How high is the solution potential of brownfield sites to combat the logistics space shortage?

New areas are hardly ever designated and are increasingly difficult to acquire

In view of the high demand for space, suitable areas are becoming increasingly rare to find. And the few available greenfield sites are currently the subject of extremely competitive bidding, with the result that land prices are rising massively and often rendering all calculations absurd.

Relief through the designation of new commercial and industrial areas (greenfield sites) is not to be expected. And if new designations are planned, the approval and planning processes are lengthy and marked by high hurdles. Against the background of minimising the ecological consequences of unrestrained building activity and protecting the valuable, non-replicable resource of land, these hurdles are absolutely sensible and understandable. The goal is to be realised through sustainable land management, which aims to reduce land sealing in Germany from the current level of around 63 hectares per day to only 30 hectares per day by 2030. The aim is to control land sealing more effectively and to steer it in an orderly direction. The EU Commission even aims to reduce land sealing to net zero by 2050. The prospects for new buildings on greenfield sites are therefore difficult.

Brownfield land as a beacon of hope for logistics real estate development

One solution could be to focus more on existing properties. From the point of view of climate balance, this is to be favoured in many cases anyway. However, the vacancy rate in the cross section of the German logistics real estate landscape is stated at an extremely low 1–3% in the reporting. Therefore, the use of existing properties is rarely a real option – at least from the current market perspective.

What remains is the search for already developed sites that have fallen out of use. Since from 2050 at the latest, new construction can only be carried out if another plot of land is unsealed, many market participants already have their sights firmly set on the brownfield strategy.

How and where to search for and find brownfield lands? National register of German brownfield sites needed

Brownfield sites are needed in increasing numbers in order to be able to meet current and, above all, future space requirements. But how can these areas be found and are there enough of them? This question is difficult to answer, because it would first have to be known where and how many brownfield sites are available in the first place. There are no firm findings regarding this. A national register of brownfield sites would be desirable. It is true that the German Federal Environment Agency reported 15 years ago that approximately 150,000 to 176,000 hectares were available.¹ However, this information has not been verified, updated or, above all, broken down qualitatively and geographically. More basic knowledge is needed here. For this reason, the topic of land registry is seen as one of the most important tasks by the newly founded association. Other countries, e.g. the United Kingdom, are already much further ahead here and have inventoried their holdings in detail.

As long as no comprehensive registry is available, project developers must act creatively and innovatively in order to locate and acquire suitable sites at an early stage. For example, GARBE is working on optimised digital identification of potential brownfield sites.

Classifications of brownfield sites: Upgrading brownfield sites

The strategy of using brownfield land, i.e. areas that are already being used or have fallen out of use, is not new. However, depending on the location type – located in urban or outlying areas – other brownfield sources have to be considered in the search grid.

Urban locations:

In urban locations, brownfield land sources can be highly diverse, as sites for urban logistics (Verlinkung zum Artikel Urbane Logistik) are usually much smaller (see our article on urban logistics). Here and there, closed leisure and cultural facilities as well as former municipal infrastructures can also be used. Unused office properties, originally also a possible source of land, are currently almost non-existent, so there is little significant potential here as an urban brownfield source. Even if this were the case, locations in urban fringe areas or peripheral office centres would be more relevant. Retail properties that have come under pressure due to changing consumption patterns in connection with the e-commerce boom can also be an urban brownfield source – especially if they are found in locations with an affinity to specialist stores.

Brownfield site found: Project developers are abandoned with the risks

Simply finding a brownfield site is only the first step towards making it usable. While greenfield sites with building rights rarely pose major problems, brownfield sites are often fraught with myriad imponderables that an actor willing to build must take on. Since brownfield sites often represent industrial locations that date back to the Wilhelminian period (around 1870), plans and documentation regarding known obstacles are scarce. On the one hand, the areas are often contaminated (waste, munitions etc.). On the other hand, heavy structures – both above ground and underground – are often obstructed. Comprehensive decontamination and evacuation is necessary. These measures are not only extremely cost-intensive, but also involve many protracted risks and are lengthy for those involved.

