bulwiengesa Logistics Screening 2014 LOGISTICS SCREENING 2014 Developer of Logistics Buildings in Germany Berlin, 22 October 2014

Transcription

1 Logistics Screening 0 Developer of Logistics Buildings in Germany Berlin, October 0 Construction of new logistics floorspace decreases Newly completed logistics floorspace 009 to 0 in,000s by quarter and year Shortly before Expo Real 03, published a logistics screening examining the construction activity in the German real estate logistics sector. The motivation for conducting the survey was, besides the increased significance of the logistics industry in Germany, the growing importance of logistics real estate as an asset class for the investment market. Due to the increased interest of investors, this property type continues to gain an importance in Germany, comparable to the importance the asset class has achieved already in more mature real estate markets such as the US or the UK. Consequently, the need for current, well-researched market figures has increased significantly. For this reason, and given the large number of enquires, an update is released on this subject.,00, Q Q Q3 Q Construction activity decreases by percent in 0 From 009 to 03, a total of. million square meters of modern logistics space was completed. However, when considering also the 0 completions, the total increases to 7.3 million square meters. Although the last real estate crisis had already peaked in 009, construction activity reached its trough only in 00, due to delay effects of property development. That year only million square meters were constructed, approximately 80,000 square meters less than the -year average of over.8 million square meters. On a quarterly basis, the first quarter of 0 marked the lowest point: However, first quarters are typically the weakest in a year due to, amongst other things, the weather conditions. Post 00, however, owing to good economic growth and the continuing significance of e-commerce, development activity picked up quickly and strongly. The absolute peak was reached in 0, with more than 3.6 million square meters of newly built logistics warehouse space. The third quarter of 0 also marked the quarter with the highest completion volumes with more than. million square meters in the period examined. Although 0 has not yet come to an end, it can be estimated how much logistics floorspace will be completed in Germany by the end of the year. This will be around 3. million square meters, which is about 80,000 square meters, or about.% less than in the previous year. For this, we can identify two main reasons: Firstly, developers sense in recent months the intensifying political crises and many uncertainties. Even though, there were and are still a number of projects to be developed in the coming quarters and years the industry will increasingly put projects on hold, waiting to how things change e.g. the export restrictions resulting from the Ukraine crisis which will affect Germany and the logistics sector. On the other hand the availability of suitable sites for logistics developments decreases. Whilst various developers still have expansion sites in their "land bank", in some regions suitable sites with "real" logistics quality are increasingly scarce. Here, in future the importance of brownfield developments will increase significantly. An increasing number of comprehensive refurbishments of standing investments or demolitions/ reconstructions on conversion sites can be observed already now. AG 0 Seite /6

2 Not only traditional property developers should be taken into account... In addition to the in-depth examination of completion figures, an analysis of developer types is of interest, because in contrast to the office sector significantly fewer schemes are built speculatively or partially speculatively. Therefore also the construction activity of the most important owner-occupier groups needs be considered. Generally categorizes the existing data according to the following five developer types: Developer: core competence is the development of (logistics) properties (e.g. Ixocon, Garbe, etc.) Logistics provider: core competence is the management of logistics services, usually for third parties (e.g. Kühne & Nagel, etc.) : core competence is retail, either through a branch network or as supplier (e.g. Kaufland) CEP companies: core competence is the distribution of courier, express and parcel shipments (e.g. DHL, Hermes.) Other owner-occupiers: other actors, often industrial and manufacturing companies as well as small and medium-sized enterprises (SMEs) Whilst major property developers often publish many details on their properties, data quality is very limited regarding the group "other owner occupiers". Comparable studies and surveys have often examined only sizes from,000 or 0,000 square meters respectively. In this screening, in contrast, the overall market is considered i.e. also smaller areas are examined These areas, usually built by owner-occupiers from the manufacturing sector, but also by SMEs, a very important sector for Germany, are much more difficult to measure. This research procedure does not guarantee completeness, but gives a comparatively good overview allowing basic statements on completion statistics.... because large retail chains and logistics providers are increasingly developing their own floorspace From the total of. million square meters of logistics floorspace completed between 009 and 03 an average of 3% was erected by developers, i.e. by companies that specialized in the project-based development of logistics properties. Over time, however, it becomes apparent that the proportion of developers involved in this activity shows a declining trend. Whilst the proportion was still at around 3% in 009, it decreased continuously to under 0% by 0, although in 03 it reached a small temporary high of around %. However, in comparison construction activity by owner-occupiers increased. In particular, individual groups account for this trend, thus influencing positively the construction activity of owner-occupied logistics developments. These comprise, in particular, large retail chains such as Edeka, the Schwarz Group or REWE and large logistics companies such as Küihne & Nagel and industrial groups such as Volkswagen, including the respective brands belonging to the groups. In addition many small to medium-sized enterprises (SMEs) from various industries are also driving this trend. Logistics providers, retail companies as well as other companies and owner-occupiers account for around 8 to 9% of all built floorspace in the -year average. Floorspace built by logistics developers in Germany from 0/009 to /03 by type 9 % 8 % Property developers Logistics provider % 8 % 3 % Other owner-occupiers CEP companies Relative share by developer type of completed logistics floorspace from 009 to 0 00 % 80 % 60 % 0 % 0 % 0 % 3.6 %. %. %.9 % 3. % 3.0 % 3.3 %.9 % 39.6 % 37.9 % 3.6 % 38.9 % 0.9 % 0.3 % 3.3 % 7. %.6 % 8. % 0.8 % 9.7 %. %. %. % 3.8 % 3.8 % 0.9 %.3 % 7.3 %. %. % (EDEKA, Schwarz-Gruppe, etc.) CEP service providers (DHL, DPD, Hermes, etc.) Logistics providers (Hellmann, Kühne & Nagel, etc.) Property developers (, ProLogis, etc.) Other owner-occupiers (individual properties, SMEs, etc.) AG 0 Seite /6

