Hanover logistics region continues to gain in relevance

In general, demand for logistics real estate has increased significantly in recent years. This has been driven by the growth of e-commerce, increased “friend-shoring” and “on-shoring” due to the global political situation, and the increased division of labour, including in the economy. Demand for warehousing is correspondingly high. At the same time, the available space is becoming increasingly scarce, especially in attractive metropolitan areas.

This shortage is also noticeable in the Hanover region, with limited supply for large-scale sites in particular (>50 000 m²). Policymakers are responding to this challenge by calling for more sustainable land use. More and more industrial wasteland and existing industrial estates are to be revitalised, repurposed and developed further with integrated solutions. This means that brownfield development is a high priority, as it not only counteracts the shortage of space, but can also fill gaps in the cityscape. On the other hand, green field land is currently only being designated sparingly and in specific cases.

Nevertheless, greenfield developments are not impossible if the project developers have a convincing – and above all economically and ecologically sustainable – concept. Swiss Life Asset Managers has achieved this with its new “Hanover North I” project development in Wietze in the greater Hanover area. Here, a logistics centre of over 43 000 m² is being built on a recently acquired site of 77 000 m² with modern, high-quality fittings and an energy concept based on international ESG standards.

Environmental and economic sustainability plays a particularly important role for all the parties involved. It is not enough to implement the most necessary measures – ESG must be embedded in the DNA of all projects. This is also in the interest of the communities. They would like the long-term establishment of suitable companies and the generation of added value through trade tax and modern workplaces. For developers and investors, this means that they need to appeal to the right companies and impress them with high-quality properties in excellent locations.

Logistics properties with modern fittings are highly sought after by investors and tenants. This includes the generation of energy and heat via photovoltaic systems, heat pumps and geothermal probes, enabling low-consumption operations. This means that the ancillary costs for tenants are lower, and there is additional scope for adjusting rents.

The concept of “big boxes” also plays an important role in the development of logistics real estate. As these are always developed according to the same building type, they are significantly more scalable compared to other properties. This is also a positive aspect, as demand for storage space will continue to rise in the future.

Its central geographic location favours the Hanover logistics region – consisting of the greater Hanover area and the neighbouring cities of Salzgitter, Braunschweig and Wolfsburg to the east. It is an important hub and distribution centre for national and international freight transport. Hanover enjoys excellent transport links thanks to its airport (with a 24-hour operating licence), four federal motorways, four inland ports, and proximity to three North Sea ports (Hamburg, Bremerhaven and Wilhelmshaven), including the freight transport centre (GVZ) in Lehrte, which is praised by Deutsche Bahn as the “most modern transhipment facility in Europe”. These are ideal conditions, not only for domestic and cross-border goods transport, but also for the logistics companies located here.

The geographical location, combined with a solid infrastructure, makes the region particularly attractive for companies that want to efficiently supply the German and European markets. These specifically include companies from the e-commerce, automotive and retail sectors. Combined with current trends such as the energy transition and the transformation of the mobility economy, this is creating ongoing strong demand for suitable space. This is also shown in a study by the Fraunhofer Institute: With a new construction volume of around 250 000 m², the Hanover region ranked second in a nationwide comparison in 2023, compared to 14th in 2022. According to the Wirtschaftsförderung Hannover (Economic Development Hanover), the projects planned for 2024 to 2026 amount to around 440 000 m² of hall space.

Although the growth in e-commerce sales – a key driver of demand – has slowed and stabilised following the pandemic-induced boom, e-commerce is likely to continue to significantly shape the logistics property market in terms of demand for space.  In addition to numerous new project developments, the attractiveness of the Hanover region is also reflected in the development of rents, which had increased to EUR 6.20 per square metre by the end of 2023. This is a rise of 40 cents. This trend continued in 2024 with a prime rent of EUR 6.40 per square metre. Even higher rents are possible, particularly for modern, high-quality properties in central locations.