Warehouse & Logistics Market MarketView Germany

Transcription

1 Warehouse & Logistics Market MarketView Germany Feb 2013 GDP Q4 GER -0.6% q-o-q GDP Q3 GER +0.2% q-o-q IFO BUSINESS CLIMATE INDEX Feb CBRE Global Research and Consulting GFK CONSUMER CLIMATE INDEX 5.8 Feb UER GER 7.4 % Feb OVERVIEW Quick Stats 2012 y-o-y Take-up Hamburg Frankfurt Prime rents Munich Frankfurt Hamburg Dusseldorf Berlin Hot Topics 565,500 sq m 447,000 sq m 6.50 / sq m 6.20 / sq m 5.70 / sq m 5.20 / sq m 4.50 / sq m Investment vol. Germany 1.65bn Ø-Prime yield Top 5 locations 6.50% Record import and export results and stable employment figures resulting in high levels of economic growth in Germany compared to other European countries Take-up in 2012 remains below the very good result of 2011, but is still high; the result is one of the best results registered in the last few years Rental markets expected to stabilise further in 2013 online shopping and fashion retailing continue to drive demand for logistic space Around 1.65bn of capital was invested in logistic property, which is a tremendously increase of 83% compared to 2011 Demand from institutional investors for modern warehouse and logistic property continues to increase Economic conditions According to preliminary calculations by the Federal Statistics Office, goods with a total value of 1,100bn were exported, which equates to a rise of 3.4% over the record level of the previous year. By contrast, imports rose only slightly by 0.7% to 909bn, which means that the trade surplus of exports over imports rose by 18.5% to 188.1bn, which was the second best result since the introduction of export statistics. The German economy grew by 0.7% in 2012 and was therefore significantly above the average level in a Europe still suffering the effects of the financial crisis. Low levels of investment in plant and machinery compromised an even better result. With employment figures at new record levels and the overall low average unemployment rate of 6.8%, the employment market continued to show its resilience despite the crisis. As a result, consumer spending rose by around 0.7%. Robust take-up and partially rising prime rents In the Hamburg market area, take-up of warehouse and logistic space reduced by around 25% to 565,500 sq m. Frankfurt also saw a reduction in take-up to its current level of 447,000 sq m, albeit the fall was significantly lower at some 14%. In view of the record turnovers of the previous year and the continued difficult macroeconomic situation in Europe, these results are still at a very high level. Looking objectively at both Hamburg and Frankfurt, these cities have recorded the third and second best space take-up figures respectively since Prime rents have remained stable in Hamburg and Berlin, and there was a rise registered in Munich and Frankfurt. Only in Dusseldorf was there a slight reduction in prime rent. Dynamic investment market and stable prime yields With invested capital of around 1.65bn, the transaction volume rose by more than 83% compared to the previous year, and was the highest result since In terms of investment volume, the final quarter of 2012 alone showed a greater dynamic than the whole of Even if the proportion of investment activity in the leading German logistic centres reduced somewhat, at least every seventh Euro was invested in the five most important logistics locations Hamburg, Frankfurt, Berlin, Munich and Dusseldorf. The prime yield for all of the German logistic centres was 6.5% at year-end.

