The market report of the Initiative Corporate Real Estate shows: Following an unexpected final spurt, corporate real estate for around EUR 3.1 billion has been traded in the full year 2019. This record volume comes as a surprise to many market players. At the same time, the letting market lies idle.

The new record volume comes as a surprise to many market players, after transaction volumes in the first half of 2019 had still fallen significantly compared to the previous year. The development of corporate real estate is analogous to the entire commercial transaction market in Germany, which also set a new record with EUR 72.6 billion. That the corona crisis will also have an impact on corporate real estate seems beyond question, even if the asset class will be comparatively less affected (see also blog post on the effects of the corona crisis).

According to the market report for the second half of 2019, production properties in particular changed hands more frequently in 2019. In general, the propensity to own corporate real estate is declining. For the year as a whole, sales by owner-occupiers amounted to just under EUR 530 million and were thus around 60 % higher than the median for the past five years. This is a positive signal not only for real estate investors. Companies have more capital available for research and development, skilled employees and other investments in their core business.

Hardly Any Movement in the Letting Market

In contrast to the investment market, there was still little movement on the space or letting market. Compared to the first half of 2019, take-up of space rose only marginally from 246,000 sqm to 282,000 sqm and remains at a low level overall.

One thing is clear: the shortage of space must be countered by expanding the supply. However, only a few properties are currently under construction or in planning; new space is only being created on a small scale. But here too, the effects of the corona crisis remain to be seen.

Users were also sceptical as to whether new space will be created in the near future. In order to have planning security, companies mainly asked for space in medium size categories: Areas between 2,500 and 4,999 sqm experienced a record turnover in 2019. With around 24 % of total space turnover, demand was higher than ever before. In addition, users currently prefer medium lease terms. While tenancy agreements of ten years and longer were common in 2013, the agreed lease term has fallen steadily over the past few years. Currently, only just under 19% of tenants conclude contracts for ten years or longer. In 2019, demand was much stronger for leases with a term of between five and ten years. This also reflects the shortage of space on the real estate market: users again prefer longer contract terms.

Industrial park is the favourite of investors

Without a doubt, the most sought-after properties in the four property categories for corporate real estate (transformation properties, business parks, warehouses and smaller, urban logistics properties as well as production properties) are business parks, which regularly account for a large part of the investment volume. In addition to their often central location, they represent a mixture of different types of land: They combine flexibly usable hall space, for example for light production or for the storage of materials, with office space. Over the past five years, an average of around 1.05 billion euros per year has been invested in industrial parks. This already impressive figure was exceeded by around 10 % in 2019 with just under 1.20 billion euros alone.

Siemens Real Estate turns traditional locations into business parks

Siemens Real Estate (SRE), a member of the Corporate Real Estate Initiative since 2015, is also responding to the growing demand for business parks. For example, four "Siemens Technoparks" are currently being developed at the Erlangen, Nuremberg, Ruhstorf and Tübingen locations, where traditional Siemens locations are being converted into mixed-use industrial parks.

Note: You can download the Market Report No. 12 of the Initiative Corporate Real Estate on our website. Further information is also available at www.unternehmensimmobilien.net

Contact person: Patrik Völtz, Principal Investigator for Logistics Real Estate and Unternehmensimmobilien, voeltz [at] bulwiengesa.de