ELLWANGER & GEIGER: INDUSTRIAL AND LOGISTICS PROPERTY STUTTGART REGION 2013

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CONTENTS. …

CONTENTS.
The Stuttgart Economic Region 4
Market Trends 5
Facts and Figures 6
Investments 8
Outlook 2013 8

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  • 1. INDUSTRIAL AND LOGISTICS PROPERTY STUTTGART REGION 2013
  • 2. 3 4 CONTENTS. The Stuttgart Economic Region 4 Market Trends 5 Facts and Figures 6 Investments 8 Outlook 2013 8 Our Services 10 Your Contact Partners 10 ELLWANGER & GEIGER Real Estate 11 2 3
  • 3. THE STUTTGART ECONOMIC REGION. A81 direction Heilbronn A81 direction Karlsruhe A81 direction Singen A8 direction Munich County of Göppingen County of Ludwigsburg County of Esslingen County of Rems-Murr County of Böblingen Ditzingen Weilimdorf Esslingen industrial and logistics cluster* * logistics space > 50,000 sqm industrial space > 100,000 sqm Berlin
  • 4. 5 6 4 5 MARKET TRENDS. Global concerns like Daimler, Porsche and Bosch, as well as many strong midsized companies have created employment and wealth in the Stuttgart Region. Their success is mainly due to excellent export rates, but also to a high level of specialisation and closely linked value chains. To ensure economic success in a global industrial environment, it will be crucial to remain flexible and competitive, and to provide an excellent infrastructure for businesses in the Stuttgart Region ALLOCATION OF CAPITAL One option for reaching these goals is to invest in modern production facilities. This can be a challenge for midsized companies due to the extremely high capital require- ments and long capital commitment of such investments. Especially in a volatile market ­environment, foreign capital needs to be strategically ­allocated within the company. The capital requirement for research and development need to be harmonised with efficient production processes and a high level of standards. Only a successful trade-off between these ­factors will lead to sustainable economic success. RENTING OF PRODUCTION SPACE Industrial companies may therefore consider to reduce their capital commitment by renting property. Profes­ sional investors have met this demand with a balanced provision of lettable office, logistics and storage space. However, this trend is slow to gain ground in industrial production, the very heart of German midsized companies. In order to make use of production property as a hidden resource, it is crucial to strengthen real estate compe- tence within these companies. This can be reached by implementing corporate real estate management or through close cooperation with professional real estate partners. A NEW ASSET CLASS In the near future, production property will become more and more interesting for investors with a long term orien- tation. A low probability of default, a strong binding to location and long term leases of more than 10 years will provide for stable, secure cash flows with above average yields. FLEXIBLE USE OPTIONS The key to success in this new asset class will be standard- ised multi-functional production facilities in industrial A locations, the potential to be adapted to individual tenant requirements. This may be logistics in a former production site, or vice versa. Industrial and logistics ­tenants will ­appreciate the multi-functionality of such ­facilities, as it allows them to flexible react to market ­requirements.
  • 5. FACTS AND FIGURES. SPACE TURNOVER* For 2012 ELLWANGER & GEIGER Real Estate were able to ­determine a total of approx. 240,000 sqm of rented ­industrial and logistics space within the Stuttgart Region. This constitutes an increase in space turnover of approx. 45 per cent compared to the previous year (165,000 sqm). With ca. 65,500 sqm, newly built logistics property played a major part in this excellent result – a plus of nearly 64 per cent compared with approx 40,000 sqm in 2011. This means that newly built lettings made up round about one third of the total space turnover. In the county of Ludwigsburg alone, especially in Mark- gröningen, Marbach am Neckar, Schwieberdingen and Kornwestheim, ca. 56,000 sqm of newly built logistics space were successfully placed on the letting market. The remaining new developments were let in Esslingen (ca. 5,500 sqm) and Stuttgart-Weilimdorf (ca. 4,100 sqm). ELLWANGER & GEIGER Real Estate were able to win ­Mercedes-AMG as tenant for the modern logistics facility in Marbach am Neckar (ca. 12,000 sqm), Schenker Deutschland AG for 10,500 sqm of multi-­ functional ­logistics space in Schwieberdingen, as well as Rhenus AG & Co. KG for the 4,100 sqm in Stuttgart- Weilimdorf. These signings correspond with a market share of about 41 per cent for newly built logistics space in the Stuttgart Region. In 2012, the counties with the highest lettable space turnover of existing and newly built property were: Ludwigsburg with approx. 