2 February 2013 Warehouse and Logistics Market Germany MarketView Market environment Also called the backbone of the German economy, almost no other country is so dependent on its functioning export sector like Germany. Whilst the Germans are generally prudent, not just in times of crisis, and prefer to turn over each and every Euro at least twice, it is the non-domestic market which is continuing its enthusiastic purchase of expensive German products. For logistics, exports and imports mainly mean transport and therefore orders. Thus, the global economic situation is of great interest for the logistics industry, particularly in terms of how this affects Germany s most important trading partners. In terms of turnover volumes, these inevitably include France as the largest importer of German goods as well as the Netherlands, the USA and China. USA The economic development of the USA has been generally good in the last three years. After the dramatic downturn in 2009, the US economy has recovered quickly and significantly in the subsequent years, and in 2012, with economic growth of around 2.2%, even more powerful than the German one. Nonetheless, this welcome development in the past year was overshadowed at the end of the year by the discussions and negotiations relating to the fiscal cliff which, at the 1st January, threatened the newly blossoming US economy with spending cuts and tax rises. As neither political camp was able to reach an agreement on spending cuts and a cap on government debt, US president Obama managed to push through budget restrictions on all state departments, effective from 1st March As one of the most important trading partners (the USA was the second largest importer of German goods after France in 2011), Germany s export economy will not benefit from the US cost cutting measures and any potential resultant economic slowdown. Experts believe that this scenario is unlikely to persist and the economic climate appears to be unaffected to date: economic growth of 1.9% is still forecast for the current year 2013, and is even expected to rise to 2.8% for Overall, this is still a relatively positive outlook for the German export economy and therefore also for the logistics sector, even if the final outcome of the political resolutions and negotiations between the Democrats and Republicans to be continued in March are as yet unknown. France In addition to Germany, France has also performed well on a European level in the intervening five years of the financial crises. After a reduction in GDP of 3.1% in 2009, there has been continual growth in the subsequent years, albeit not at the level of Germany. However, it is expected that the performance will stay at the same level in Neither investment nor consumption will produce a decisive recovery. Opinions are widely divided about this year s economic development, ranging from 0.7% growth to a reduction of 0.5%. There is renewed optimism for 2014, with an average growth forecast of 0.8%. Overall, given the current status, no overriding impetus can be expected for the German economy in terms of foreign trade with France. Fig. 1: Ranking of German foreign trade (imports and exports) 2011 Fig. 2: GDP development since the onset of the financial crisis 2 Source: Federal Statistical Office Source: Consensus Forecast, International Monetary Fund

3 Netherlands Similar to France and the USA, the Dutch economy was hit hard by the financial crisis and contracted by 3.7% in the crisis year and 2011 saw a significant uplift in production output, which resulted in growth of 1.6% and 1.1% respectively. However, these positive developments were compromised by a reduction in consumer spending due to the unstable employment market and comparatively high inflation rate, causing the economy to shrink further by 0.9% in According to an assessment by the Dutch-German Chamber of Commerce, this trend will continue until Mid 2013, after which it forecasts an exportdriven recovery. Handling volumes in the Port of Rotterdam are forecast to be at record levels, a factor which could provide impetus to the German logistics industry in the second half of the year, due to its focus on trade with the Federal Republic. China Even the Chinese export economy has been suffering from volatile world trade and the continuing economic crisis in Europe over the last few years; albeit not to the same high degree. However, the continual weakening of economic growth from 10.45% in 2010 to its current level of 7.8% in 2012 (the lowest position since the start of the financial crisis) appears to be just a snapshot. According to information provided by the International Monetary Fund, stronger economic growth is expected in the current year China has become an important trading partner for Germany, and the importance of its share of overall foreign trade continues to grow. Fig. 3: Lending and investments: Germany Source: Federal Bank of Germany According to the foreign office, the value of German exports to China has grown from USD 270 million in 1972 to around USD 93.7bn in This means a rise of over 20% compared with 2010 alone. The short to medium-term development of China appears to be promoting growth in trade with a further increase in imports and exports, which should have a positive effect on the German economy and its logistics sector. Germany After the rapid recovery in 2011 and economic growth of 3.0%, the resilience of the German economy weakened noticeably due to the European debt crisis. The upswing of the previous year was sustained into the New Year, driven mainly by significant export growth in the first quarter. February 2013 Warehouse and Logistics Market Germany MarketView Table 1: Macroeconomic data and forecasts F 2014F German GDP Eurozone UK USA (annualised) Private consumption Investment in plant & machinery Industrial production Unemployment rate (BA), % CPI, % Production costs, % Source: Federal Labour Office, Consensus Forecast, Federal Statistical Office, Federal Bank of Germany Change y-o-y in %; F = forecast; (status: Feb 2013)

