Panattoni anticipates continued high demand for industrial and logistics real estate

  • Panattoni’s target: development of more than 1 million square metres of industrial and logistics real estate in Germany
  • Capacity bottlenecks in the construction sector and protracted approval procedures are the challenges for the next one or two years

According to expert opinion, the demand for new logistics real estate continues to be high. The consulting company bulwiengesa recorded an annual growth rate for completed new logistics space of 5.1 percent in the last five years.

Fred-Markus Bohne, Managing Partner of Panattoni Europe, expects demand to remain at a continuously high level throughout 2018. “The structural changes in industry and trade due to digitalisation and the continuing expansion in the e-commerce sector are the main drivers of further development in the logistics real estate sector.”

In Bohne’s view, both user demand as well as the interest of the capital markets will remain stable or increase further, and this trend will continue in 2018. However, development activity could be restricted by the scarcity of suitable property sites, especially in metropolitan regions. Furthermore, the current boom has resulted in a shortage in capacity in the construction sector. Another trend is the increasing amount of time required by authorities to process applications for building permits. “Protracted approval procedures mean that the time available to complete buildings by the date required by customers becomes shorter and shorter. This is a difficult balancing act that we have to contend with more and more often,” Bohne explains. Panattoni’s strategy to deal with this situation is to obtain suitable sites as soon as they become available and increasingly engage in speculative development of logistics parks.

In the last three years, the project development company completed more than 800,000 square metres of logistics space throughout Germany. The consulting company bulwiengesa ranked Panattoni as a top developer in 2017 due to the quantity of logistics space created by the company. Panattoni’s developments include user-specific build-to-suit projects as well as speculative developments to satisfy the high demand on the market.

The projects developed by Panattoni fulfil very diverse customer requirements. For example, the user-specific business and logistics facility completed for Quip for their assembly and logistics services. Another customer, the B+S company, moved into a logistics complex consisting of an office building, logistics and transhipment area in Borgholzhausen. In Waiblingen, near Stuttgart, Panattoni carried out extensive refurbishment of an existing two-storey building and constructed two additional new halls for Schmalz + Schön Logistics GmbH. Furthermore, Panattoni constructed the new production facility for insulating materials for Firestone Building Products in Heinsberg and a logistics facility for storage of hazardous substances for the Noerpel Group in Elsdorf in Lower Saxony.

Bohne says that Germany continues to be one of the focus markets for Panattoni. Since its realignment in the market in 2015, Panattoni has developed 32 new projects in sought-after logistics locations. Fred-Markus Bohne is very pleased with the company’s successes so far and is confident about its future business. “Germany has great potential and our Panattoni recipe is excellently suited to this market. Short decision paths, speed and the willingness to accept a certain amount of risk, this is the DNA of our concept.”

Panattoni Europe is a full-service developer for industrial and logistics real estate. The company began its activity in the European market in 2005 and since then has developed more than 6.3 million square metres of new space. In Poland, where Panattoni has developed several logistics facilities for online retailer Amazon, Panattoni Europe is the market leader with 4.7 million square metres of developed logistics space and a market share of 42 percent.