Take-up with good result in the first half of the year

The restrained investment activity of the previous year continued in the first half of 2024. Even after key interest rates were lowered again slightly for the first time in the first half of the year, buyers and sellers are still in the discovery phase, although price adjustments were more moderate in the current year. The sluggish economy in Germany, which
has also hit the industry hard, is also making investors cautious.

With take-up of 1.74 million sqm in the first half of the year, Unternehmensimmobilien got off to a strong start in 2024. The high take-up performance of light manufacturing properties in particular ensured the best half-year result since 2019. Lettings accounted for around 42 % of take-up, which corresponds to the previous year’s share and is therefore also at the same proportionate level as in previous years.

Rental market continues to show positive trends

No turnaround was observed on the investment market in the second half of 2023 either. The changed political and economic conditions were reflected in a continuous rise in interest rates, among other things, which continued to have a strong impact on transaction activity. In addition, market participants are concerned about older business parks with a high proportion of office space and fears of recession, particularly in the production property sector. In the second half of 2023, take-up remained at a high level of 1.32 million sqm. The year as a whole saw the highest take-up performance since 2019, which is largely due to a strong result for owner-occupied light manufacturing properties. The continuous rise in rental prices underlines the sustained demand for space in the Unternehmensimmobilien segment.

Restrained start into the new year

No turnaround has yet been observed on the investmentmarket in the first half of 2023. Further steps in interest rates by the central bank have not dispelled the uncertainty among the players. Price determination
within the Unternehmensimmobilien was not yet completely concluded in the past half-year, but there are increasing signs that a formation of a basis for purchase prices is no longer in the too distant future.
Take-up again increased slightly in the first half of 2023. This development is attributable to a further strong result for production properties and is therefore also largely due to owner-occupancy.

Continued high demand for space

Despite continuing uncertainties and economic gloom, the demand for space from users of corporate real estate remains high. Accordingly, the second half of 2022 saw an increase in take-up in corporate real estate. With the turnaround in interest rates, yield increases and purchase price discounts have visibly made their way onto the investment market. As a result of this development, investors have had to reassess the market environment and a wait-and-see and cautious approach has become established.

Corporate real estate is still crisis-resistant

The global developments since the spring of this year have caused a strong restraint to spread on the investment market. As a result, transaction activity in many asset classes has come to an almost complete standstill. The corporate real estate segment is an exception. Instead of a slump in the investment volume, a slight increase in the total volume was recorded compared to the previous half-year. Compared to the previous half-year, the transaction volume even increased slightly by 6.9 % and amounted to around 1.64 billion euros.

Investment market for Unternehmensimmobilien in transition

The full year 2021 saw a record transaction volume of 4.3 billion euros. This result was primarily driven by the strong first half of the year. Light manufacturing properties accounted for the largest share of traded properties on the market in the second half of 2021. In addition, warehouse properties were increasingly in investors' favor.
The Unternehmensimmobilien asset class became increasingly interesting for a broader group of investors due to its crisis resilience during the Corona pandemic and the resulting increase in importance. As a result of the rise in purchase prices, a downward trend in yields was noticeable in all property categories of corporate real estate in the past year.

Investment market for Unternehmensimmobilien is on an upward trend

The reluctance of the market players due to the Corona pandemic now seems to have completely disappeared. Germany's economy is growing again and Unternehmensimmobilien in particular, with their diversity of space, offer good conditions for uses from a wide range of sectors. As a result, a clear upward trend was also noticeable on the investment market for Unternehmen-simmobilien. The transaction of a converted property in Munich played a significant role in this result. Considering the rental market, business parks were the most sought-after property catego-ry among Unternehmensimmobilien in the first half of the year, with 116,000 sqm of space let-ted.

Unternehmensimmobilien: Yields stable even in the crisis

The Corona crisis had a significant impact on the rental and investment market for Unternehmensimmobilien. The results for the first half of 2020 initially indicated an expected increased investment volume for 2020 as a whole. With a volume of 900 million, however, the result for the second half of the year was considerably weaker than in the previous half-year with 1,244 million euros - investors were increasingly adopting a wait-and-see approach.

