Remarkable momentum is establishing itself in the Frankfurt logistics and industrial real estate market. In the first nine months of the current year, the letting market achieved its highest take-up since the peak figures of the pandemic. Following the pronounced boom phases of recent years, the location is once again matching earlier record levels, demonstrating the ongoing relevance of the Rhine-Main region within Germany's national logistics network.
This result was driven significantly by large-scale deals in the big-box segment. Leases for units of more than 10,000 square metres formed the foundation for this substantial growth in take-up. This demand for space is accompanied by an ongoing upward trend in rents, as both prime and average rents increased once again during the reporting period.
Key sectors and shifting leasing behaviour
Demand for large-scale capacity stems from various economic sectors. Alongside e-commerce companies, occupiers from the automotive industry and the pharmaceutical sector increasingly featured as seekers of large units. Asian online retailers in particular secured immediately available space in the Frankfurt area to respond flexibly to logistical requirements.
- —High take-up driven primarily by transactions in the segment above 10,000 square metres
- —Sustained upward trend in both prime and average rents
- —Large-scale requirements concentrated in e-commerce, automotive and the pharmaceutical sector
- —Growing demand for immediately available capacity from Asian online retailers
At the same time, limited economic predictability is noticeably affecting tenant decision-making. The willingness to enter into long-term lease commitments is currently subdued. This situation primarily benefits speculatively built developments that offer ready-to-occupy space. Conversely, interest in tailored built-to-suit solutions, which require longer lead times and firm commitments, remains noticeably restrained.
Muted activity on the investment market
A contrasting picture is evident on the capital market for logistics properties. Transaction volume after the first nine months remained well below the previous year's level, recording an overall below-average result. Alongside altered financing terms, a scarce supply of market-appropriate product was the main factor dampening transaction activity in the institutional segment.
The Frankfurt logistics sector is thus displaying a clear divergence at present: while operational space demand in the letting market is matching previous peak periods, investors continue to act with marked restraint under current conditions.
