The 1st half of 2018 has closed with office take-up in Hamburg some 50,000 m² below the result of the prior year. Grossmann & Berger, a member of German Property Partners
(GPP), has calculated a total for the 1st half year of 250,000 m². This translates into a 17% drop in office take-up. Compared with the 1st quarter of the year the owner-occupier share rose from 1% to 7%. “The vacancy rate continues to fall and is having an impact on take-up of office space. Clients are finding it appreciably harder to rent the kind of space they want,” says Andreas Rehberg
, managing director of Grossmann & Berger, summarizing figures for the 1st half year.
Mainly mid-sized office space let
While the same number of agreements for over 5,000 m² of office space were signed as in the prior year, the actual volume of take-up dropped by 47%, reducing the share of this size sector to a relatively low 18%. This represented the biggest fall in any size category. Six very large lets were registered in the 1st half year, involving a total of around 44,000 m². The biggest agreement in the 1st quarter was signed by the insurance group Signal Iduna to rent space in the “Vattenfall Building” (Überseering 12, City North) as a temporary measure. An additional three large lets were finalized in the 2nd quarter:
f & w fördern und wohnen, a social housing company owned by the Free and Hanseatic City of Hamburg, will be moving into some 8,600 m² of offices in the “Economic Quarter” (formerly called the “Economic Centre”) at Heidenkampsweg 96-98 (City South).
Hamburg’s Department of Building Regulations and Civil Engineering has taken a lease on some 6,900 m² at Nagelsweg 47 (City South).
Lufthansa decided to rent some 5,300 m² in the “Hanse 10ter Grad” (Essener Bogen 21-23), a new development in the Hamburg West sub-market completed in the 1st quarter of the year.
The biggest new office lease in the City was signed by Zeaborn for space in the “Tower am Michel” (Ludwig-Erhard-Strasse 22) in the 1st quarter. In May the firm moved into some 5,300 m² spread over four floors of the tower. The most popular size of office in the 1st half year was between 1,001 and 2,000 m²; this segment accounted for a quarter of total take-up (63,000 m²). Offices in the size categories 2,001 to 5,000 m² and 500 m² or less accounted for a fifth each (49,000 m²).
Harburg profits from industrial/logistics agreements
Only the City and City South returned two-figure shares of overall take-up of office space in the 1st half year for a joint total of 43%. At the end of the 2nd quarter City
sub-market once again emerged as the clear leader with a share of 24% (60,500 m²). The successful letting of office space in the “Tower am Michel” (Ludwig-Erhard-Strasse 22) contributed some 14,800 m² to the final tally. In the 2nd quarter the British petrol (gas) station company EG Deutschland (Euro Garages) decided to take around 1,700 m² of space in the building. In the 1st half year several leases for office space to a total of some 4,700 m² were also signed in the new “Stadthaus” building in the “Stadthöfe” development (Stadthausbrücke 6-8). New tenants included the CS Business Centre with some 1,500 m², thus further adding to the City’s stock of such providers.
sub-market placed second, with a share of about 19% of the total (46,500 m²). Here about a third of the take-up of space was attributable to the big, new 2nd-quarter leases already mentioned, namely f & w fördern und wohnen (8,600 m², “Economic Quarter”, Heidenkampsweg 96-98) and the Department of Building Regulations and Civil Engineering (6,900 m², Nagelsweg 47).
came third, with a share of 9% (22,800 m²). Harburg profited from a relatively high number of agreements signed in the industrial/logistics sector. One such agreement was the construction start of a new building on Schlachthofstrasse for Harburg-Freudenberger Maschinenbau, which is to include some 7,700 m² of office space and was the single biggest transaction in this sub-market. In addition, the Technical University of Hamburg-Harburg (TUHH) rented around 3,000 m² in the 1st section of the “Hamburg Innovation Port/HIP ONE” new build, thus boosting figures for Harburg.
Apart from City, City South and Harburg, where take-up was concentrated, office lets were distributed in very small clusters across the other sub-markets. Only HafenCity (7%, 16,500 m²) and City North (6%, 15,000 m²) succeeded in reaching shares of take-up above the five per cent mark.
Various industries account for relatively even spread of tenants
The tourism and transport
industry was a driving force in the 1st half of 2018, accounting for 17% of the total take-up of office space (41,800 m²). This result is mainly due to four large agreements which comprised a full 40% of take-up by this sector. Taken together, four firms in this segment, Lufthansa, Zeaborn, Ocean Network Express and Kühne + Nagel, were responsible for office take-up of some 18,000 m². Public administration, associations and churches
followed in second place, taking a good 13 % (31,500 m²) of the total. This ranking owes much to two large leases totalling 15,500 m² signed in the 2nd quarter by f & w fördern und wohnen and the Department of Building Regulations and Civil Engineering. The insurance industry
each accounted for 9% of the total take-up (22,800 m²). A major factor in the result for the insurance sector was the biggest office lease of the year to date taken by Signal Iduna, and for manufacturing it was the previously mentioned 1st quarter construction start for Harburg-Freudenberger Maschinenbau. In the 2nd quarter the manufacturer SPIE Deutschland & Zentraleuropa signed an agreement for some 4,400 m² in the “Alsterpark” (Deelbögenkamp 4, Eppendorf). Construction and real estate
were close behind in third place with take-up of 22,300 m² (9%) thanks to several rental agreements for more than 1,000 m². Three business centre providers, Regus, CS and Dussmann, added 3,800 m² to the total for the aforementioned sector.
Premium rent slightly below last year’s
Year on year the premium rent (prices paid in the most expensive 3% of newly let space in the past twelve months) slipped by 1.9%. At the close of the 1st half of 2018 the premium rent was €26.00. However, the average rent, weighted by rental area, rose by 6.1% from €14.80/m²/month a year ago to its current level of €15.70/m²/month.
Competition for good office space hots up
The four per cent barrier has fallen. In the 2nd quarter the vacancy rate contracted once more and stood at 3.9% at the end of the quarter. Year on year a fifth less office space was available to tenants within three months as vacancies fell to only 536,200 m². “In view of a vacancy rate below four per cent, clients have to rethink their policies. There is now huge competition for good office space. Companies need to speed up their decision-making processes and sign agreements appreciably faster if they do not want to be left standing in the race for offices,” cautions Rehberg
If the market remains as brisk as it is now, the completions scheduled in the next two years will fail to generate an increase in available office space and a looser market. The completion of 58 developments in 2018 and 2019 will, in all likelihood, add around 330,000 m² of office space. However, 59% (195,000 m²) of this space has already been pre-let or is being built for an owner-occupier. The result is that in the space of two years Hamburg will gain a mere 135,000 m² of office space for the open market. Building activity in 2018/2019 is concentrated in the City, where 18 developments are set to deliver 87,000 m² of space.
Looking ahead, Rehberg
says, “The market has showed no signs of slowing in the first half year, because many firms are still looking for offices. There are limitations on how well demands can be met due to the drastic reduction of available premises leading to keener competition on the market for Hamburg offices. Over the course of the second half year the run on well-designed space in sought-after locations will intensify and influence the asking rents. We do not expect, in view of the situation on the market at present, to match the record set in 2017 but to end the year somewhere in the region of the ten-year average of 512,000 square metres.”
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Source, chart: Grossmann & Berger GmbH