105,000 sqm (2011: approx. 33,000 sqm), Böblingen with approx. 49,000 sqm (2011: approx. 35,000 sqm), Esslingen with 45,000 sqm (2011: approx. 49,000 sqm). The most significant brownfiled transaction took place in Winnenden, where Alfred Kärcher GmbH bought ca. 58,000 sqm of Pfleiderer Ziegelfabrik (former brick factory). This was closely followed by the selling of the Redevco-areal in Markgöningen (ca. 53,000 sqm). ­Porsche acquired the former Mercedes-Benz transmission plant in Stuttgart-Zuffenhausen (ca. 45,000). With regards to greenfield, HUGO BOSS acquired approx. 58,000 sqm in Filderstadt-Bonlanden for their new high- bay warehouse. ELLWANGER & GEIGER Real Estate launched approx. 41,000 sqm in Marbach am Neckar designated for 24/7 industrial and logistics use, which was sold to Gazeley. In total, about 135,000 sqm of industrial and logistics property were successfully listed by real estate agents in 2012. This corresponds with approx. 56 per cent of the total letting volume. ELLWANGER & GEIGER Real Estate were able to market ca. 48,000 sqm, which constitutes a market share of approx. 36 per cent. * without lease extensions
  • 6. 7 8 6 7 RENTS In 2012 the average net rent for existing industrial and ­logistics space in the Stuttgart Region remained steady at approx. € 4.70 per sqm, compared with € 4.75 per sqm in the previous year. Average net rents for newly built logistics space ranged at € 5.55 per sqm, with peak rents of € 6.60 per sqm in the county of Ludwigsburg. Tenants requested and leased production and storage space mainly between 2,000 sqm and 5,000 sqm. For existing and newly built logistics property, lettable spaces between 7,000 sqm and 10,000 sqm were most requested. LEASE TERMS The average lease duration for existing property still lies between 3 an 5 years. Lately, a trend for shorter lease terms could already be observed. While lease durations range between 7 and 10 years for newly built logistics, leases of 10 years and more are not uncommon for newly built production space. Range of net rents € per sqm Average net rents € per sqm trend 2013/2014 County of Böblingen 3.40 – 6.50 5.10 County of Esslingen 2.50 – 5.50 4.50 County of Göppingen 2.70 – 3.80 3.50 County of Ludwigsburg 3.70 – 6.60 5.00 County of Rems-Murr 1.80 – 4.00 2.90 Stuttgart 4.50 – 6.20 5.20 Total 3.25 –5.40 4.70 Source: BANKHAUS ELLWANGER & GEIGER KG ©, March 2013 monthly net rents
  • 7. OUTLOOK 2013. To remain cost competitive, industrial companies in the Stuttgart Region will continue to outsource logistics ­processes to external service providers. In order to meet the constantly increasing requirements of the industry and to ensure smooth process chains, an ongoing demand for modern logistics property can be expected in 2013. Especially contract logistics requires modern, flexible and multi-functional facilities. The supply of such logistics ­developments will remain limited, as no major speculative construction project has yet been identified for 2013. Similar trends can be observed at industrial companies in the Stuttgart Region. Multi-functional newly built produc- tion facilities have come into focus as owner occupier or lease hold investment models. What counts for logistics, also holds true for industrial property: modern industrial production requires modern production facilities. INVESTMENTS. The demand for logistics and light industrial investment opportunities by private and institutional investors has ­remained on a high level in 2012. The high density of ­logistics service providers in the Stuttgart Region is a ­result of a strong economic base with an attractive mix of SME´s and global concerns. As in the previous year, also in 2012 predominantly private investors were active on the market. Transaction volumes for existing property ranged between € 3 m and € 8 m, reaching gross initial yields of 7.5 per cent to 9.5 per cent. Due to a general lack of new developments, Core property will continue to be scarcely available. As a matter of fact, only one logistics development in Böblingen sold to an institutional investor for approx. € 30 m. A modern logistics facility at the Stuttgart harbour was sold in a portfolio together with two warehouses in ­Sindelfingen, comprising a total of approx. 55,800 sqm of logistics space. For modern, highly flexible logistics property, ­ELLWANGER & GEIGER expect initial gross yields between 7.2 per cent and 7.8 per cent.
