Garbe Industrial Real Estate sees diversification as key in a changing logistics landscape and is embracing photovoltaics, data centre conversions and sustainable construction.

Few, if any, building types lend themselves to the exploitation of the blank canvases that are their rooftops, quite like logistics and industrial buildings.

As is being widely demonstrated in the sector, the hectares of otherwise unused surface area can, if underlying structure and local regulations permit, provide the location for large photovoltaic installations that might otherwise take up large areas of land with the obvious, concomitant opportunity cost.

Not only are rooftop PV panels a tick in a box in terms of ESG credentials, they potentially represent a useful and substantial business diversification and an additional attraction for tenants when they can offer a cheaper answer to their power needs, which are rapidly increasing.

This diversification potential is something that Hamburg-headquartered logistics and industrial real estate specialist Garbe Industrial Real Estate has actively pursued, says Garbe Industrial Real Estate managing partner Christopher Garbe.

“As we have done infrastructure investment for a while, we started five years ago putting photovoltaic panels on our roofs and so we now have quite a large portfolio of solar panel parks on rooftops and are able to develop that side ourselves,” he says. “Obviously, that is an interesting infrastructure play, which a lot of our German investors are interested in.

“We look to the transition of our buildings into energy-producing assets. Industrial assets, logistics assets, lend themselves to it. They have huge potential. We do photovoltaic, but you can even add wind turbines and could turn this energy into hydrogen which has potential as well.

‘It’s different times now, so obviously companies have to find new and different strategies and we at Garbe have pivoted.’

Christopher Garbe, Garbe Industrial Real Estate

“The infrastructure part obviously becomes more and more popular. Investors that have previously invested in real estate are now looking more at renewable infrastructure.”

Timber building

Installing PV panels is not Garbe’s only ESG-compatible tactic.

Subsidiary Garbe Immobilien-Projekte is close to finishing the development of what will be Germany’s tallest building constructed in timber: a €140 million, 181-home residential building in Hamburg’s Hafencity called Roots. And later this year Garbe Industrial Real Estate and partner Logicenters will commence construction of Europe’s largest timber-built logistics hall: a 27,000 sq m, €31 million project in the port of Straubing, Lower Bavaria.

While huge power consumption means data centres are not an obvious nod towards ESG, data centre development is a diversification that several industrial/logistics specialists have now embraced, in part because the building type and power needs, if not the location type, are familiar territory.

“In addition we also have the data centre side – some investors might argue that is an infrastructure play rather than a real estate play. We have developed one of the most energy-efficient hyperscale data centres for Google at Hanau near Frankfurt in the past year, so that’s a sector which we find highly interesting and see enormous growth potential.”

“The biggest challenge for data centres is the energy part, they consume a lot of energy and obviously that’s a scarce resource so we have to see how we combine that,” adds Garbe.

Adapting strategy

As with most real estate companies, Garbe’s recent story has been one of adapting its strategy, including the investors that it targets. “It’s different times now, so obviously companies have to find new and different strategies and we at Garbe have pivoted,” Garbe explains. “We had been quite dependent on German institutional capital, which at the moment is a bit shy so we have changed to more international investors.” 

“Core capital is not so openly available at the moment and therefore it’s more difficult to source core deals and get investment into that.”

Working with private equity works quite well and there’s still a lot of that equity available for projects which provide higher returns through value-add development, he says. “That works for us quite well at the moment and keeps us particularly busy on the development side.”