4 February 2013 Warehouse and Logistics Market Germany MarketView Nonetheless, although exports continue to develop very positively and a record 3.4% year-on-year rise was recorded by the end of the year, German economic growth slowed down due to the lack of investment in plant and machinery in the period following. Overall, there was an absolute reduction to around 175.8bn in 2012, which is a reduction of around 4.4% compared to the previous year s result. The main reason for the decrease in spending on plant and machinery and vehicles was the successively reduced capacity utilisation in the production industry over the course of the year. Similar to investment in plant and machinery, this also reduced over the course of the year, despite a slight rise at the start of the year. The capacity utilisation calculated for year-end was around 80.7%, which is around 4.4 bps down on the previous year. Despite the increased deterioration of the economy, the situation in the employment market improved, thereby confirming its resilience to the financial crisis. According to information provided by the Federal Employment Agency, the number of people in work increased to a record level of just under 42 million by the end of the year, and with it the number of those subject to social insurance contributions. This resulted in a reduction in unemployment rate, which remained at a low level in 2012, particularly in a pan-european comparison. Over 2012, the average unemployment rate was 6.8%, falling slightly to 6.7% by year-end. The good news in the employment market meant that 2012 also saw a rise in private spending, which was up 0.8% compared to This, in turn, had a positive effect on the warehouse and logistics market. Fig. 4: Exports and Imports Source: Federal Statisticcal Office Fig. 5: Industrial capacity: Germany Source: Federal Bank of Germany Fuel prices, which have a significant impact on the transport and distribution logistics sector, were relatively stable, despite the political turmoil in Egypt and Syria, albeit at a relatively high level. High operating costs mean that cost efficiency measures will further intensify, as has been the case for logistics operators for a number of years. This is particularly evident in the increase in transport capacity; for example, in the case of shipping, where the average size of ship (in terms of TEUs) has grown continually over the last few decades. Fig. 6: Mineral oil prices: USD/barrel 4 A future increase in efficiency is expected as a result of collaborations between normally competing shipping companies. It is hoped that a more efficient capacity utilisation can be realised through the cooperative use of ships, i.e. as a result of companies collaborating. Source: Association of the German Petroleum Industry

5 Fig. 7: Air freight volume: Germany Source: Company information Fig. 8: Sea freight indices: Baltic Dry Index & ConTex Source: Baltic Exchange, Hamburg Shipbrokers Association (VHSS) Logistics sector in Germany With a current motorway network of more than 12,800 km, around 41,900 km of railway tracks and a navigable inland waterway system of approx. 7,700 km, Germany is able to satisfy the highest demands for a modern logistics infrastructure. Together with its excellent inland transport and distribution systems, via high performance cargo hubs such as Frankfurt Airport and the Ports of Hamburg and Duisburg, which are connected to the global freight chains, Germany is a global leader in logistics. However, according to information provided by the Federal Statistics Office, the economic slowdown has again had a negative effect on the total volume of freight transport in Germany. Despite the strong growth of 6.5% registered in 2011, the total transport volume for all forms of transport reduced by 2.2% in 2012, reaching its current level of 4.3 billion tonnes. Most forms of transport reported reductions of between 1% and 2.7%. Germany s most important cargo airports reported a reduction of some 2.1% in freight turnover. The biggest loser in the past year was Frankfurt Hahn, where the volume fell by around 17.6%. Cologne/Bonn, Dusseldorf and above all Leipzig/Halle Airports saw rises in freight volume. By contrast, there was an increase in crude oil pipeline transport by around 1.5% to around 88 million tonnes and seagoing freight transport by 1.8% to 298 million tonnes, the highest growth registered for the year as a whole. A good example of this is the strong result reported by the Port of Hamburg: in 2012, 8.9 million TEUs (20 foot equivalent unit) of containers were handled and thus almost the same level as the previous year, with a marginal drop of around 1%. February 2013 Warehouse and Logistics Market Germany MarketView Fig. 9: Container turnover: Hamburg 5 Source: Port of Hamburg

