Sirius Sirius Real Estate

Sirius continues to operate primarily in Germany but also in the UK – two of the top six economies in the world – where it owns and manages a well-diversified portfolio of mature business park assets, as well as those where there is an opportunity to add value through asset management.

Markets overview

The integration of BizSpace, a leading provider of regional flexible workspace across the UK acquired by the Company in 2021, continued apace this year, driving meaningful operational and financial synergies underpinned by the Company’s internal operating platform.

In Germany, the primary focus is to build a “critical mass” around its “big seven” cities of: Berlin, Hamburg, Düsseldorf, Cologne, Frankfurt, Stuttgart and Munich. The Company has a secondary focus on a selection of key border towns where we can reap the benefits of markets on both sides of the border and the periphery of the “big seven” cities.

The Company provides 1.8 million sqm of manufacturing, storage and office space across Germany. The Company’s tenant base is diverse ranging from multinational corporations and government agencies to SMEs within the German Mittelstand and individual tenants.

In the UK, BizSpace is a leading provider of regional flexible workspace, offering office, studio and workshop units to a wide range of businesses in convenient regional locations. The Company provides 4.2 million sq ft across 70 sites.

BizSpace is equipped with a high-quality portfolio in a supply constrained market that offers significant organic growth potential in rental pricing. BizSpace’s UK tenant base is similarly diverse to that which the Company serves in Germany, ranging from multinational businesses to manufacturing-focused SMEs and individual tenants

The German market

Germany comfortably remains the largest economy in the European Union and the third largest in the world after the USA and China (1), as it has overtaken Japan to take the number three spot. It has maintained its reputation as an industrial powerhouse with a strong export focused economy characterised by low unemployment.

The German economy continues to face headwinds, however GDP is expected to grow in 2024 and beyond. The labour market remains robust as unemployment rates remain at 5.4% and consumers overall have more funds to spend as inflation eases and real wages see improvement (2).

The European Commission estimates a 0.3% GDP contraction occurred in Germany in 2023, followed by 0.3% expected growth in 2024 and a further 1.2% in 2025, with inflation coming off from its 11.6% peak in October 2022 to 6% in 2023 and 2.5% in February 2024 (3),being the lowest level since June 2021 (4). Inflation is expected to finish the year at 2.8% in 2024 and fall further to 2.4% in 2025. Gas supplies in Germany are stable and balanced, with wholesale prices having fallen in recent months (5).

Commercial real estate investment volumes in Germany in 2023 were down sharply to just under €23.3 billion from €54.1 billion the year prior according to BNP Paribas, representing a 57% drop year over year. This marks the first time in eight years that investment volume was below €50.0 billion, showcasing the headwinds faced by the industry (6).

Once again, the majority of sales volume was registered in and around Germany’s seven major cities (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart); however; these registered only €9.3 billion in investment, down from €28.2 billion the year prior.

Berlin led the way with €3.2 billion invested followed by Munich (€1.3 billion), Hamburg (€1.3 billion) and Frankfurt (€1.2 billion). Investments in these cities saw a fall between 62% and 76% compared to the previous year.

Logistic property investment led the way, receiving €6.1 billion in investment ahead of the office and retail asset class, accounting for 26% of total volume. Offices investment was just under €6.0 billion with retail investments accounting for 24% of investment with €5.7 billion. Overall investment in these sectors was down approximately 40% year on year. Foreign investors were responsible for around 37% of total
investment levels, compared to 45% in the previous year.

The German economy continues to be driven by a diverse, and large number of small to medium-sized companies (“SMEs”), the so called “Mittelstand”, which remains robust and agile to changes in the market. Germany leads the way globally with such “SMEs” making a significant contribution to the economic output and employment (Berenberg). These companies are highly specialised, acting as strategic partners for larger companies along the value chain, contributing significantly to innovation through their opportunistic mindset. In excess of 58% of jobs created in Germany are attributable to the Mittelstand, generating a total of 35% of sales. The space that the Company provides is especially suited for SME tenants which occupy 55% of our space and contribute 62% to the Company’s rent roll.


The UK market

The UK continues to adjust to life after Brexit. An increased focus on supply chain security has driven demand for commercial storage as lead times for imported goods have increased. The end of free movement of people is exacerbating a shortage of labour which is affecting the entire economy. At the time of writing, the country faces political uncertainty that comes with an election in early July 2024.

Despite these uncertainties, on the ground we continue to experience the resilience of British business – our smaller units are highly sought after and are dominated by small businesses serving every area of the economy. Our larger industrial spaces benefit from the shortage of supply that comes with there having been very little new stock constructed in a generation.

The OECD forecasts a return to growth for the UK economy in 2024 of 0.7%, following a contraction of 0.3% in 2023, and forecast growth of 1.2% in 2025 (1). Inflation has reduced to 3.8% from its peak of 8.8% in September 2022 (2) and is forecast to return to its 2% target in the first half of 2024 (3).

Commercial real estate investment in the UK in 2023 was £43 billion, representing a 23% decline year over year from £56 billion. Domestic investors increased their share of investments at approximately 55% compared with 45% foreign investment, flipping the trend seen in previous years (4).

Of the £43 billion invested, the office and industrial sector  enjoyed investment of £9.5 billion and £9.2 billion respectively, accounting for 43% of total investment. Year on year, the office and industrial sector decreased by 50% and 34% respectively.

The fourth quarter of 2023 saw investment increase by 15% compared to the previous quarter, indicating that investments are picking up. Looking ahead, commentators expect bond yields to stabilise off their peaks and rate cuts from mid-late 2024, easing the cost of capital and thereby alleviating concerns of asset investors, even though interest rates are expected to be higher than those enjoyed over the past decade. The Company has taken advantage of the market sentiment investing in assets with attractive yields.


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