Glossary

B2B

“Business to business,” as the acronym spells out, refers to the relationship between corporates. This means that goods or services are provided for another company rather than for an end-consumer.

B2C

The acronym, whether it is spelled out “business to consumer” or “business to client,” refers to the business relationship between a company and its end consumers. It is most frequently used in the e-commerce industry.

BF.Quartalsbarometer

This quarterly barometer compiled by bulwiengesa since 2012 represents an analytic tool that has been very well received by the German financing market. The BF.Quartalsbarometer score is highly meaningful because it captures around 90 percent of the funding volume approved in Germany. It is based on a quarterly poll that bulwiengesa conducts among a panel of around 200 senior industry experts. The barometer has been published in collaboration with the company BF.direkt, hence the name.

Box plot

A so-called box plot is a chart used to visualise how various characteristics are distributed. The box plots used in the survey represent the distribution (position and measure of dispersion) along a scale. The so-called whiskers extending from the boxes represent the minimum and maximum figures, meaning the outliers. The box itself marks the area in which half of all data are located. The shaded band inside the box represents the median that bisects the distribution. One quarter of the data is above the median (shaded in orange) and one quarter below (shaded in blue). Since these areas each represent 25% of the figures, they are referred to as quartiles. The left margin of the box marks the 25% quartile, whereas the right margin of the box marks the 75% quartile.

 

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Branded delivery

This term refers to a nascent trend by vendors or retailers to keep the logistics process in-house, including the last-mile delivery. In Germany, the practice has been adopted by Amazon and Zalando, among others.

Brexit

The term “Brexit” is a portmanteau word blending the words “British” and “exit.” It was coined in connection with the UK’s referendum on whether or not to leave the European Union, and now refers to both the process and the fact of the UK’s exit from the EU.

Brownfield developments

The term refers to building works on plots pre-used for industrial purposes over long periods of time, or to special development areas formerly zoned as railway sites, for instance. Such areas may also include former military sites or backfilled open-pit mines. Land of this type is in any case subject to extensive repurposing, and often implies elevated threats of soil contamination or unstable subsoil conditions. This increases the potential cost risk in the form of waste disposal costs or measures to stabilise the subsoil, among others. A residual risk of follow-up costs remains even beyond the completion of such works (redevelopment, decontamination, etc.). On the bright side, brownfield sites often come with superb transport links that date back to their previous use for industrial purposes or because they used to be frequented by heavy goods traffic. Development costs can thus be lower than those of greenfield development, not least because the planning permission is already in place. Whether or not the existing permit can be used for the contemplated development must be clarified on a case to case basis.

Certification

Buildings raised in accordance with particularly sustainable criteria in regard to social, environmental and economic aspects may qualify for a “green label” certification. A variety of such labels exists that are subject to different national standards and available in several grades. In Germany, the DGNB German Sustainable Building Council issues four different certificates: “DGNB Bronze,” “DGNB Silver,” “DGNB Gold” and, since 2015, “DGNB Platinum.” The UK-based certification body BREEAM uses seven different ratings, ranging from “non-classified” to “outstanding.” Within the framework of its GreenBuilding Programme, the European Commission issues its EU Green Building Standard. The LEED certificate issued by the US Green Building Council uses a rating system of four levels, from “Certified” to “Platinum.”

Core location

This term refers to prime sites in more or less clearly delineated areas like town centres or the heart of logistics regions that are deemed particularly stable and low-risk. These areas are favoured under a long-term investment strategy.

CSR

The acronym stands for “corporate social responsibility” and implies a concept of holistic accountability in business. A company implementing the concept will typically seek to reconcile the interests of its business stakeholders with communal, social, and environmental concerns.

E-commerce

“E-commerce” is short for “electronic commerce” and refers to the online retail business. The term, while theoretically covering the entire world of internet trading, is used essentially for buy-and-sell processes. On top of that, customer services and online banking are considered e-commerce, and some market players even include mail-order retailing in their definition of e-commerce.

E-fulfilment centre

This term refers to a warehouse facility combining all the logistics processes that come into play in e-commerce. The processes, which typically include stock-keeping, handling of incoming online orders from end customers, shipping out orders and accepting returns, are executed by a fully automated intralogistics system.

Energy Saving Ordinance

The German Energy Saving Ordinance (EnEV) provides the legal basis for the energy-efficient development of new or existing buildings.

Established logistics regions

bulwiengesa has identified 28 connected areas in Germany with demonstrable real estate economic activity in the logistics sector. It is the first time that statistical-demographic and economic fundamentals were used to define such regions.

Greenfield development

This term covers building works on land not previously developed or marketed. As often as not, the properties involved represent former agricultural land (hence the name “greenfield”) rezoned for development as industrial or trading estate. Obtaining a planning permission therefore often marks the first step. In deviation of the above definition, the term is also used for plots that are already zoned for development as part of trading estates, but that have not been sold yet. This goes in any case for trading estates not created through land recycling.

Industry 4.0

The next paradigmatic shift after Industry 3.0 (computer-controlled manufacturing processes) involves the networking of humans, machines and products into cyber-physical systems, the Internet of things and cloud computing, among other phenomena.

Logistics sectors

bulwiengesa applies a drilldown to the logistics real estate take-up in Germany that distinguished between these sectors: freight carriers/transports, CEP (courier, express, parcel), retail/wholesale trade (excluding food), food/beverages, industrial, automobile and automotive suppliers, construction and construction suppliers, IT/computing/data technology, chemical industry and suppliers, medical products/pharmaceuticals, e‑commerce, fashion/textiles logistics, consumer goods, household goods, and miscellaneous.

