The availability of space in the warehouse, logistics and production property segment in Germany has noticeably increased in recent years. This trend is particularly evident for properties exceeding 10,000 square metres in size. While vacancy rates in 2021 and 2022 were historically low, remaining below the 1.0 per cent mark, the market is now experiencing a gradual easing.
By the end of 2023, the vacancy rate already stood at approximately 3.0 per cent. For 2024, market observers predict a further increase to around 4.0 per cent, provided that current underlying conditions do not fundamentally change. This development results from an altered market environment, affecting both the supply and demand sides.
Dynamics of Supply and Demand
On the supply side, a decline in development projects is evident. While the development of properties over 10,000 square metres still reached a volume of over 7 million square metres in 2021 and 2022, current figures are lower. This indicates decreasing new construction activity, which could influence medium-term supply development.
Concurrently, demand for warehouse, logistics and production space has slowed down. This is due, among other things, to the general economic situation, increased financing costs, and greater investment hesitancy among companies. The combination of a moderate decline in new developments and lower demand leads to a cumulative increase in available space on the market.
Impact on the Property Market
The increasing availability of space could open up new opportunities for companies pursuing expansion plans or seeking to optimise their warehousing and logistics structures. A broader selection of properties offers potential tenants and buyers an improved negotiating position. Investors, however, may need to consider adjusting their yield expectations, as increased supply could intensify competition.