Record completions of Unternehmensimmobilien

Project developers have reacted to the shortage of space, which has been acute for some time: Already after the first half of 2020, a new record of around 2.2 million sqm of completed Unternehmensimmobilien is emerging for the year as a whole. In 2019, 1.3 million sqm were completed, equivalent to an increase of 66 % in 2020. At the same time, the transaction volume of more than 1.2 billion euros in the first half of the year was also extremely high - and this despite the conspicuous reluctance of international players to act. Once again, business parks were by far the most sought-after. These are the key findings of the latest market report published by the Initiative Unternehmensimmobilien.

Spotlight Gewerbeparks

Just a few years ago, they were still under the radar, but now business parks are a real estate class in high demand. Investors are buying heavily, and with a transaction volume of almost 1.2 billion euros, industrial parks in 2019 accounted for almost 40 % of the total investment volume in 2019 in corporate real estate. And project developers are creating new areas on a large scale: Whereas in 2015 only 90,000 sqm of space were completed, five years later the figure was 210,000 sqm. The "Spotlight Business Parks" of the Initiative Corporate Real Estate analyzes this property category for the first time and illustrates details and background information for a broad public.

Investments Climbing to New Record Total in 2019

Just six months ago, this report sounded a rather cautious note. The transaction volume of the first half-year of 2019 had been the lowest since 2015. Given the global jitters, a massive dip in Unternehmensimmobilien investments seemed conceivable at the time – even as the general investor interest in real estate investments remained strong.

Strong Demand for Property and Floor Space Coincides with Shrinking Supply

Germany’s real estate investment market is going through a sustained peak phase – fuelled by the ECB’s sustained zero-interest policy and a high level of liquidity. There have been no clear signs of a turning point so far. There are admittedly first indications of deteriorating sentiment: Certain market barometers such as the Deutsche Hypo Real Estate Climate 1 and the Deutsche Hypo Real Estate Economy Index (REECOX 2) have for some time now suggested that the cycle has “passed its zenith.” Among many market players, however, the thirst for German real estate investments is far from quenched. Or so the latest transaction reports suggest. Yield rates continue to harden, and the investment volume in most asset classes is at a record high.

Deceleration of the market

In years past, the figures reported by Initiative Unternehmensimmobilien seemed to have only one way to go: upward at a brisk pace, and downward just as fast in terms of yield performance. But in late 2017, first signs that the market development is slowing began to show as the transaction volume declined. The problem was: The largest portfolios had already been traded, and the options for quickly placing major investment volumes had become far more difficult. In subsequent months, market operators tended to focus on single- asset deals instead.

Investment turnover was below the previous half year

The developments of the first half-year of 2018 resumed directly where 2017 left off: Demand for Unternehmensimmobilien—German for multi-use and multi-let commercial real estate—remained strong. Still, with an investment turnover of barely 800 million euros, the mid-year result was almost 17% lower than it had been in the previous halfyear or roughly 32% lower than the long-term average of the prior half-years.

Dynamics on the market for Unternehmensimmobilien

Both for the member companies of Initiative Unternehmensimmobilien and for the Unternehmensimmobilien asset class of multi-use and multi-let commercial real estate as such, 2017 proved to be a special year. It was defined by a rather dynamic investment demand. For the first time, the year-end transaction volume crossed the mark of 3 billion euros. The demand structure varied considerably between mid-year and yearend. While the first six month were dominated by large portfolio transactions, the latter were almost entirely amiss from the second half of the year. In some instances, the portfolio transactions involved the acquisition of entire companies along with their assets. In fact, several member companies were also involved. M7, for example, joint forces with other investors to take over Hansteen. The corporate structures of Atos and Geneba changed as well.