6 February 2013 Warehouse and Logistics Market Germany MarketView The market shares attributable to the various forms of transport in terms of freight volume remained largely unchanged compared to the previous year. The highest share was accounted for by road transport (77.3%). This was followed by rail with just 8.5%, then by sea transport and inland waterways. Ignoring crude oil transport via pipelines, the smallest share by volume was held by air transport. An international comparison of the sector In 2012, the World Bank published its third global study Connecting to Compete, which analysed the competitiveness of the logistics sectors in 155 countries. The result was that Germany was unable to defend its 2010 lead position and has now been overtaken by Singapore (4.13), Hong Kong (4.12) and Finland (4.05); nevertheless, its high logistics performance index status of 4.02 was only just below the leading trio. There were well aboveaverage results in the criteria infrastructure, logistics know-how, tracking & tracing and punctuality. Warehouse and logistics rental market After the continual rise in take-up in the German market for logistic property between 2009 and 2011, 2012 saw something of a turnaround. Similar to 2011, the greatest level of activity was in Hamburg, with take-up of 566,000 sq m; however this was also a significant reduction of around 25%. Also, there was a reduction in take-up of warehouse and logistic space in Frankfurt; albeit, at a much lower level of around 14%, reaching 447,000 sq m. Despite the strong 2011 result and the continuing financial and economic crisis, the result for the whole of 2012 should be seen in a positive light. Also, the volumes of take-up achieved in Hamburg and Frankfurt were the third and second best results of the last eight years respectively, and were significantly above the long-term average ( ). Fig. 11: Modal Split Germany 2012 Source: Federal Statistical Office Fig. 12: Logistics Performance Index 2012 Source: World Bank Fig. 10: Logistics Performance Index 2012 partial results 6 Source: World Bank

7 Fig. 13: Take-up: warehouse & logistic property Higher volumes of take-up were not possible due to the lack of available modern space which, in the case of Hamburg, is the result of limited construction activity. This is also affecting the availability of poorer quality space. Furthermore, the stable demand for logistic space gives reason for further optimism. There are still a high number of enquiries registered in the market; however, there have been a relatively low number of lettings due to the caution being exercised by logistic companies in response to the economic uncertainties. Despite the excellent year in terms of foreign trade, with new record levels of exports and imports, the uncertain future prospects for many logistics services providers is enough to delay decisions with regards to expanding capacity. With increasing confidence in a sustained positive economic development however, a catch-up reaction is expected in the logistics rental markets. With this in mind, the German government is of the opinion that the low point of the economic crisis is now past. This is reflected in the renewed upwards movement of the ifo Business Sentiment Index and ZEW s Indicator of Economic Sentiment and point February 2013 Warehouse and Logistics Market Germany MarketView Table 2: Selected take-ups: warehouse & logistics sector 2012 Location Tenant Sector Area in sq m Tenant/User Harburg/ South Elbe Logistics 33,000 DSV Solutions Frankfurt Logistics 32,000 BLG Langgöns Logistics 30,000 Junkers Norderstedt, outside Hamburg Trade 29,776 Wellensteyn International Markgröningen Logistics 28,000 Cargopack, Emons Harburg/ South Elbe Logistics 27,963 arvato distribution Böblingen Logistics 27,000 LGI Hamburg Wilhelmsburg Logistics 25,000 PCH Packing Cologne Production 18,000 Objectflor 7 Berlin Production 17,500 Stadler Rail

8 February 2013 Warehouse and Logistics Market Germany MarketView to a recovery in the rental markets during the remainder of 2013; or at least to the increasing willingness of logistics service providers to take on longer term leases, which should lead to an increase in construction activity and an improvement of logistic space availability. The main focus of interest will be on state-of-the-art core properties with good alternative use potential, which also satisfy the increasing requirements in the transport and distribution logistics sector in response to the increase in online business. The rapid increase in the importance of e-commerce has led to a rise in demand for smaller distribution centres in relative proximity to the end-client. Rents The cooling down of the economy and resulting weakening of demand in the last few years has put downward pressure on rents, especially in southern European countries which have been particularly affected by the crisis. This trend continued in 2012; albeit not at the same intensity as at the very start of the crisis. By comparison, most locations in Central Europe and Scandinavia, including the German logistic centres, show stable to slightly rising rents. Munich and Frankfurt were able to register growth to 6.50 and 6.20, respectively, Berlin and Hamburg stabilized at 4.50 and 5.70 respectively. Only Dusseldorf registered a slight year-on-year reduction in prime rent, of 0.10 to On average, prime rents in the German hubs are lower than those of many European countries (London 13.82, Helsinki 11.42), and exhibit a significantly lower level of volatility based on historical rental price development. This is particularly evident in the Hamburg market where rental prices for the top properties have fluctuated only very slightly from the long-term average by just under 0.18 since the Millennium. Fig. 15: Prime rents in Europe, current status & annual comparison Fig. 14: Prime rents: Germany

