Germany’s supply of industrial and commercial land is drying up. According to GARBE Research, logistics regions may come to a standstill by 2037 that will seriously threaten site development and the economy in general. Companies might even leave these regions unless adequate countermeasures are taken. Will policymakers act in time to avert a looming land crisis?
For the first time, GARBE Research is presenting an analysis on the subject – and suggesting possible solutions.
It has been well known for years that the supply in available industrial and commercial land (so-called GE and GI land) in Germany is dwindling and that the development of logistics warehouses and sometimes of industrial plants keeps getting harder. The main reason for this is a steady increase in demand for space that started in the year 2000 and that comes at a time when less and less land has been, and continues to be, zoned for the purpose.
This development is politically motivated: The German Government intends to reduce land consumption to below 30 hectares per day nationwide by 2030 to achieve a net zero land consumption by 2050. The situation is further exacerbated by the fact that existing industrial and commercial land is often repurposed or put to some other use. The development is ominous for the German economy because logistics are crucial for production and consumption – they represent the lifeline of the German economy.
To analyse the creeping loss of industrial and commercial land more closely, GARBE Research conducted a comprehensive survey based on data sourced from the Official Real Estate Cadastre Information System (ALKIS). The survey considered industrial and commercial land (GE and GI categories) that are principally suited for logistics operations. The analysis covers both the general stock and the annual changes that are verifiable through status reports – which means that the survey took both new sites coming on-stream and sites lost into account.
Sites lost represent all land that was absorbed and has thus become unavailable for the development of new structures. The freshly added land includes both newly zoned sites and site expansions. Also taken into account were brownfield sites because these could be recycled and put to different use. It is true that usable sites are regularly put back on the market whenever their occupiers go out of business or reorganise, but generally speaking, the supply is steadily drying up because it is outpaced by demand.
The centre of gravity that the GARBE Research analysts chose as example for their survey is North Rhine-Westphalia. Data coverage in the most populous German state is particularly sound; moreover, North Rhine-Westphalia has one of the densest infrastructures in Europe and has been severely impacted by structural change. The ALKIS data used cover the years 2016 through 2023 and were extrapolated based on average values for that period.
The analysis shows that about 53 percent of the disused GE and GI sites – meaning around 800 out of 1,500 hectares – remained vacant throughout the entire survey period. It is reasonable to assume that there will never be relevant demand for these sites and that they are practically ineligible for logistics purposes. Most of these sites are compromised by structurally adverse characteristics or represent brownfields difficult to recycle because their reclamation would be time-consuming, complex and costly. Examples for such sites include surface landfills like in Werne (40 ha), former public utility installations like the power plant in Voerde (31 ha) or a decommissioned corporate waste management facility near Bielefeld (28.5 ha).
Between 2016 and 2023, the stock of GE- and GI-zoned sites available in North Rhine-Westphalia shrank continuously, whereas the average area consumed annually amounted to around 110 hectares. As the extrapolation shows: The provision of land will have gone down to zero by 2042, the year in which the newly zoned land and the land absorbed will cancel each other out. All new sites are absorbed by the market as soon as they are zoned. While 2042 may sound like the distant future, the time that remains to influence the trend is short. After all, experience shows that planning processes tend to be long-winded. So, it is crucial to act quickly now. Especially in the logistics regions of North Rhine-Westphalia the pressure to act is even higher if future shortages are to be prevented.
Figure 1: Change in ALKIS sites in North Rhine-Westphalia that qualify as GE/GI land potential (rated as “expansion, new development” in ALKIS) and permanently vacant GE/GI sites (rated as “disused, decommissioned, abandoned” by ALKIS)
Rural regions such as Münsterland or Sauerland tend to be unsuitable for logistics purposes. The second stage of the analysis therefore concentrated exclusively on seven logistics regions in North Rhine-Westphalia where demand for space is particularly strong and which are therefore most likely to be affected by changes. Although the land consumption in these regions averaged 84 hectares per year between 2016 and 2023, thus falling short of the state average, the ramifications will probably be dramatic due to the limited total stock in available land. Unless the supply is replenished, things could grind to a halt as early as 2037 when the new land zoned for development no longer covers demand.
As a result, businesses find economic planning and strategic development options increasingly fraught with uncertainty. They could even be forced to relocate to other German states or indeed leave the country altogether – ushering in an ominous trend in site selection policy. Moreover, the need for space will probably continue to grow going forward because the economic recovery, structural drivers like social commerce and new production capacity for batteries and other technologies will create additional space requirements. To meet tomorrow’s demand, the necessary prerequisites should be put in place today.
Figure 2: Change in ALKIS sites in North Rhine-Westphalia that qualify as GE/GI land potential (rated as “expansion, new development” in ALKIS) and permanently vacant GE/GI sites (rated as “disused, decommissioned, abandoned” by ALKIS)
To address the looming bottleneck in commercial land, more greenfield land would have to be zoned for development. But since doing so goes against stated government policy, the focus should also include the reclamation of permanently vacant sites both inside and outside the logistics regions. A major step to achieve this would be a pinpoint infrastructure expansion to make remote sites more accessible and to mitigate their adverse site characteristics. Moreover, the willingness to engage in brownfield projects should be strengthened because operators tend to be discouraged by the high costs and the complex implementation of such projects. If the looming bottleneck and the threat of companies moving out are to be averted, it can no longer be an option to just keep going.
In view of the current market situation, with falling demand and a slight increase in vacancies, the question arises as to whether the issue of a shortage of space is even acute. In our view, however, it is important to talk about it. The lengthy processes involved in otaining building rights and planning are major contributors to the sluggishness of real estate markets and and thus a cause of the looming pig cycle. To shed light on this important topic, we will be hosting a webinar in the first half of 2025, bringing together key stakeholders for an in-depth discussion. Stay tuned!
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