LTC

The “loan-to-cost” ratio for which the acronym stands puts the amount borrowed for a given property in relation to its total investment costs.

LTV

The “loan-to-value” ratio for which the acronym stands puts the amount borrowed for a given property in relation to its fair market value.

Mechanised delivery sites

Mechanised delivery sites, known in Germany by the acronym “MechZB,” are used predominantly in the CEP industry (Deutsche Post DHL Group). In these small-scale logistics facilities, consignments are automatically sorted and prepared for their last-mile delivery.

Monte Carlo simulation

The Monte Carlo simulation represents a stochastic model used for forward projections to obtain a forecast value. Simply put, this statistical method generates a limited number of random figures that remains within the parameters or values defined by the person conducting the test. Taking the predefined parameters into account, the simulation produces a large number of results (in this case 1,000). The modelling calculates the probability of occurrence for each result within the range of samples. The range of values itself has a probability of occurrence of 100%. The variables defined for the simulation of this survey include property prices, incidental acquisition costs, construction costs and financing charges.

Net initial yield (NIY)

Representing a transaction-based ratio, the net initial yield (NIY) reflects the annualised current passing rent minus non-recoverable property expenses, divided by the property valuation plus the incidental acquisition costs typical in the respective market. The NIY is one of the essential measurable variables for the investment market. It describes the typical price level of a logistics region. The lower the posted figure, the more attractive and pricey the location. The reported prime yield rates refer to properties let on long-term leases (e.g. of 10 years), sound property standards (alternative use options), and warehouse areas of more than 10,000 sqm. They represent stabilised yield figures that ignore outliers and thus fail to reflect the absolute peak figures of a given market.

New logistics facilities

The posted new logistics facilities include all new-built logistics and transshipment properties, normally for the period under examination, 2012 through 2016, and in some cases for 2017, too. Expressly not covered by the term are redeveloped. Neither are manufacturing plants or other commercial properties covered by the term.

Omni-channel

This term was coined by the e-commerce industry, and complements terms like multi-channel and cross-channel marketing as well as no-line commerce and everywhere commerce. It signifies a business model that maximises customer experience by making a retailer’s entire assortment available via any sales channel (be they stationary or online).

Order picking

This term refers to the order preparation process that consists of collecting goods or items to fulfil existing orders from the inventory in stock. The person handling this job is called the order picker.

Pure player

Retailers of this type sell their goods or services exclusively via the internet.

Renewable Energy Sources Act

Germany’s Renewable Energy Sources Act (EEG) defines rules and regulations that govern the conservation of fossil energy sources and the promotion of renewable energy sources for the production of electricity.

RIWIS cities logistics

The cities picked by bulwiengesa AG for its RIWIS database are grouped into four categories depending on their functional significance for the international, national, regional or local real estate market:

Class A cities:
Germany’s leading centres, having national and in some cases international significance. Large functional markets across segments. Example: a total office stock of more than 7 million sqm, a long-term average take-up of more than 150,000 sqm, and a long-term average prime rent of 16.00 euros/sqm or more.

Class B cities:
Major cities of national and regional significance.
Example: a total office stock between 2 and 5 million sqm, a take-up normally exceeding 35,000 sqm, a long-term average prime rent of 12.00 euros/sqm or more.

Class C cities:
Important cities of regional and to some extent national significance, and serving as centre for the surrounding region.

Class D cities:
Small towns of regional focus with a central role for the directly surrounding countryside; marked by lower market volume and take-up.

Same-hour delivery/same-day delivery

These express delivery models within the hour or before the end of the day are emerging in urban areas in Germany. It is one of several approaches to solve the last-mile problem in online retailing.

Social security-covered jobs

The term social security-covered employment covers all workers and employees, including those in training (apprentices, et al.) that are obliged to pay into a health insurance, pension plan, long-term care insurance and/or are obliged to pay contributions to the Federal Labour Agency (unemployment insurance pursuant to the Employment Promotion Act, AFG), or for whom the respective employer has to pay into a statutory pension plan. This principally excludes therefore self-employed persons, relatives helping in the family business, and civil servants, as well as those employees who are exempt from the insurance obligation because of marginal employment. The aggregation is based on the place-of-work principle, meaning the employees are allocated to the town where their place of employment is located.

Supply chain

This term refers to a complex management process that covers the organisations, players, resources, activities and information involved in getting a product or service from its supplier to a given customer.

Survey desk

The bulwiengesa survey desk is an online tool for conducting qualitative surveys which may also be used in combination with online polls. The tool meets the latest standards for qualitative survey tools, while its freely scalable architecture can be fully adjusted to the client requirements at hand. It has a multi-lingual set-up, and thus permits a wide range of possible deployment scenarios, including tenant and satisfaction surveys, market polls for target group panels, among other options.

Value-added services

The deliverables of this type of service exceed those provided under an assumed basic service model. In the logistics business, such extra services could, for instance, take the form of quality controls, assemblage, repairs or sales returns over and above standard services like storage, transshipment and haulage.

VdS protection classes

The protection classes defined by the German Association of German Property Insurers (VdS) govern the minimum requirements for intrusion and hold-up alarm systems. There are three VdS protection classes (A, B, C) and twelve security classes.