Commercial space turnover and demand for land

Commercial space turnover

Development of space turnover and sales cases

For 2023, the Hannover Region has a commercial land turnover of 34.6 ha (source: Landesamt für Geoinformation und Landesvermessung, Regionaldirektion Hannover/Kadasteramt). These are areas ready for construction, i.e. generally undeveloped plots of land that are designated as commercial development areas in the land use plan (F-Plan) in accordance with the German Land Use Ordinance (BauNVO) (Fig. 1).

This means that take-up is well below the long-term average (1992 to 2023) of 61.2 ha. In 2022, the total take-up was 81.8 ha, in 2021 46.0 ha. Although the low volume of space is likely to be due to a continued slight decline in the availability of space, among other things, its main causes appear to be the development of interest rates in the past year in general and the development of construction interest rates in particular.

The current shortage of construction capacity is also likely to have had an inhibiting effect. In addition, there was only one sale with an area of over 10 ha in 2023.

The lower volume of land is also accompanied by a reduction in the number of sales (Fig. 1). The average size per land sale, which has risen noticeably in recent years, will fall from 1.11 ha in the previous year to 0.63 ha in 2023, thus approaching the long-term average of 0.6 ha.

Looking at the nationwide trend, however, it is clear that the Hannover Region is following the national trend. According to data from the real estate consultancy Savills (source: "WirtschaftsWoche", 11.01.2024), the transaction volume of commercial properties across all types of use in 2023 was 60 % lower than in the previous year. Transactions in the office property sector fell by 77% in this period, industrial and logistics properties by 46% and development sites by 30%.

In terms of take-up for 2023 (see also Fig. 2), the state capital Hannover is in the lead with 15.7 ha. It is followed by Wedemark with 4.5 ha, Lehrte with 2.9 ha and Neustadt with 1.7 ha of take-up.

Compared to the respective long-term average since 1992, only the state capital Hannover and Wedemark achieved above-average annual take-up in 2023. The highest take-up over the entire period since 1992 is in the state capital Hannover (396.8 ha), Lehrte (203.8 ha), Langenhagen (198.2 ha) and Barsinghausen (138.6 ha).

The state capital of Hanover will have the most sales cases in 2023 with 14 cases, followed by Neustadt with six cases and Isernhagen and Lehrte with five cases each.

The highest number of sales in a long-term comparison since 1992 is in Hanover with 557 cases, followed by Neustadt (230), Wunstorf (226) and Isernhagen (215).

Take-up by property size class

Fig. 3 shows the distribution of commercial space take-up by property size category for 2023 compared to the overall period since 1992. Accordingly, 78 % of take-up is accounted for by small and medium-sized spaces up to 5,000 sqm - slightly above the long-term average (75 %). Larger spaces between 5,000 sqm and 10,000 sqm account for 7% of take-up and are therefore well below the long-term average of 13%. Accordingly, the volume of large spaces (> 10,000 sqm) is slightly above the long-term average (13 %) at around 15 %.

Take-up of space and development of land prices

The average prices for space are highly dependent on the quality of transport connections, the use and the size of the plot. In particular, land in the state capital of Hannover has a very differentiated price structure depending on its suitability for use (office, retail, industrial area, logistics).

The average prices of land sold, broken down by regional sub-zones , rose by just under 18 % across all locations between 2022 and 2023. However, there is also a clear divergence in price trends between the state capital of Hannover and its surrounding areas, which runs counter to the previous year's trend.

Average prices per square meter in the state capital of Hanover fell from a record level of € 273/sqm in 2022 to € 194/sqm in 2023. Despite the price decline, the current value is well above the ten-year average of € 154/sqm. In contrast, prices rose in the immediate surrounding area and in the regional municipalities in the outer ring. In the immediate surrounding area, prices for commercial space rose from € 104/sqm to € 137/sqm and in the outer region from € 81/sqm to € 105/sqm.

Take-up by regional origin of the companies and usage groups

The analysis of sales cases by origin of the companies for 2023 shows that the majority of sales by far were attributable to relocations within the municipality (Fig. 5). This category accounts for 59 % of sales. The importance of expansion purchases on neighboring properties has also increased significantly compared to 2022 (from 8 % to 29 %).

Against the backdrop of decreasing availability of space, established companies are increasingly securing expansion reserve areas. Increasingly, municipalities are allocating space exclusively or preferentially to companies that are already established. Relocations between municipalities in the surrounding area account for 6% of cases in the year under review, as do supra-regional relocations.

Property inquiries according to usage groups and property sizes

Further statements on the usage groups and the desired plot sizes can be derived from location inquiries recorded by the Hannover Region's business service and the municipalities. A total of 159 evaluable cases are available for 2023.

Logistics-related uses account for a fifth of all inquiries (Fig. 6). In this group, demand varies in terms of the size of the space, depending on the specification, but space of 10,000 sqm or more is predominantly sought. In second place with 11 % is the industrial/manufacturing group, which predominantly requests larger properties of 1 ha or more, as well as the manufacturing trade, (car) workshops, petrol stations (11 %), mostly with inquiries of up to 2,000 sqm.

This is followed by leisure and health services (8 %), which usually demand small to medium-sized spaces of between 2,000 sqm and 10,000 sqm, and construction, building materials trade and storage (8 %), which mostly demand spaces of 1 ha or more.