New occupiers found for 550,000 m² of office space in 2016 in Hamburg. This emerges from figures released by Grossmann & Berger. Compared with 2015, the amount of take-up rose by 2%. There was a relatively high proportion of lettings - 492,000 m² - and thus a correspondingly low level of take-up by owner-occupiers (58,000 m²). “2016 was a good year for those letting offices in Hamburg. For the third time in a row take-up of office space passed the 500,000 m² mark, and about a fifth of the total related to agreements for space in development projects,” says Andreas Rehberg
, managing director of Grossmann & Berger, commenting the annual result. Take-up was at its highest in the 3rd quarter, at 175,000 m², followed by the second and fourth quarters with take-up of 140,000 m² and 135,000 m².
Three more large-scale agreements than a year ago
The number of rental agreements and owner-occupier transactions rose by 4% year on year to a total of 645. Premises offering over 5,000 m² accounted for a full 25% of the total take-up of space. The number of agreements registered for this size category rose from 11 in 2015 to 14 in 2016.
The five biggest agreements of the year 2016 included two owner-occupier transactions; Nordex Energy, a manufacturer of wind turbines (12,000 m², Langenhorner Chaussee 600a, Airport) and Kassenärztliche Vereinigung Hamburg, an association of registered physicians (10,000 m², Humboldstrasse 56, Barmbek).
The biggest rental agreements of the year were signed by Olympus Deutschland, which took a temporary lease in the “Poseidon-Haus” (22,800 m², Amsinckstrasse 67-71, City South), by the consultancy KPMG in the “Springer Quartier” (11,800 m², Caffamacherreihe/Kaiser-Wilhelm-Strasse, City) and by AXA Group, an insurance company (9,700 m² in the “Fleet Office II”, Heidenkampsweg 74+76, City South).
Accounting for shares of between 19% and 21%, the remainder of office space taken up in Hamburg was evenly spread over the medium size categories ranging from 1,001 to 5,000 m². Office suites of less than 500 m² accounted for 16% of the total.
City and City South account for half of total take-up
In 2016 letting activity was even more concentrated in the two central sub-markets City and City South than it already was in 2015, and together they accounted for exactly half of Hamburg’s take-up of office space. With a share of 31% City closed the year as the biggest sub-market for office take-up. A total of 172,400 m² of office space was newly occupied in this market. In the 4th quarter further larger-sized agreements were signed, adding to those in the 2nd and 3rd quarters such as the KPMG transaction already named, the agreements with Ruby Hotels & Resorts for 9,400 m² in the former “Fleetbogen” office block at Düsternstrasse 1-3 and with the University of Hamburg for 8,000 m² at Gorch-Fock-Wall 5-7. For example, the Fitness First fitness centre rented 2,600 m² in the “Work Life Center” (Gorch-Fock-Wall 1a) while one of the City of Hamburg’s administrative units chose a 2,600 m² sector in the “Tower am Michel” (Ludwig-Erhard-Strasse 22).
“The City is extremely popular with users. We have observed that the decision-makers are paying closer attention to how attractive the surrounding district is for the employees. Development projects such as the Springer Quartier, Alter Wall and the Stadthöfe provide offices to suit contemporary needs and sustainably enhance the appeal of this sub-market,” comments Rehberg
The majority of the take-up of office space in City South, around 103,000 m² or 19% of the total, took place in the first three quarters. During this period leases were agreed, as already mentioned, with Olympus Deutschland and the AXA Group, as well as with TUI Cruises cruise operators for 7,300 m² and with Hapag-Lloyd for 5,800 m² in the “Double XX” (Heidenkampsweg 58) and with the technology group SHARP Electronics for 4,000 m² in the “Cambium” (Nagelsweg 33-35). In the 4th quarter Hamburg Water Works chose 1,700 m² of space in City South (Eiffestrasse 26-30), and the games developer Innogames added some 2,000 m² to its existing office space of 7,300 m² (Friesenstrasse 13).
Consultancies are the biggest customers for office space
In 2016 consultancies accounted for 15% of the take-up of office space (80,000 m²) and thus constituted the biggest group of new tenants, a position held by local government departments the year before. The biggest agreement signed by a consultancy was the KPMG lease. Partly due to the Olympus lease, manufacturing was the second-biggest group of new tenants, with a share of 12% (64,400 m²). Tourism and transport took the third-biggest share, with 11% of the total (62,700 m²). This was essentially due to the large-scale agreements signed by Ruby Hotels & Resorts, TUI Cruises and Hapag-Lloyd.
Premium and average rents rise by one euro
Due to several high-priced agreements, above all in newbuild developments in central locations, both the premium and the average rent rose by one euro. The premium rent (top price segment accounting for a market share of 3% of letting volume in the past twelve months) had thus reached €26.00/m²/month by the end of the year and the average rent, weighted by area let, was €15.50/m²/month. “Because the amount of empty space has steadily fallen in recent years, tenants are willing to pay top rents for good properties,” says Rehberg
, commenting on changing rates.
Slowing decline in the volume of offices standing empty
Since 2010 the amount of office space standing empty in Hamburg has fallen steadily. However, this trend has slowed during the past twelve months. Compared with 2015 the vacancy rate, including sublet space, had only fallen from 5.2 to 5.1% by the end of 2016. At the end of the year 684,100 m² of space was available at short notice. With a declining number of properties being offered, the two busiest sub-markets, City and City South, saw their reserves of empty properties shrink by 16 and 17% respectively.
In 2016 some 192,000 m² of offices in 22 developments were completed, but contracts had already been signed on 89% of the total. “The proportion of newbuild offices with no advance contracts has become steadily smaller over recent years. In 2016 a mere 21,000 m² of speculative space came onto the market. In view of this trend tenants, particularly those who need larger amounts of space, are advised to plan long-term and act in advance to secure new offices. Companies that wish to rent sizeable office suites at short notice usually have to be prepared to make compromises,” says Rehberg
, describing the current situation.
In all likelihood the volume of completions in 2017 and 2018 will be some 418,000 m² in 55 developments. Slightly over half - 54% - is being built on speculation. Construction is concentrated on the City, where the volume of completions is 116,800 m².
“Demand for both large and small suites of offices that meet today’s requirements remains very high. Fewer and fewer properties are on the market, and there is a particular shortage of offices with top fit-out. Project developers can therefore look forward to high pre-let ratios. Despite the slightly less optimistic economic forecasts, we expect the office market in Hamburg to progress in stable fashion in 2017. At the very least, it should be possible to end the year on the ten-year average of some 500,000 m²,” says Rehberg
The full market survey will soon be available and can be downloaded from our website