3 At first glance, the relative share of the floorspace by logistics providers, retail logistics and other owner-occupiers seems fairly evenly distributed. Over time, however, it becomes obvious this is cyclical.. Whilst property developers are still more in line with the development patterns of the real estate industry as a whole, the other groups tend to follow corporate growth plans instead.. Thus the share of retail logistics was, for example, in 0 at %, whilst logistics providers only developed % of the floorspace. The high demand of floorspace by retail logistics will or is still, among other things fed by the e-commerce boom. The courier, express and parcel delivery companies (CEP) are the market players, who although experiencing high dynamics in the logistics industry, are barely active in developing owneroccupied space. Their demand for floorspace is increasing steadily and the network of delivery depots, such as the mechanical delivery points (MechZB) of DHL with more than 0 planned projects, is a striking example of extensive infill. However, CEP companies only rarely take on the role of a property developer. Instead their needs are reflected in the demand for rental space. While the major logistics hubs of CEP companies are still built by major, established property developers, smaller units in the distribution network such as the MechZB are also provided by smaller regional property developers. International actors and Prologis with high market dominance The table of the top 0 developers shows clearly that international developers dominate the market of logistics properties. Especially the two large multinational experts and Prologis who are the leaders on the German market for property development. alone built around % of the 6. million square meters developed by property developers in the period examined. Second-placed Prologis still gained a market share of over 0%, with IDI Gazeley able to win a share of more than % on the German market. Other strong international brands such as Panattoni have not yet been largely successful on the German market. However, the competitive edge of and Prologis on the market is striking. In the development business and Prologis benefit, especially, from their strong, internationally-orientated expansion policies and their access to a global network. They are well known to many logistics companies who operate internationally, but also to many industrial companies. Both parties appreciate the high-quality, standardised products offered by these two market leaders who are also able to offer the same quality worldwide. Therefor many international market players often turn to these suppliers to enter the German market. Share of the big five property developers in developed floorspace volume from 0/009 to /03 % Prologis Ixocon % 0 % % % % IDI Gazeley Harder & Partner Others Top 0 property developers of modern logistics properties from 0/009 to /03 in Germany Developed floorspace in sqm useable area,8,300 3 ProLogis Ixocon 639,00 3,300 IDI Gazeley Harder & Partner 70,00 3, Alpha Industrial Garbe 0,900 9, greenfield Verdion 7,00 7,700 0 Gateway Habacker Holding,00,00 3 Panattoni Alcaro Invest,00 03,00 IM Properties SEGRO 98,00 97, ECE Projektmanagement Dietz 88,600 88, DIBAG GIEAG 87,00 7,600 0 FREO 7,300 Compared to this many German SMEs such as Ixocon, ranked third, but also Harder & Partner or Garbe, who individually appear lower down the table, represent in total a strong market presence. They posses a well-developed local to regional network and their senior management have often for years or decades been well connected personally to national stakeholders. Thus they were able to secure themselves a fixed position AG 0 Seite 3/6