Enormous growth -1. Hj. 2017 exceeds full year 2016

The corporate real estate asset class is back on a growth path. This is shown by the evaluation of investment volumes in the current report of the Corporate Real Estate Initiative. The yield compression in the classic asset classes (office and retail), which is still continuing but is easing slightly, is causing investors to focus on corporate real estate in particular. While around 600 million euros were invested in corporate real estate in 2011 and 2012, this figure had already risen to 1.3 billion euros by 2013. The following years of reporting do not show any major slumps in investment activity either. In 2015, the number of transactions even exceeded 2.3 billion euros. This is the previous record result since 2011.

Another successful year for the investment market

Corporate real estate is becoming increasingly established as an asset class. Because investors are looking for new investments due to the rapid yield compression in the asset classes office or retail an attractive investment alternative and further diversify their portfolio. This can be easily understood by taking a look at the reports of the INITIATIVE UNTERNEHMENSIMOBILIEN. Whereas in the first analysis years 2011 and 2012 only around 600 million were converted into corporate real estate, the transaction volume has already doubled to more than 1.3 billion euros by 2013. The increase continued at a faster pace in the following years, with the result that investments in corporate real estate always amounted to EUR 2 billion or more. The year 2015 was particularly strong demand and achieved the previous record result of over 2.3 billion euros. As mentioned at the beginning, this development ran parallel to the overall commercial property investment market in Germany.

Transaction volume in the first half of 2016 already exceeds the previous year's figure.

2015 was a record year for commercial property investments in Germany. This was also evident in corporate real estate. With a total volume of 1.9 billion, it was the strongest year in terms of turnover for transactions with corporate real estate since the initiative was founded. Interestingly enough investment activity, especially in the second half of 2015 - in the second half of 2015 alone. In the first half of the year, more than 1.3 billion euros were invested in corporate real estate. In the first half of the year, the transaction volume was only around EUR 610 million.

New investment record - 40 % above previous year's result

After a restrained first half of 2015, the market for corporate real estate developed all the more dynamically in the second half of the year. The goal of the Corporate Real Estate Initiative to establish the asset class of corporate real estate on the German real estate market is thus moving a significant step closer. The available liquidity in this market segment is once again impressively demonstrated. In the second half of 2015, by far the highest investment turnover since the Corporate Real Estate Initiative was founded three years ago was achieved. The investment volume of 1.32 billion euros is almost 40 % above the best result to date from the same period last year. The general market situation, but also the improved transparency in the area of corporate real estate, made this development possible.

Business parks are once again highest in demand

Compared with the same period of the previous year, the investment volume in the first half of 2015 fell by 19.9%. Nevertheless, corporate real estate continues to enjoy brisk demand. A total of 72 corporate properties were traded in the first half of 2015. In 2014 as a whole, only 92 properties were traded. Therefore, the declining transaction volume is rather due to the comparatively small size and/or quality of the traded properties and not to a lack of interest. Many high-quality and expensive properties have already been traded in the recent past. Taken together, the investment volume for corporate real estate in the first half of 2015 totals around EUR 532.2 million. Of the previously 24 billion in commercial real estate, corporate real estate accounts for around 2.2 %.

Transaction volume in 2014 is 75% above previous year

Corporate real estate in Germany is enjoying increasing demand. The transaction volume was around 1.62 million euros, almost 75% higher than in the previous year. In total, 2014 in Germany was a year of growth in the commercial Transaction market in real estate valued at around 40.5 million euros. Corporate real estate thus accounts for around 4% of total commercial real estate investment assets. In the previous year, the share was only around 3.5 %.

Business parks are currently the most sought-after property category

Around 930 million euros will be invested in corporate real estate throughout Germany in 2013. This corresponds to around 3.5 % of the total commercial investment volume of 26.7 billion euros (excluding residential and hotel). The investment performance has developed relatively equally over the two half-years (1st half 52.8%; 2nd half 47.2%). In the first half of 2014, corporate real estate with a volume of around 381 million euros was traded. The total volume of commercial investment in this period was around EUR 15.5 billion, which is historically one of the highest transaction volumes in the first six months of a year. The share of corporate real estate was around 2.5 %.