Commercial property market Cologne|Bonn: very noticeable lack of space
A total of around 285,000 square metres of industrial, storage and logistics space were taken up in the Cologne|Bonn region in the first three quarters of 2021. This corresponds to an increase by just over 100,000 square metres compared to the same period last year. In their latest market report, the real estate experts Greif & Contzen highlight that many companies are no longer in a position to cover their space requirements, and that this scarcity of space is also reflected in rent prices.
‘The transaction volume increased noticeably,’ says Frank Klähn, Head of Industrial and Logistics Properties of Greif & Contzen Immobilienmakler GmbH, about the first three quarters in the commercial property market of the Cologne|Bonn region. This is quite an understatement: take-up increased by 250 percent compared to the same period last year. ‘Things are getting tight in the market,’ Klähn points out. ‘At 70,000 square metres, vacancies have reached a longtime low, and most of the current construction projects feature high pre-letting ratios or are intended for owner occupation. This is not only about large logistics service providers. Medium-sized companies that need relatively small units are also finding it impossible to find space by now.’
Scarcity of space even in peripheral areas
The real estate experts from Greif & Contzen explain that the lack of space is caused by a significant increase in demand paired with a shortage of commercial building land. A number of large units taken up in recent months have contributed to clearing the market on the demand side. G. Wurm GmbH + Co. KG, a wholesaler for modern gift items and home accessories, took up around 12,000 square metres in Cologne-Gremberghoven, while the donation agency Innatura gGmbH took up just over 6,600 square metres of warehouse space in the same district. Some even bigger units were taken up beyond Cologne’s city limits: in Kerpen, around 46,000 square metres were taken up by WEG Germany GmbH, while around 26,500 square metres were let to Lekkerland SE. P&C Modelogistik accounted for the biggest unit in the ‘construction for owner occupation’ segment, with their over 50,000 square metres big logistics facilities that are being built in Bedburg. The region’s pronounced lack of space is no longer limited to central city locations and core areas. The market is depleted, also in peripheral areas where backup space could be found in the past. ‘It is becoming more and more difficult for demanders to find suitable units within a reasonable period of time,’ says Klähn.
The shortage of space is further intensified by the lack of commercial building land. ‘Property developers, owner-occupiers and investors are virtually queuing up, whenever any commercial building land is released in the real estate market,’ Frank Klähn reports. Another aspect that contributes to the demand surplus, is the fact that industrial and logistics properties have become even more popular among investors since the start of the COVID-19 pandemic. The resulting high demand has given rise to price increases in recent months. The real estate experts from Greif & Contzen observed land price increases of more than ten percent compared to the year before, in various locations across the logistics region. In the city of Cologne, the prime rent rose by 15 cents to now EUR 5.95 per square metre, and in Euskirchen it increased to EUR 5.25. Average prices increased in the entire region, and the average rent currently stands at EUR 4.90 per square metre. This corresponds to an increase by 15 cents since the start of the year.
The region needs space
Greif & Contzen assumes that the lack of space will continue to be the greatest challenge of the months ahead. ‘We do not expect any considerable increases in availability,’ says Frank Klähn. Increases are more likely to occur on the demand side. For example, among retail companies, who are already the most important group of users of the regional commercial property market, and who will need more space also in the future, thanks to the growth of the online retailing trade. ‘We are receiving requests for space from the e-commerce segment, from logistics service providers, from industrial and production companies that cannot be catered for,’ says Klähn, describing the current situation. He continues to point out that the latest price increases will continue at least in the medium term as a result. Klähn explains that there can be only one solution to this problem: ‘Our region needs more space!’