For Insiders: Building in the Ruhr Area
For Insiders: Building in the Ruhr Area
For the first time, the project Developer Study Ruhr 2020 sheds light on the market for project developments in the Ruhr area. Our team has evaluated more than 1,800 projects. The most important findings: Housing construction and logistics are currently in top form - but many well-known players in the Ruhr Area prefer to keep a low profile.
Unlike the seven major class A cities, where project developers have been competing for land for years, the Ruhr Area is not riding a wave of success. Constant change is the order of the day. This means that new developments are an opportunity for those who know their way around and are courageous enough to tackle brownfields or cross-segment developments.
And it is running: Across all real estate segments, the total project development volume amounts to 11.1 million square meters. In terms of construction volume, the Ruhr Area is thus comparable with the class A cities of Munich and Hamburg. Almost half of the volume (46%) is accounted for by the four largest cities: in Bochum, Duisburg, Dortmund and Essen alone, 65.8% of all office space and 51.1% of all residential space in the Ruhr Area is being developed. Incidentally, most residential and office space is developed in Essen, and most logistics space is developed in the district of Unna.
Overall, residential construction in 2020 is in top form. The space-intensive logistics segment is also trumping. No wonder that the largest project developers are also logistics specialists.
Project development volume at a glance:
- Residential 3.4 million sqm
- Office 2.2 m sqm
- Retail 0.8 million sqm
- Hotel 0.3 million sqm
- Logistics/commercial 3.5 million sqm
The large project development volume should not hide the fact that many well-known national players in the Ruhr Area are holding back. According to the major national players, the reason for this is, on the one hand, the less liquid investment market and, on the other hand, the business management parameters. On the one hand, there are high costs for land and construction work, on the other hand, relatively low returns. This often makes it difficult to make a viable project calculation in many Ruhr area locations. But the moderate starting point in terms of prices and rents is at the same time the great advantage of the Ruhr Area over the class A cities.
Most of the projects in the Ruhr Area (approx. 70%) are already being developed by so-called investor-developers - i.e. investors who build for their own needs or for their own use and do not resell their projects like "classic" project developers. In this respect, the Ruhr Area is virtually anticipating a trend that has been observed in the class A cities for years.
The cities of Bochum, Duisburg, Dortmund and Essen are clearly the main drivers of project developments in the metropolitan region. They are developing almost half of all project areas and will continue to shape the Ruhr region in the coming years, as is well demonstrated by large-scale developments such as the Mark 51°7 on the former Opel site in Bochum or the Huyssen Quarter in Essen.
So far, 34% of the space is being realized in the residential segment alone. In addition to developments in central locations, decentralized residential development areas are also gaining in importance for project developers, and new residential quarters are also being created on the outskirts and in the surrounding area of large cities. Most of the residential areas are being developed in Essen, which even has slightly fewer inhabitants than Dortmund, the largest city in the Ruhr area.
Compared to previous years, a strong increase in the volume of project space in the residential segment is currently being recorded. More than half of the residential space is being developed in the top 4 cities. By 2024, however, the completion rate for residential units will be halved - based on current plans, which are expected to be supplemented step by step.
The largest residential project developer is Vivawest, followed by Wilma Wohnen, Deutsche Reihenhaus and Bonava.
The third largest segment in the Ruhr Area is the office segment with a volume of 2.2 million sqm and thus a share of 19.6% of the total volume. The office space developments are mainly concentrated in central locations or in current development areas.
Essen is also at the top here - every fifth square meter of office space is developed here. Many projects are under construction or in planning, which means a high volume of completions in the coming years. Here too, companies are developing primarily for their own needs - with the exception of Essen, investor development projects (73% in total) clearly dominate the segment. Only a minority of the projects are built speculatively, in the hope of later buyers. This counteracts possible concerns about overheating or potential vacancies.
The largest office project developer is Bau- und Liegenschaftsbetrieb NRW (BLB), followed by Landmarken, Soravia (with plans) and Aurelis Real Estate.
The Rhine-Ruhr logistics region is one of the top logistics regions in Germany. Unsurprisingly, the logistics and commercial sector with large-scale project developments, for example at well-known logistics locations in the district of Unna, accounts for a large share and, with a project volume of 3.5 million square meters, is just ahead of the residential segment (3.4 million square meters).
The project developer market is mainly dominated by investor developers who develop for the company's own portfolio; their share of the logistics project development volume amounts to 68.5 %.
The logistics locations in the Unna district account for around one quarter of the overall market in the Ruhr district. Together with the districts of Recklinghausen and Wesel, the district of Unna accounts for half of the project development volume of the entire Ruhr area in the logistics sector. The pipeline is still very well filled for next year.
In line with the trend, the development of project space in the retail sector is declining. Since 2017, newly developed retail space has been declining both in terms of trend and perspective. However, there are also players active in this market who, through mixed-use projects or large-scale refurbishments and conversions, are at least raising the space statistics - especially in the local supply sector, which was more likely to benefit from the corona lockdown. As things stand at present, many projects are under construction or in the planning stage, which can be attributed to the high volume of space in investor development. In the district of Recklinghausen 15% of all retail spaces are developed. Among others, the new construction of the Herten Forum is planned.
Top players especially with logistics space
The top players across all sub-areas are responsible for a total project volume of 1.8 million square meters. That is 16 % of the total project market. Approx. 57 % of the project area of the top players is logistics and commercial space, which can be attributed to the large scale of projects in this segment. With Vivawest Wohnen and Wilma Immobilien, two housing players are among the top 10 project developers. With 20 % project space, the residential segment occupies second place.
The largest project developer in the Ruhr Area across all segments is GARBE, followed by Goodman, Vivawest and EDEKA.
Note: You can find the order form for the study on our website (study only in German language).
Contact persons: Andreas Schulten, general representative at bulwiengesa, schulten [at] bulwiengesa.de, and Jeremy Feist, author of the study, feist [at] bulwiengesa.de