Hamburg’s office-letting market started 2018 with appreciably less activity than a year before. Grossmann & Berger, a member of German Property Partners
(GPP), has calculated that some 105,000 m² of office space was let or owner-occupied in the 1st quarter, whereby owner-occupiers comprise a mere 1 % of the total. “The record set in the previous year proved unattainable and the result dropped by 34 per cent. The main reason for the decline is the diminishing stock of available space, which now considerably limits the choice that can be offered to potential clients,” says Andreas Rehberg
, managing director of Grossmann & Berger, commenting the latest quarterly figures.
Number of big office lets halved
Year on year the market share of clients taking more than 5,000 m² of office space fell from 30 % to 15 %. Only two big lets, with a total volume of some 16,000 m², were agreed in the first three months, which translates into 67 % less space than in the 1st quarter of 2017. The biggest agreement signed in the 1st quarter related to 10,000 m² that the insurance group Signal Iduna rented in the “Vattenfall Building” (Überseering 12, City North) as a temporary measure. When Hansainvest Real Assets has completed the new build “Kap 5” office block (Kapstadtring 5, City North), Iduna will be leaving the Überseering to move into these new premises.
The second-biggest let of the year to date was for space in the “Tower am Michel” which already stands at Ludwig-Erhard-Strasse 22 (City). Zeaborn, founded in 2013 by a group including the Bremen construction magnate Kurt Zech, will soon be moving into 5,300 m² of space, occupying four floors of this building. At the beginning of the year the shipping company took over all the shares in the E.R. Schiffahrt line, simultaneously buying the ships’ broker Harper Peterson & Co. In 2017 Zeaborn took over the ship management business of the insolvent Bertram Rickmers shipping line.
The mid-sized segments between 1,001 and 2,000 m² and between 2,001 and 5,000 m² saw most new business in the 1st quarter, posting 26 % (27,000 m²) and 24 % (25,000 m²) respectively, followed by the smaller segments - under 500 m² accounted for 18 % (19,000 m²) and 501 to 1,000 m² for 17 % (18,000 m²).
City reports the biggest volume of turnover
The trio of central sub-markets, City, City South and HafenCity, took 62 % of the market for office space in the 1st quarter. The largest of the three was City
with a share of 29 % (30,000 m²). The good result in this sub-market was partially due to three fairly large lets in the “Tower am Michel” (Ludwig-Erhard-Strasse 22). Apart from Zeaborn (some 5,300 m²), the Fairplay shipping company (about 1,300 m²) and the freight forwarding service Damco Germany (some 1,300 m²) have decided to move into this striking building opposite the iconic “Michel” church.
Mid-sized deals favour City South and HafenCity
Second-placed City South
, with a total take-up of 20,300 m², benefited from the new Ocean Network Express, a joint venture established by the shipping lines Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines and Nippon Yusen Kabushiki Kaisha, which rented some 4,100 m² of space in the “Berliner Bogen”, a bow-shaped building at Anckelmannsplatz 1. An agreement for over 3,000 m² of space was noted at the “FrankenQuai” (Frankenstrasse 18-20) where the federation of German insurance providers, the Gesamtverband der Deutschen Versicherungswirtschaft (GDV), took about 3,200 m². The third-strongest sub-market, HafenCity
, accounted for 12 % (14,200 m²). Four lets of more than 2,000 m² each were noted in this district. They include two agreements for space in the “Watermark” (Überseeallee 10). The logistics company Kühne & Nagel (some 3,000 m²) and the private broadcasting company RTL (some 2,500 m²) both secured office space in this new build on the banks of the Elbe that is now close to completion.
Tourism and transport sector is biggest client
In the 1st quarter of the year three sectors - tourism and transport, insurance, and construction & real
estate - dominated the market, accounting for about half of office take-up. Mainly due to the space taken up by Zeaborn and Ocean Network Express, the tourism and transport sector constituted the biggest client group with 25,500 m² or 24 % of the total. The next-largest group was the insurance sector, which generated 15 % (about 16,000 m²) of the total as a result of the temporary let of space to Signal Iduna. Construction and real estate came third, taking up 13,000 m² of office space, equivalent to a share of 12 %. Five agreements for over 1,000 m² were signed by this sector, one of the new tenants being Regus. This business centre operator took some 1,600 m² in a new build project named “Brückenquartier” (Veritaskai 8) in Harburg district.
Average rent shoots up
Whereas the premium rent (top price segment accounting for a market share of 3% of letting volume in the past twelve months) fell by 1.9 % year on year, the average rent, weighted by area let, rose significantly and is now 4.7 % higher than a year ago. By the end of the 1st quarter of 2018 the premium rent was €26.00/m²/month, unchanged from the previous quarter. The average rent climbed to €15.70/m²/month. “The acute shortage of space in some sections of the market will, in the short to medium term, lead to rising rents, especially in the central sub-markets,” comments Rehberg
Only 580,000 m² of office space free
Once again the vacancy rate was lower than in the previous quarter, falling well below the five-per-cent mark to an all-time low of 4.2 %. Over the past twelve months the amount of space available within three months has fallen by around 100,000 m² to a total of 574,000 m². “Currently, we are seeing high demand for office space in almost every sub-market. The shortage of available space, particularly in central areas, is making tenants more willing to compromise on the topic of location if the other parameters are right. The market is especially tight for companies seeking 250 square metres or less in the City district or that need more than 5,000 squares metres of contiguous office space at short notice,” says Rehberg
A mere 136,000 m² of new premises scheduled for 2018 and 2019 remains on the market
The market is unlikely to show any significant improvement over the next two years. It is expected that 309,000 m² of office space will be completed in 2018 and 2019; agreements have been signed for 173,000 m², meaning that 56 % of the new space has already been withdrawn from the market. The projected volume of completions in 2018 is 150,000 m² in 31 office building projects, roughly the same as is expected for 2019 at 159,000 m² (24 projects). The City sub-market accounts for 27 % and thus the biggest single share of total developments; here 84,000 m² is due for completion in 18 projects.
“The take-up figures in the first quarter do not reflect the true situation on the market. Many potential tenants are seeking office premises. However, in view of the meagre range available, it is not always possible to satisfy customers’ every wish. The extreme shortage of offices on the market could prove to be a limiting factor for take-up throughout the year. The final figure for 2018 will probably be somewhere around the ten-year average of 512,000 square metres,” forecasts Rehberg
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