Office Hamburg 4Q2015

Take-up of space higher than prior year thanks to brisk 4th quarter

Press release | Hamburg

As a result of an agreement for a large amount of space in the Bahrenfeld sub-market, total take-up in the 4th quarter of last year was higher than in the other three, at 185,000 m². According to figures released by property services provider Grossmann & Berger, 540,000 m² of office space was taken up in Hamburg, a year on year rise of about 3%. With owner-occupiers accounting for around 15% of the total (80,000 m²) the 460,000 m² of new lettings was 34,000 m² higher than in 2014. “Again in 2015 the Hamburg market was highly dynamic, returning a result well above the ten-year average of 498,000 m². Five large agreements, each involving more than 10,000 m² of space, added up to almost a quarter of total take-up and were thus instrumental in producing this good result,” says managing director Andreas Rehberg.

Office Hamburg 4Q2015Office Hamburg 4Q2015
50,000 m² converted into refugee shelters
As in prior quarters, take-up was calculated without regard to the unusual situation caused by the pressure to accommodate refugees and the consequent take-up of office space. Grossmann & Berger calculate that in 2015 some 50,000 m² of office space was absorbed through conversion into refugee shelters. This amount was correspondingly factored out of the figure for the total stock of office space. The figure just quoted relates exclusively to space that was previously on the market as offices. Accommodation for refugees provided in disused retail space, halls or other commercial properties is not relevant to a consideration of the office market.

Three fourth-quarter agreements for over 15,000 m² of space boost the year-end result
Overall in 2015 appreciably fewer agreements for 5,000 m² or more were noted - eleven as opposed to 16 in 2014. However, five of these eleven contracts for space in excess of 5,000 m² fell into the 15,000 m² or more category, a welcome development on the Hamburg market. The largest contract recorded in the year was an insurance company’s decision to take 39,000 m² in a project development at Gasstrasse in Bahrenfeld district, ahead of the first-quarter sale of part of the former Axel Springer building complex, which was purchased by the City of Hamburg for the Hamburg-Mitte Borough Council (Caffamacherreihe 3, City) to provide 32,000 m² of office space. Accounting for around 20,000 m² each, the third and fourth biggest agreements were signed by a bank for space in “H2T Hamburg Two Towers” (Lübeckertordamm 5) and by Hamburg tax offices for “SonninKontor” (Nordkanalstrasse 22+24). Wandsbek local registration office followed in fifth place with a lease for some 16,000 m² at Hammer Strasse 30-34. Units between 501 and 1,000 m² accounted for 108,000 m² or around 20% of the total take-up of space. The remaining take-up was fairly evenly divided between the other size categories with shares of 16 to 17% each.

Bahrenfeld in the top three thanks to insurance company contract
As a result of an insurance company’s 4th quarter decision to rent a large amount of space at Gasstrasse, Bahrenfeld rose to third place in the ranking of sub-markets with a 12% (64,000 m²) share of total take-up. First and second places went, as usual, to City and City South which accounted for about 29% (156,000 m²) and 14% (74,000 m²) of total take-up respectively. Apart from the previously mentioned owner-occupier transaction to procure 32,000 m² of space for Hamburg Mitte Borough Council, the biggest agreements in City were signed by the advertising agency Thjnk (about 4,900 m² in “BOA VISTA”, Vorsetzen 32-39), the Office Centre Mindspace Germany GmbH (about 4,300 m² in the “Altes Klöpperhaus”, Rödingsmarkt 9) and the international law firm DLA Piper UK LLP (about 3,200 m² in “Alter Wall”, Alter Wall 2-8). The biggest rental agreements in City South were signed by Hamburg tax offices for about 20,000 m² in the “SonninKontor” at Nordkanalstrasse 22+24 and by the IT services provider S-Servicepartner Norddeutschland GmbH (formerly NRS) for 9,500 m² in the “Sonninhof” at Sonninstrasse 24-28.

Local government and consultancies account for a third of take-up
The local government, associations and churches sector of the market joined the consultancy segment as the leading clients for new office space in 2015. These two sectors generated a third of the year’s take-up of space. By reason of the three previously named contracts in excess of 15,000 m² of space, local government was the most prominent player, accounting for about 19% (101,000 m²) of take-up. Consultancies followed with a 15% share (81,000 m²), ahead of insurance companies whose share of take-up was about 10% (52,000 m²).

Rising premium rents and stable average rents
Several transactions for expensive properties pushed the premium rent (top price segment accounting for 3% of lets in the past twelve months) up to €25.00/m²/month in the 4th quarter of 2015, a year on year increase of 50 cents. Weighted by amount of space taken, the average rent was stable at €14.50/m²/month. “Although in most new leases the agreed rates are €15.00/m²/month or less, there is also a lot of activity in the expensive sector where rents are €20.00/m²/month or more. The rise in the premium rent shows that clients are prepared to pay high-end rents if the location and quality of the office space are right,” comments Rehberg.

Year on year 100,000 m² less space available in the short term
At the end of 2015 the supply of office space available in the short term was 100,000 m² lower than a year before. Compared with 2014, the amount of space standing empty fell from around 798,000 m² to the current figure of about 698,000 m². At the end of the year the vacancy rate, including sublet space, was only 5.2 % of the total stock of office space of 13.3m m². At the end of 2014 the rate was 6%. In 2015 some 120,000 m² of office space was completed in 18 projects. Around 86% of this space has been let already. In all likelihood the volume of completions in 2016 and 2017 will be some 334,000 m² in 46 projects. Less than half of this volume (around 48%) will go on the market as speculative space.

Annual take-up in 2016 forecast to fall below 500,000 m²
“The underlying mood on the market is positive. Economic institutes are expecting to see moderate growth continuing in 2016. The service industry is optimistic and planning to hire more staff. Thus all the signs point to a good year on the letting market. However, we do not expect the year’s take-up of space to rise above 500,000 m² because fewer agreements for large units are anticipated. One of the reasons for this is that fewer alternatives will be available to customers looking for office space. In addition, we are expecting to see the vacancy rate dip below the 5% mark during the course of the year,” says Rehberg.

The detailed market survey is soon ready for download on our website.

Permission is given to reproduce the chart (source: Grossmann & Berger).

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Britt Finke

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