  • 8. 9 10 TOP YIELDS FOR COMMERCIAL PROPERTY (IN %) 2006 2007 2008 2009 2010 2011 2012 2013 8 9 In most cases, the refurbishment of existing space will not necessarily pay off. Especially the high energy costs of such older facilities stand in the way of modern and cost- efficient industrial production. For 2013, ELLWANGER & GEIGER expects steady market rents, with a slight increase in average rents in some counties. Base rents for newly built logistics facilities are going to range at € 5.50 per sqm. Source: Research BANKHAUS ELLWANGER & GEIGER KG ©, March 2013 Logistics Retail Centres Office Office/Retail in Prime-Location 7,0 7,0 7,5 7,5 7,5 9,5 7,2 10,5 10,5 7,5 8,0 7,5 7,25 7,5 5,55,55,55,5 5,25 5,5 5,0 4,6 5,0 5,0 5,0 4,6 4,6 5,5 7,5
  • 9. YOUR CONTACT PARTNERS. The industrial and logistics sector has its own characteristics. In this field, you should rely on specialists who know the requirements for buildings, infrastructure and property down to the last detail: ELLWANGER & GEIGER Privatbankiers. You will benefit from our expertise, our long-standing experience and our comprehensive services. Our team in Stuttgart looks forward to your call or visit. You can reach us at: Phone +49 (0)711/2148-286 or Fax +49 (0)711/2148-290. Information on the Internet: www.privatbank.de OUR SERVICES. Markus Knab Team Manager, Industrial and ­Logistics Properties Phone +49 (0)711/2148-227 Markus.Knab@privatbank.de Alexander Fink Consultant, Industrial and ­Logistics Properties Phone +49 (0)711/2148-261 Alexander.Fink@privatbank.de Moritz Weeber Consultant, Industrial and ­Logistics Properties Phone +49 (0)711/2148-383 Moritz.Weeber@privatbank.de Kathrin Ziegler Assistant Industrial and ­ Logistics Properties Phone +49 (0)711/2148-286 Kathrin.Ziegler@privatbank.de Letting Investment Valuation Consulting ResearchSale INDUSTRIAL AND ­LOGISTICS
  • 10. 11 12 10 11 ELLWANGER & GEIGER REAL ESTATE. ELLWANGER & GEIGER Real Estate offers you a one-stop shop for a comprehensive range of services ­relating to the asset class of real estate. With the very highest discretion and integrity, we enable you to keep your bearings in rapidly changing markets. Our success is founded above all on excellent knowledge of the market and decades of experience in the real estate business. COMMERCIAL PROPERTY Extensive research is the basis for our analyses of locations, portfolios and cost-effectiveness that reflect market conditions. From this, we derive strat­egies whose goal is to capitalize on potentials for earnings and effi- ciencies. Apart from comprehensive leasing services, our core expertise includes project consulting and transaction business. We adopt a holistic approach in consulting on real estate invest- ments: we partner you all the way – from the development of market­ing ­strategies, to preparation of data on properties, to implementation of ­marketing processes. OUR SERVICES Research Investment analysis and ­consulting Transactions, renting and leasing of office, retail, industrial and logistics facilities FUNDS & ASSET MANAGEMENT We plan individual real estate invest- ments and create special funds for ­institutional investors and professional private investors (family offices). Each investment approach is devised in close consultation with the customer. An investment volume is selected that permits niche investments and individual mandates. By creating portfolios for single investors or small groups, we are able to provide indi- vidual support for the duration of the investment. Different investment ­vehicles are selected depending on the needs and product preferences of each investor. OUR SERVICES Special funds in accordance with the German Investment Company Act (KAGG) Closed investment models (KG, GmbH) Luxembourg security funds and special funds, SICAV, SIF Individual schemes for offshore ­investors OUR LOCATIONS Head office Stuttgart Börsenplatz 1 70174 Stuttgart, Germany Phone +49 (0)711/2148-286 Fax +49 (0)711/2148-290 www.privatbank.de Branch office Munich Herzog-Rudolf-Straße 1 80539 München, Germany Phone +49 (0)89/17 95 98-0 Fax +49 (0)89/17 95 98-55 www.privatbank.de OUR OTHER PUBLICATIONS Retail Market Report Office Market Report Investment Market Report can be obtained free of charge from: Kathrin.Ziegler@privatbank.de
  • 11. DISCLOSURE: The data for this market report has been sourced directly from city and ­community authorities, as well as from realtors and owners. Our contact partners received standardised questions concerning quantitative factors like rental price, standard ground value, plot size and space turn-­over, as well as the prospects for the future. The quality of the answers to our enquiry varied significantly. Some values were estimated, some data was incomplete. However, this survey offers an overview of the current trends and developments in the industrial and logistic sector of the Stuttgart Region. BANKHAUS ELLWANGER & GEIGER KG Real Estate Börsenplatz 1, 70174 Stuttgart, Germany Phone +49 (0)711/2148-286, Fax +49 (0)711/2148-290 www.privatbank.de