9 CBRE Logistics Hubs Rents und Land Prices Germany 2012 February 2013 Warehouse and Logistics Market Germany MarketView 9

10 February 2013 Warehouse and Logistics Market Germany MarketView Investment At 25.2bn, around 11% more was invested in Germany s commercial property investment market in 2012 than in 2011, and the best result was achieved since the two record years 2006 and The strongest increase in investment activity was seen in the final quarter of the year, with more than 42% of the total capital invested in the last three months. In the top five investment centres, the total of almost 13.7bn was a year-on-year increase of 23%. In terms of the total transaction volume in 2012, the Berlin investment market was in first place with 4.25bn. Around 2bn or 93% more was invested here than in In Munich, there was a recorded investment volume of around 3.56bn, an increase of 25%. In Frankfurt, the investment turnover was 3.05bn (+6%). By contrast, the transaction volume in the Hamburg investment market in 2012 was 1.94bn or 9% below 2011 s level. At 859m, the Dusseldorf investment market recorded a reduction in transaction volume of 14% compared to The transaction volume in the logistics sector also showed significant increases: the investment volume of around 1.65bn, which was the best result since 2008, was a rise of over 83% compared with The volume in the fourth quarter alone was higher than was registered for the whole of In total, the warehouse and logistics sector accounted for around 7% of the total commercial transaction volume. Fig. 17: Investment transaction volume: Germany 2012 Fig. 18: Transaction volume by logistics use types 2012 There was again a slight fall in the proportion of the investment volume attributable to the top five locations. In 2011, every fifth Euro was invested in the logistics sector in one of Germany s logistic hubs; the proportion fell to 15% in 2012, commensurate with the 2010 level. Fig. 16: Logistics investment volume

11 Fig. 19: Transaction volume by use type & region Fig. 20: Transaction volume: single assets vs. portfolios Fig. 21: Transaction volume by investor type Transaction volume in detail In 2012, the dominance of logistic sheds as the most sought-after investment product in the logistics sector continued; albeit at a somewhat lower level than 2011, accounting for around 1.15bn or almost 70% of the capital invested in logistic property. There were significant increases in the proportion attributable to warehouses, which accounted for every fourth Euro invested. Despite showing improvement in 2011, production sheds played a rather subordinate role in 2012, accounting for only 3.6% or 60m of investments. As a result of ongoing economic crisis in the Eurozone and uncertain future outlook, the conservative portfolio strategies of institutional investors, with their increased interest in core properties, once again dominate transaction activity. Of the various use types of logistic properties, which continue to be considered as a traditional investment products, demand has increased mainly for high-quality, flexible logistic sheds with good alternative use potential, large lettable areas and good tenant covenants. After the significant decrease in the number of portfolio sales noted in 2011, there were indications of an improvement in 2012, with the proportion of the investment volume attributable to portfolio transactions rising from 16% in 2011 to its current level of 22.5%. The largest transactions of this type registered by CBRE included the acquisition of shares by the Norwegian state funds via its management company Norges Bank in a pan-european ProLogis portfolio. This included nine German logistic properties at a purchase price of around 65m. In total, the joint venture between Norges Bank and Prologis invested around 1.2bn in pan-european logistic property, which is further evidence of the increasing acceptance of the logistics sector as a classic investment product. February 2013 Warehouse and Logistics Market Germany MarketView Furthermore, the UK-based property company Hansteen purchased a portfolio from Cambridge Place Investment Management LLP for around 33m. 11

