The office-letting market in Hamburg is heading towards a new record result for the year. Figures from Grossmann & Berger, a member of German Property Partners
(GPP), show that take-up of office space in the first three quarters was some 465,000 m² and thus 12% higher than in the same period a year before. The 3rd quarter, posting some 165,000 m² of newly let and owner-occupied office space, was the best quarterly result thus far. The proportion of owner-occupied space, at 65,000 m², was a relatively low 14% of the total. “All the parameters indicate that business will remain as dynamic in the fourth quarter too. Take-up of office space will probably total around 600,000 square metres by the end of the year. The low vacancy level is the only factor that might slow the market,” says Andreas Rehberg
, managing director of Grossmann & Berger, looking ahead to the end of the year.
Considerably more take-up of large suites
One outstanding feature of the first three quarters was the large proportion of agreements for more than 5,000 m² of office space. This size segment accounted for 29% of the total, a volume of 137,000 m². Agreements signed by Olympus Deutschland and Gruner + Jahr for 34,500 m² and 34,000 m² respectively played an essential part here. Olympus Deutschland is having a new, custom-made complex built in City South (Wendenstrasse 14-18); construction began in the 2nd quarter and is due for completion in 2020. In the 3rd quarter it was announced that the publishing house Gruner + Jahr had signed a rental agreement for a new headquarters in the “Am Lohsepark” district (Am Hannoverschen Bahnhof, HafenCity). This building, costing a projected €250m, is being constructed by developer HIH Projektentwicklung. Construction on building lots 73/74 is expected to last until 2021 and encompass an ensemble of buildings offering 66,000 m² of floor space. Plans envisage apartments, commercial spaces and room for cultural uses as well as offices.
Five of the ten large agreements were registered in the 1st quarter. These included the third-biggest contract of the year which was entered into by the University of Hamburg for 19,700 m² at Überseering 35, City North. This August the university moved into its temporary premises here. Only one large contract was noted in the 2nd quarter, that for Olympus Deutschland. But in the 3rd quarter, Grossmann & Berger recorded three more contracts for over 5,000 m² of space. For example, the health insurance firm Techniker Krankenkasse signed an agreement for 8,200 m² of office space in the “Silberling” (Überseering 32-34, City North). WeWork, a provider of coworking space, rented some 6,400 m² of office space in the “Europa Passage” mall (Ballindamm 39-40, City) and logistics enterprise Kühne & Nagel completed a contract for around 5,800 m² of office space in the “Shipyard” new-build development (Überseeallee 12, HafenCity).
With 510 rental agreements and owner-occupier contracts in the first nine months, the number of contracts rose by 3% year on year. All size segments below 5,000 m² shared the market more or less evenly with about 18% each. The size category 2,001 to 5,000 m² was slightly lower with a share of 17%.
Business centres propel City into 1st place
In the first three quarters of the year some 60% of the take-up of office space was registered in the central sub-markets City, City South and HafenCity. City pulled ahead again in the 3rd quarter, but only by a very narrow margin. Taking a 22% share of the total with 103,700 m², City was only slightly in front of City South with a share of 21% and a volume of 99,500 m². “City’s good result was partly thanks to the business centres. These firms accounted for four new lets with a total volume of about 13,000 m² in the third quarter alone. Since the beginning of the year business centres have rented about 26,000 m² of space in the City, which was equivalent to one quarter of the total take-up,” says Rehberg
, discussing figures for the City sub-market.
HafenCity was the third-busiest sub-market, its share of take-up totalled 15% and 68,800 m² of office space. The biggest contributors to the good HafenCity result included the previously mentioned contracts signed by Gruner + Jahr (building lots 73/74, Am Hannoverschen Bahnhof) and Kühne & Nagel (“Shipyard”, Überseeallee 12).
With a respectable fourth place and 9% of total take-up, City North remained a strong player. Apart from the contract with the University of Hamburg (Überseering 35) three other agreements - signed by Techniker health insurance, ERGO life insurance and beneFit fitness studio - for space in the “Silberling” (Überseering 32-34) made a significant contribution of 14,000 m² to the total take-up of 41,900 m².
Turnover of office space essentially attributable to four industries
Most of the space taken up in the first three quarters of the year was attributable to four industries which accounted for about 60% of the total. The biggest share of some 16% (73,900 m²) was taken by the information and telecommunications industry
, partly due to the rental agreement signed by Gruner + Jahr for space in HafenCity. Placed second and third, with shares of 14% each (67,000 m²) were the consultancies
and companies engaged in manufacturing.
Whereas the manufacturing sector posted no new agreement for more than 1,000 m² in the 3rd quarter, the consultancy segment reported six new contracts in this size sector during the same period. These included business consultancy Ecker + Ecker, which will be moving into some 1,300 m² of space at Warburgstrasse 50 (Alster West). Construction and real estate
came fourth in the ranking by industry. With the exception of the agreement signed by Goldbeck Nord for around 3,600 m² (Fuhlsbüttler Strasse 29a, Barmbek) take-up by the construction and real estate sector was dominated by business centres. In the 3rd quarter four such companies signed agreements for over 1,000 m² of office space. They included WeWork, which secured space in the “Europa Passage” mall as well as in the “Richard-Böse Haus” on Gänsemarkt. The other providers were rent24 (“Kaufmannshaus”, Bleichenbrücke 10, City) and Design Offices (Görttwiete 16-20, City).
Market now favours lessors over tenants
By the end of the 3rd quarter both the premium rent (top price segment accounting for a market share of 3% of lets in the past twelve months) and the average rent had risen slightly above their levels a year before. For example the premium rent rose over the course of twelve months from €25.00/m²/month to €26.00/m²/month (+4 %) while the average rent grew from €14.90/m²/month to €15.00/m²/month (+0.7 %). “Because so little vacant space is available, competition between companies to secure the best offices is becoming keener. Already, we often find several companies in talks about renting one and the same space. Consequently rents will grow appreciably in the medium term. This is no longer a tenant’s but a landlord’s market,” says Rehberg
, putting the situation in a nutshell.
Shortage of space is changing market parameters
The shortage of office space in Hamburg has become more acute since the last quarter. Whereas at the end of the 2nd quarter the vacancy rate, including sublet space, was still 4.9%, by the end of the 3rd it had fallen to 4.6%. A mere 620,000 m² of space was available to new tenants within a period of three months. “The shortage of space is changing the market parameters. Even just a few months ago customers could reserve space for a fairly long period in order to gain more time to make their decision but now, whatever they do, they must be quick about it,” remarks Rehberg
describing current conditions on the market.
The volume of completions in 2017 stands at a record of 272,000 m² in 37 developments. But the massive 69% of pre-let space means that only the small amount of 85,000 m² will land on the open market. Of the 151,000 m² of office space that is scheduled for completion in 2018, Grossmann & Berger calculate that only 79,000 m² will be put on the market. The pre-let rate here is 48%. Most of this development activity is taking place in the City sub-market where 23 developments will provide 117,000 m².
“Some potential lets of large amounts of space are still in the pipeline. However, the lack of large areas of contiguous office space in every sub-market is complicating the search for suitable premises. Nevertheless, take-up of 600,000 square metres and thus a new record by the end of the year is virtually assured. We are just 85,000 square metres short of surpassing the 2016 figure of 550,000 m² of take-up,” says Rehberg
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