Over the last few years, we have seen a surge in demand for logistics and warehousing space, due to the increase in e-commerce. 2020 has seen the sector’s fundamentals grow even stronger as e-commerce's share of retail sales increased further, and disruption to supply chains has led to further domestic demand, e.g. from the automotive and mechanical engineering sectors.
The pandemic caused supply chain bottlenecks worldwide. In response, a large number of German companies are considering relocating their production and storage facilities back to, if not Germany, at least the EU.
Reshoring/Nearshoring to regain control
The pandemic caused supply chain bottlenecks worldwide. In response, a large number of German companies are considering relocating their production and storage facilities back to, if not Germany, at least the EU. In an online survey by the Karlsruhe University of Applied Sciences, more than half of the 655 companies asked said they would be looking at reshoring and nearshoring in the future as they look to mitigate risk and make their supply chains more resilient9. We are already seeing examples of German companies moving business to neighbouring countries including the Czech Republic and Poland as well as the non-EU countries of Serbia and Ukraine. There is nevertheless a sectoral split, with automotive, chemical and electronics businesses seemingly keen to relocate back to Germany itself.
In the middle of Europe
Due to the federal structure of Germany and its location in the middle of Europe, the landscape of the German logistics market is extensive. Six of the nine corridors of the Trans European network (TEN-T) of roads, railways, airports and water infrastructure lead through or touch Germany10. The country has an extensive hub and spokes network based around the big five markets.
During 2021, we expect to see a further increase in occupier demand, which coupled with tight supply of modern, efficient space will put upward pressure on rents as restrictive land allocation exacerbates the situation. We also expect to see further demand for last-mile logistics space especially in Berlin, which is a comparatively underdeveloped market.
Two lighthouse projects that have attracted significant attention are now coming to fruition. After 14 years of construction, the first planes took off the BER Airport at the End of October and will bring a boost to cargo handling in the short term. At Giga-Factory 4 in Grünheide, 500,000 Tesla brand electric cars are to come off the assembly line from summer 202111. The project has not only brought a boost to the local economy, but the German automotive market, as the sector continues to reinvent itself.
In the middle of Europe
Due to the federal structure of Germany and its location in the middle of Europe, the landscape of the German logistics market is extensive. Six of the nine corridors of the Trans European network (TEN-T) of roads, railways, airports and water infrastructure lead through or touch Germany8. The country has an extensive hub and spokes network based around the big five markets. During 2021, we expect to see a further increase in occupier demand, which coupled with tight supply of modern, efficient space will put upward pressure on rents as restrictive land allocation exacerbates the situation. We also expect to see further demand for last-mile logistics space especially in Berlin, which is a comparatively underdeveloped market. Two lighthouse projects that have attracted significant attention are now coming to fruition. After 9 years of construction, the first planes took off the BER Airport at the End of October and will bring a boost to cargo handling in the short term. At Giga-Factory 4 in Grünheide, 500,000 Tesla brand electric cars are to come off the assembly line from summer 20219. The project has not only brought a boost to the local economy, but the German automotive market, as the sector continues to reinvent itself.
Prepared food as a logistics good
Further evidence of crises accelerating trends has been seen by the increase of food delivery as consumers have been forced to eat their favourite restaurant’s meals at home. This has led to an increase in demand in suburban markets for so-called ghost kitchens12. Compared to the North American market, the concept is still in its infancy. German start-ups have entered Berlin and Munich as two locations of a Europe-wide expansion strategy with several brands and we expect to see expansion over the next few years.
Source: Own display
Footnotes
9. https://www.hs-karlsruhe.de/presse/wie-wirkt-sich-die-corona-epidemie-auf-lokale-lieferketten-aus-ist-eine-rueckverlagerung-der-produktion-zu-erwarten 10. https://www.bmvi.de/SharedDocs/DE/Artikel/G/transeuropaeische-verkehrsnetze.html 11. https://www.tesla.com/de_de/gigafactory-berlin 12. https://www.zukunftsinstitut.de/artikel/food/ghost-kitchen-restaurant-ohne-gaeste/