Project developers and investors often feel left alone in this phase. Ultimately, a contaminated site that does not generate any added value and is generally unsightly in terms of urban development is revitalised. As one of the economic lifelines of the national economy, logistics generates jobs and fulfils system-relevant tasks. This is a valuable contribution to society as a whole. However, risks and hurdles must be borne or mastered entirely by the project developer. A little more support from the state and local authorities would be desirable here, especially since the goal of minimising land sealing is also being pushed.

GARBE has a lot of experience in the implementation of brownfield projects

Brownfield project developments have been pursued at GARBE for a long time. A lot of experience has now been built up here. The Westfalenhütte is considered one of the most ambitious, but also most successful showcase projects. After a lengthy revitalisation process lasting around ten years, the overall project was completed in 2018. With the last stage of expansion, distribution halls with a total lettable area of 225,000 sqm were realised on the site.

During this time, many of the risks that such a project can present indeed became reality. Explosive ordnance finds in particular repeatedly put the feasibility in jeopardy. During the construction of the Westfalenhütte alone, twelve suspected bomb sites were located, two of which contained bombs and one of which had to be professionally defused. These so-called five-centner bombs require a safety radius of up to one kilometre for defusing.
During another GARBE project development in 2014, an American aerial bomb actually had to be detonated in Salzgitter on the former site of the Braunschweig steelworks built in 1941. Here the fuse of the unexploded bomb was too corroded to be defused. In addition, 50,000 tonnes of concrete foundations for the main armoury had to be broken on-site and reinstalled for foundation purposes at a later date.

To date, GARBE has completed around 1.3 million sqm of brownfield logistics space – But the search for new brownfield sites is becoming increasingly difficult

Since 2015, GARBE has realised around 1.3 million sqm of logistics space on brownfield sites, thus making a significant contribution to avoiding new land sealing. Especially in the years between 2015 and 2018, more than half of all logistics completions were brownfield developments. The Westfalenhütte, however, accounted for a large part of these developments. In 2018, only brownfield developments were realised. However, it must be emphasised here that only two project developments were completed in total. In recent years it has become increasingly difficult for GARBE to identify suitable brownfield sites or those with calculable risks. For this reason, the share is significantly lower, as the space needs of tenants cannot be met in all regions.

Overview of all GARBE Industrial Real Estate brownfield projects in Germany

Despite sophisticated search methods, players willing to build are often faced with the problem that customer enquiries do not harmonise with the brownfield sites on offer. These are not a ubiquitously available resource, but are often only found in regions where economic structural change has taken place. The Ruhr region with its former coal and steel industry is certainly the best known of such business locations in Germany. Brownfield locations are therefore only a regional component in the provision of land.

Above all, the difficult-to-calculate risk of a brownfield site also prevents a more intensive use of this type of land. Nevertheless, they represent a source of land that can and must be tapped even more intensively in the future against the backdrop of increasing demand and the need to minimise land sealing. This is at least the case if the urban development and environmental policy components reward or promote such a commitment and the risks are spread across multiple shoulders.

GARBE becomes active as a brownfield pioneer in the advisory board of the German Brownfield Association (DEBV)

As explained above, brownfield sites can contribute to the shortage of logistics space. However, a few preconditions must be created in order to pursue this goal even more intensively. Two measures in particular are worth highlighting:

• Creation of a national brownfield register
• Promoting brownfield measures to minimise risks

These are two of the main tasks that the German Brownfield Association (DEBV), which was founded at the beginning of 2021, has written on its agenda. GARBE is happy to support these goals and is represented on the advisory board as a founding member. The goals can certainly be achieved if GARBE works intensively with other members of the association to increase the political and social recognition of brownfield sites.

1. German Federal Environment Agency 2005, Die Zukunft liegt auf Brachflächen [The Future Lies on Brownfield Sites].
2. Industrial and railway sites can also be found in urban locations in some cases, but these source types are mainly located in outlying areas.