12 February 2013 Warehouse and Logistics Market Germany MarketView 12 Fig. 22: Transaction volume by investor nationality The largest single transactions included two deals by Union Investment Real Estate GmbH at 78m and 56m respectively. These included the Multicube project in Heddesheim, which was brought into the Uniimmo: Europa fund. Whilst transaction activity in 2011 was characterised by only a few purchaser types, 2012 was more diversified in this regard. Asset and Fund Managers and Open-ended Property Funds accounted for the highest volume of investments, in relatively equal proportions, each accounting for around 25% of the market activity. Project Developers, who accounted for a relatively high percentage of market share last year, were unable to continue their dominance on the purchaser side and reverted to playing a more subordinate role. This contrasts with the situation on the seller side: with almost 450bn (27% share), Project / Property Developers were by far one of the most active market participants in 2012 and were able to increase sales of their products, particularly in the second and fourth quarters of the year. Only Listed Property Companies / REITs were more active in the market, achieving a higher market share of around 29%. The picture on the seller side was as diverse as that on the purchaser side, i.e. there have been a number of different players active in the market. Fig. 23: Prime yields: logistic property In addition to Listed Property Companies / REITs and Project Developers, Corporates (14%) and Asset and Fund Managers (12%), and also Private Investors (7%) were active on the seller side, whereby the increased perception of logistic property as a traditional investment product is expressed. There was an increased market share attributable to international investors. On the purchaser side, these accounted for around 40% in 2012, which was significant higher than the 2011 figure (29%). Of particular interest is the fact that international investors remain interested in large-scale portfolios and single assets, with a preference for core locations. However, these continue to be in short supply and there is therefore an increased willingness to also invest high volumes in secondary locations. Examples of such transactions include the purchase of a six-property portfolio by the UKbased Hansteen Holding, which may be classified as opportunistic due to the high risk of rental loss; however, it would be premature to suggest on this basis that there is a tendency to accept a greater level of risk. Prime yield According to the rules of the market, an increase in investor demand at a time of low supply leads to increased purchase prices and, as a result of the stable to slightly increasing rents, to a stabilisation of prime yields.

13 Fig. 24: Prime yields: logistic property Only Berlin saw a 25 bps year-on-year fall in the prime yield to its current level of 6.5%. At year-end 2012, prime yields for high-quality properties in the top five locations stood at around the same low level, which is again a clear sign that Germany remains a highly attractive investment location saw the lowest ever average unweighted net initial yield for modern logistic property in the top five locations; it reduced by a further 5 bps in Thus, it remains significantly below that of the boom years 2004 to The gap between the unweighted average yield for the best investment products and the yield for a 10-year government bond was at its widest ever level of 523 bps at the end of Capital value development in the top five locations In the fourth quarter of 2012, the average Capital Value Index for Germany s logistic centres stood at with a base year of Compared to the same quarter in 2011, this equates to a renewed rise of around 1.7%; however, this does not apply to all of the major locations. The main contributors to the rise in the index were Munich and Frankfurt, due to their rising prime rents, and Berlin with its yield reduction. By contrast, capital values in Hamburg remained mainly stable, and reduced in Dusseldorf due to the slight fall in prime rent. February 2013 Warehouse and Logistics Market Germany MarketView Table 3: Yield gap: logistic property vs. office & retail property Logistics prime yield % Yield gap in bps Office Prime retail Shopping centres Retail parks

14 February 2013 Warehouse and Logistics Market Germany MarketView 14 Financial market environment Despite the ongoing financial crisis and hopes for a slow but steady recovery, restrictions on lending reduced further in Compared to 2011, the proportion of companies with financial problems reduced by a further 2 bps. According to the January poll carried out by the ifo Institute, this trend is continuing. Only 20.3% of the companies from the industry and trade sectors surveyed were of the opinion that lending conditions remain restrictive. In terms of the property finance segment, banks are continuing to focus on core properties. The dropout of classic lenders such as Eurohypo, Westdeutsche Immobilienbank and other international banks has led to gaps mainly in the financing of commercial property in the high-risk and opportunistic segments. Whether the introduction of Basel III, with its associated higher levels of equity capital backing, and the increased regulatory pressure by legislators in the Eurozone will increase the availability of credit is as yet unclear; current expectations are that these measures will have a considerable impact on lending, which will mean that risk assets in the form of loans and securities are more likely to be reduced rather than increased. Outlook With an exceptionally high percentage of exports, stable employment market, rising domestic consumption and a robust economy despite the continuing Euro crisis, Germany is one of the world s most attractive investment destinations for warehouse and logistic property. In view of the significant yield gap of 162 bps compared to modern office properties in the top locations, a renewed rise in demand, mainly from institutional investors due to their minimum yield requirements, is expected for this asset class. As a result, investment dynamic is anticipated to remain at a similar level in A catch-up effect is anticipated for the rental market, due to the return of confidence in the economy, and this is likely to result in a rise in take-up. Despite the fall in the IFW Logistics Indicator, which is based on sentiment, location and expectations, at the end of 2012, the ifo Institute s company survey and ZEW survey showed rising optimism in the fourth quarter for the third time in succession. Increasing stability in the Eurozone in the second half of the year, improved prospects for important trading partners and rising levels of online shopping suggest that the logistics sector can expect further positive impetus in Fig. 25: Capital values: logistic property Change in % p.a. Fig. 26: Capital Value Index: logistics Benchmark yield & yield gap, Federal Bank of Germany Fig. 27: Logistics Indicator for the German logistics sector Q Q Source: IFW, BVL