4 within the national development sector. Their construction volume, however, is significantly lower. On average, market actors ranking on position 3 to 0 developed only about,000 square meters in the five years examined. Hence, the largest national developers account for a share of to % of the volume of new construction. Noticeably different market patterns in 0 Also some logistics companies are represented in the ranking: Kühne & Nagel and Dachser also developed a large volume of logistics properties building more than 00,000 square meters, but also Rhenus, Schenker, FIEGE and the Penny Group have pushed ahead large-volume logistics developments. Excluding and Prologis, the developers ranking place 3 to 0 constructed an average of 3,000 square meters floorspace per year. In 0, the year under review, ranking positions changed quite significantly in some parts. is, indeed, still the undisputed number one on the German real estate development market, but already at ranking position major changes can be observed. With only around 8,300 square metres Prologis drops to position, whilst Alpha Industrial moves to position with about 6,00 square meters. Other market actors, such as the VGP Group have not been active in the period before 0 in Germany, but are planning major developments in the coming years. Top 0 property developers of modern logistics properties in 0 Developed floorspace in sqm useable area 3,000 3 Alpha Industrial Immogate 6,00 98,00 Ixocon SEGRO 90,300 8, MP Holding Panattoni 6,00 6, VGP Group May & Co. 3,00 0,00 0 ECE Projektmanagement 3,600 Retail chains and industrial companies follow, but rank before national developers When considering besides classic property developers all market players involved in construction in Germany e.g. owneroccupiers, still and Prologis still continue to lead the ranking, on the following positions, however, important changes can be seen. Especially the big retail chains REWE, the Schwarz Group and Edeka all built over 00,000 square meters in the period from 009 to 03. It should be noted, though, that these are entirely owner-occupied logistics properties that supply the branch network. Furthermore, the Volkswagen Group ranks with a construction volume of approximately 360,000 square meters ahead of developer Ixocon, ranking third in 03. Volkswagen is mainly developing logistics properties for storage and supply of spare parts. Top 0 property developers of modern logistics properties from 0/009 to /03 in Germany by type Developer Type 3 Prologis Schwarz Gruppe REWE Gruppe EDEKA Gruppe Retail Retail Retail 6 VW Gruppe Industrial 7 Ixocon 8 IDI Gazeley 9 Kühne & Nagel Logistics 0 Harder & Partner Dachser Logistics Alpha Industrial 3 Garbe greenfield Verdion 6 Rhenus Logistics 7 Gateway 8 FIEGE Logistics 9 Schenker Logistics 0 Pfennig Gruppe Logistics Developed floorspace in sqm useable area,8, ,00 73,900 6,800 03,300 36,00 3,300 70,00 9,00 3,800,00 07,800 9,800 7,00 7,700 7,00,00 3,00 30,00 6,800 When analysing 0 alone, a highly differentiated picture can be observed. The companies Koch, Neff and Volckmar for example, had a 7,000 square meter logistics facility built in Erfurt, which was completed in 0. Thus the company positions itself third in the rankings. The Volkswagen group, however, has not completed logistics property developments in 0, in contrast to Daimler AG, which in previous years hardly completed any logistics properties. Noteworthy, though, is especially the dominance of retail chains, which have even managed to complete more logistics floorspace than the top dog. AG 0 Seite /6

