Expansion a stroke of luck for ZF
Space growth is currently being driven primarily by online retail. But the automotive industry also urgently needs space. ZF's logistics center, which was inaugurated in 2018 with around 13,700 square meters of logistics space in Alfdorf, Baden-Württemberg, is a good example of how projects in the automotive manufacturing and logistics sector can be a success despite the difficult conditions. ZF subsidiary TRW Automotive GmbH produces and stores automotive production materials and components for occupant protection systems here. The total investment costs amounted to well over EUR 15 million. The project developer of the property is Panattoni, headquartered in Hamburg, one of the market leaders in the industrial and logistics real estate sector: since entering the European market in 2005, Panattoni has developed more than 9.3 million square meters of new space. In Germany, one of the company's focus markets, Panattoni has developed over 50 new projects in the last three years.

The development for ZF is not the only project that Panattoni has realized in the automotive sector. In September 2019, the project developer began building a logistics center for the leading international manufacturer of front-end modules HBPO at the Kleinblittersdorf site in Saarland. A hall area of around 15,000 square meters, around 1,500 square meters of office and social space and around 1,200 square meters of mezzanine space will be built.
Panattoni is also building a production facility for Microvast GmbH, a provider of energy storage system solutions, at the Ludwigsfelde site in Brandenburg near Berlin. Panattoni will begin construction in April 2020 and will develop around 10,500 square meters of production space, around 5,300 square meters of hall space and around 3,300 square meters of office and social space. The choice of location is likely to prove particularly beneficial following the US manufacturer Tesla's efforts to relocate to Brandenburg.

Structural change in the automotive sector exacerbates the situation
Despite the planned and already completed realization of projects, as in the case of ZF, the automotive sector also faces numerous challenges when it comes to future relocations. "The development of logistics and industrial sites is becoming increasingly complex, primarily due to a lack of land, an acute shortage of skilled workers, long approval processes and scarce construction capacities. We therefore believe that the cooperation between all parties involved in this expansion project for ZF was exemplary," explains expert Fred-Markus Bohne, Managing Partner of Panattoni.

In the automotive industry's hot spots, Bohne is particularly concerned about the challenging combination of a shortage of space and a lack of personnel. According to a study by the Logix Initiative Logistikimmobilien, no region in Germany has the same amount of space and personnel. The shortage of space in particular is the major challenge for the capacities required by the automotive industry. Experts assume that the situation for the automotive industry will continue to worsen. The demand for logistics and light industrial space is increasing as outsourcing processes progress.

Panattoni is countering lengthy approval processes by securing available space at an early stage wherever possible and increasingly building without pre-letting. This enables us to provide users with the logistics capacity they need. Demand is high, so the risk of speculative development is low. Panattoni counters scarce construction capacity with long-term partnerships with construction companies such as Goldbeck International.
At the same time, the automotive industry is facing a profound change due to electromobility. This change is taking place in parallel with the production of conventional petrol and diesel vehicles. According to expert estimates, it will be needed in parallel as a bridging technology until at least 2025. "This means that the shortage of space in the hotspots of automotive production, for example in Baden-Württemberg and especially in the Stuttgart conurbation, will become even more acute. Production and logistics in the automotive sector are already under pressure; they cannot find anywhere near the land they need," reports Bohne.

Use of brownfields and multi-storey buildings as a solution
Leading project developers see the use of so-called brownfields, brownfield sites with previous industrial or military use, as one of the ways out of the shortage of space. These sites are usually fully developed, have good transport links and are located close to or even in the city center. However, brownfield developments are generally associated with an increased risk for the project developer due to possible contaminated sites, species protection aspects and the complicated process of obtaining building rights. Another solution is to simply use the existing area more intensively. However, it is doubtful whether these measures alone will be sufficient to meet demand. Panattoni argues that politicians and business development agencies should pay more attention to the existing shortage of space in the automotive hotspots and thus ensure that the economy remains viable and efficient.