15 DEFINITIONS Tracking and Tracing Tracking & Tracing in German everyday usage refers to the tracking of the delivery and is a means of tracing the precise timing, location and status of the distribution of goods during the logistic process. Take-up This is the sum of all logistics space that is let, leased, or sold to an owner-occupier in a defined (sub) market and a defined period. Take-up also includes sublets of leased premises or owner-occupied space. Lease renewals are registered as space take-up if the logistic space let is larger than the space previously occupied. Only the additional space in an existing location will be added to take-up. Prime rent Prime rents are the highest sustainable nominal rent in /sq m/month achieved in prime locations, and top-quality buildings with top-quality fit outs. These are based as much on lease transactions concluded within the defined period as on the market overview of the local letting department. Prime yield The prime yield (net initial yield) is the ratio between initial annual net rental income (rent less nonrecoverable costs) and the total amount invested (purchase price plus purchasers on-costs = gross purchase price), expressed as a percentage figure, achievable in the relevant prime location in a building with first-class fit out, fully let according to market conditions. It is based both on sale & purchase contracts concluded during a period and also on the market overview of the local investment department. February 2013 Warehouse and Logistics Market Germany MarketView Warehouse Warehouses are characterised by the classic functions of a logistic property and have no special installations within the building. They generally have warehouse space of at least 5,000 sq m. Warehouses serve as storage for basic goods and are not specialised for any one particular user group. Production hall/shed The main function of production sheds is the storage and assembly of raw materials and partfinished products (components, systems) such as prefabricated parts and spare parts for the purposes of the production process. Production sheds are located in proximity to the industrial production property. The production shed serves as intermediate storage in the production logistic process. Distribution hall / Logistic shed According to the HypZert e. V. definition, the primary function of logistic sheds is the distribution of goods with additional order picking. This includes central warehouses, logistic centres and goods distribution centres. Modern logistic sheds are mainly designed as multi-use properties and have a relatively high degree of alternative use potential, suiting approx. 80% of all uses. Within the distribution logistics sector, the logistic shed serves as storage and logistic space and generally has a warehouse area of at least 10,000 sq m. 15

16 February 2013 Warehouse and Logistics Market Germany MarketView CONTACTS For more information about this MarketView, please contact: Research Germany Dr. Jan Linsin Senior Director, Head of Research Germany CBRE Bockenheimer Landstr Frankfurt t: e: Dennis Hartweg Analyst CBRE Bockenheimer Landstr Frankfurt t: e: Agency Industrial & Logistics Armin Herrenschneider Director, Head of Industrial & Logistics Germany CBRE Bockenheimer Landstr Frankfurt t: e: Logistics Investment Kai F. Oulds Senior Director, Head of Logistics Investment CBRE Bockenheimer Landstr Frankfurt t: e: + FOLLOW US GOOGLE+ FACEBOOK Global Research and Consulting This report was prepared by the CBRE Germany Research Team which forms part of CBRE Global Research and Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. 16 Disclaimer Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE GmbH clients, and cannot be reproduced without prior written permission of CBRE GmbH.