Rising rents despite weak demand for space: Greif & Contzen publish their latest market report for the Cologne|Bonn logistics region

The economic slowdown has become noticeable in the Cologne|Bonn logistics region. In their latest market report, the real estate experts from Greif & Contzen Immobilienmakler GmbH report that at 250,000 square metres, take-up of space in the first nine months of the year has been some 4 percent below the figure recorded for the same period last year (260,000 m²). The Ford plant has announced its plans to massively reduce its workforce. However, there have been some positive developments, too: small and medium-sized warehouse units continue to be sought after, business parks have been gaining in importance, and the market is becoming more open-minded when it comes to alternative forms of use. Many users of commercial space from the large-scale segment remain reluctant, nevertheless.

Restrained demand in an uncertain environment
The weak economic situation and geopolitical risks, such as the challenging US tariff policy, have been putting businesses under pressure. As a result, investment decisions have been postponed or suspended, and this has affected the region’s logistics property market. Decision makers tend to be reluctant, and large units are taken up very infrequently. Logistics companies that traditionally require large units, have been holding back in particular. Their share in overall take-up of space dropped to 33 percent, down from 42 percent in the previous year and 61 percent in 2023. Industrial, craft and production businesses accounted for a more stable share of some 22 percent of take-up. Accounting for around 18 percent, retail companies remained under-represented, according to the property experts from Greif & Contzen.

Vacant space in the surrounding region, opportunities for new user groups
Vacant space has been increasing in the region surrounding Cologne, due to a lack of new tenants for large logistics facilities. Some landlords have thus been more open-minded concerning users from less typical sectors. “To avoid vacancies, some private landlords are by now willing to accept tenants from areas such as sports, events and leisure, despite the fact that this often requires the submission and approval of applications for a change in use,” says Daniel Noeckel, Head of the Industrial and Logistics division at Greif & Contzen.

Solid demand for small units and business parks
Demand for small to medium-sized units has remained stable, despite the overall decline in take-up. Daniel Noeckel reports: “Demand does exist for small to medium-sized warehouse units in good condition that meet contemporary fit-out standards.” Light industrial properties and business parks are particularly sought after. Combining high-quality warehouse and office space, the latter fit the needs of smaller, flexible users very well. It is therefore not surprising that investment activity can be observed in this segment: at least four new business parks are to be created in the region between 2025 and 2027, as a number of property developers have been pursuing this type of project. Finding suitable tenants for large new builds in the traditional logistics segment has, meanwhile, been rather challenging lately.

Rising rents despite increase in vacancies
The development of rents has been rather unexpected: the average rent rose from EUR 6.10 to EUR 6.70 per square metre in the Cologne|Bonn region, despite the increase in vacant space. This is due to units being taken up in high-quality new builds, especially on the outskirts where prime rents of up to EUR 8.50 per square metre have been realised. The prime rent in Cologne’s city area also rose slightly, from EUR 7.50 to now EUR 7.90. A higher average rent of EUR 8.10 per square metre is obtained with light industrial space. Among other aspects, this is due to such space meeting higher fit-out standards and being more flexible concerning possible uses.

Incentives for tenants
Many landlords stick to their requested base rents but are still willing to negotiate. “We can observe that landlords tend to insist on a certain base rent but are willing to grant potential tenants incentives, provided they are creditworthy,” Daniel Noeckel points out. Rent-free periods have become quite common and in some projects these are even factored in from an early stage.

Cautiously optimistic outlook
The outlook for the rest of the year remains subdued. It is likely that some more small and medium-sized units will be taken up, but there are no signs of an imminent turnaround. A total of some 310,000 square metres is forecast to be taken up in 2025, corresponding to a decrease compared to last year’s 380,000 square metres, as well as being slightly below the five-year average. The special infrastructure and defence fund, the new special depreciation programme for investments, and in particular the reforms announced by the German government could provide stimuli for the logistics market in the medium term. However, these aspects are not expected to have a noticeable effect until 2026. The real estate experts from Greif & Contzen are cautiously optimistic. “There continues to be some market activity, especially concerning smaller units. Activity in the other segments could pick up as soon as the economic situation stabilises,” Daniel Noeckel says.