properties – because of the lack of alternative investment options on the finance market and corresponding bank fees for cash assets – even if the high purchase price level would often justify it. In 2021, there was thus only a handful of individual deals in these asset classes again. Investment opportunities are lucky finds. This situation will presumably continue for as long as the financial market is stuck in a phase of zero or negative interest rates.
 

However, we anticipate that owners have changes and investment headed their way in the area of the energy renovation of older existing properties. Reflecting the future ESG factors of the 2030 agenda, it is becoming increasingly important for users’ properties to become more sustainable. This can include modern utilisation situations, charging stations for electric vehicles, LED lighting and photovoltaic systems. Well-being factors for employees could also become more important as the tense situation on the labour market makes it harder and harder to find staff. We are therefore anticipating a lot of changes to come in the property sector.