5 Top 0 Developer of modern logistics property 0 in Germany by Type Developer Type Schwarz Gruppe Edeka Gruppe 3 Koch, Neff & Volckmar Alpha Industrial 6 SEGRO 7 Immogate 8 Ixocon 9 Brandstätter Gruppe Industrial 0 Daimler Industrial Developed floorspace in sqm useable area 6,00 0,00 7,000 3,000 0,00 99,00 98,00 90,300 90,000 7,000 of more than.76 million square meters between 009 and 0. Following close behind at position and 3 respectively are the regions of Hanover / Braunschweig and Hamburg, with volumes of.7 and.6 million square meters respectively. In recent years the region Hanover / Braunschweig was increasingly selected as a logistics location, thus demonstrating its excellent communication links and location as the central northern hub with easy access to the seaports of Bremen and Hamburg and fast connections to the Ruhr area, the Netherlands and Berlin as well as Eastern Europe. The regions Rhine- Ruhr and A as well as A and Thuringia rank four and five with 880 and 80 thousand square meters of new built logistics floorspace. New build activities of the top property developers from 09/009 to /0 in the established logistics regions Established logistics regions are still the hot spots of construction activity When looking at the geographical distribution of construction activity all properties are included that were and will be completed between 009 and the end of 0. Looking over this longer period seems reasonable especially regarding logistics regions because not all regions see high construction activity in all years. Only on this aggregated level conclusions regarding relevance and sustainability of construction activities in different logistics regions can be drawn. The distribution of construction activity of the top developers concentrated in the north and east, almost entirely on established logistics regions. In the south and west, however, some property developments can be found outside the logistics regions. With a few exceptions, however these schemes are located along the major transport routes. Regardless of the number of projects developed, in the logistics regions Rhine-Ruhr and A, Rhine-Main and Upper Rhine with an average of 8,000 square meters of floorspace the highest volume of floorspace was erected. Also striking is the situation in Munich. In the designated logistics region no construction activity of the Top developers was observed, but very close to the conurbation. This is among other things due to the extremely high land prices in Munich, which tends to push market actors further into the surrounding areas. Germany GmbH ProLogis Germany Management GmbH Ixocon GmbH Map basis: NAVTEQ IDI Gazeley Harder & Partner Logistics region In the logistics region of Munich approximately 30,000 square meters of logistics space has been developed since 009. Although rents are the highest in Germany, the region ranks only medium at position of 8 with regard to completions. From the top 7 regions only Cologne / Bonn and Dusseldorf rank behind the logistics region Munich. Front runner regarding general construction activity in established logistics regions, is the region Rhine-Main around Frankfurt with a completion volume The lowest construction activity was recorded in the northern logistics regions. In Flensburg, Kiel and Rostock each less than 0,000 square meters of logistics floorspace have been completed since 009. But also in the regions Ruhr-South and Magdeburg only low volumes of less than 00,000 square meters of logistics floorspace has been completed. AG 0 Seite /6

6 New build logistics areas from 0/009 to /0 by developer type and region/conurbation in sqm The conurbations of Hamburg, Rhine-Main-Neckar and Rhine- Ruhr rank significantly higher. These regions are not only much larger geographically; they are also of higher logistical importance, mainly due to their proximity to established waterways (Hamburg harbour, river Rhine). The highest volume of new construction besides the major logistics regions, however, can be found in the regions west and south outside the major conurbations. When also considering the conurbations Rhine-Ruhr and Rhine-Main-Neckar this discrepancy increases even more. This is among other things due to the economic structure, which is especially in the south and west characterized by many small and medium enterprises located largely in small towns and rural areas. Another reason is the higher population density in the south and west and the generally more central location within Europe, which is why logistics properties located far from the major logistics regions can also be very well connected and located near major sales markets. Conclusion / Outlook CEP service providers Logistics providers Property developers Other owner-occupiers Conurbations Traditional property developers still dominate the logistics developer market in Germany, but owner-occupier groups are also very active. Besides many small companies, it is primarily the very large companies, retailers and logistics providers who construct their own properties. According to our analysis, this trend will not decrease, but rather increase. However, this analysis gives no indication regarding ownership structures - these must be examined separately. This also applies to investors, which we observe are currently experiencing many changes. Notes on analysis / Disclaimer As part of this screening, only the floor area (without open space) of newly built space (greenfield and brownfield) and extensions were taken into account, which were completed within the five-year period In addition, all properties expected to be completed by year-end 0 were examined. The data was based on both internal and external databanks as well as publicly available information such as press releases and sales details. At the same time, it is planned to gather data from as many developers as possible for comparison in order to work with primary data and thus with very exact values. contact our logistics team at any time. The results of this screening are interpreted and evaluated on the basis of the experience of AG within the framework of its German and European research and consultancy activity. Copyright 0 all rights reserved The results and calculations presented in this screening were carried out in good faith and with due care on the basis of existing or accessible data sources during the examination time. In some cases individual data was compared with the market actors. We cannot guarantee the correctness of data from third parties The screening is not intended to be exhaustive and is made publicly available, in order to stimulate discussions and dialogue with the market actors and to increase market transparency medium-term. If you have questions or suggestions, please AG Wallstraße Berlin Ph Fax Project management: Tobias Kassner kassner@.de Project assistant: Hauke Prätzel praetzel@.de Management board: Ralf-Peter Koschny Andreas Schulten Thomas Voßkamp AG 0 Seite 6/6