Figures compiled by Grossmann & Berger, a member of German Property Partners
(GPP), show that some 640,000 m² of office space was let or taken by an owner-occupier in 2017 - more than ever before. “The rise of thirteen per cent is a clear reflection of the dynamic state of Hamburg’s office letting market at the moment. But the small amount of space available could have a negative effect on take-up in 2018,” says Andreas Rehberg
, managing director of Grossmann & Berger, commenting on the market. Year on year the number of agreements signed in 2017 rose by 12 %, climbing from 645 to 720. The last quarter of the year was the busiest, with take-up of space reaching 175,000 m². Owner-occupiers made up only a low 9 % of the total turnover in 2017.
Large premises generate a fifth more turnover than 2016
In 2017 clients seeking office suites offering 5,000 m² or more generated 26 % of total take-up, almost the same proportion as in 2016 and more than any other size category. The amount of space involved rose by a good fifth, from 139,000 to 168,000 m². Overall, 13 contracts for large premises were signed in 2017, one fewer than in 2016. The three biggest agreements of 2017 were:
The rental agreement for the new build headquarters of Olympus Deutschland (34,500 m², Wendenstrasse 14-18, City South)
Rental agreement signed by Gruner + Jahr for 34,000 m² of new build space (Am Hannoverschen Bahnhof, “Am Lohsepark” district, HafenCity)
Lease for 19,700 m² in an existing building signed by the University of Hamburg (Überseering 35, City North)
In the 4th quarter Grossmann & Berger noted three new agreements for premises larger than 5,000 m²:
Construction start of a 15,500 m² extension for Jungheinrich (Friedrich-Ebert-Damm 129a, Wandsbek)
A choice of new location: The Hamburg School of Business Administration (HSBA), which sees its role as educating young people for business roles in Hamburg, will become sole occupant of the 7,800 m² of office space in the “WB75” office block now undergoing refurbishment (Willy-Brandt-Strasse 75, City); the move is scheduled for 2020
A choice of new location: Regus is likewise moving to the Willy-Brandt-Strasse. The business centre operator has taken some 7,300 m² for its “Spaces” concept in the “Kallmorgen Tower” (Willy-Brandt-Strasse 23, City) which is now being refurbished. In 2017 extensive refurbishment work started on this building, designed by Werner Kallmorgen and built in 1968, and the project is scheduled for completion this autumn
Ranging between 19 and 20 %, office space in the mid-sized categories, i.e. those between 1,000 and 5,000
m², accounted for almost equal shares of the total. Although most agreements were for premises smaller than 500 m², these 400 contracts added up to a lower share of 17 % (109,000 m²).
Concentration on the central sub-markets
55 % of the office space taken up and 52 % of the agreements signed related to premises in the central sub-markets City, City South and HafenCity. The City
remained the front-runner. However, companies rented only 153,000 m² in this district, some 11 % less office space than in the prior year. City’s share of take-up thus fell from 31 to 24 %. The biggest new rental agreement in the City district was signed by WeWork in the “Hanseforum” (Axel-Springer-Platz 3) where the firm took 7,800 m² of space for its co-working concept. Whereas the share of total take-up in City South
was little changed year on year at 18 % (115,300 m²), HafenCity’s
share shot up from 5 to 13 %. By the end of the year new agreements in HafenCity related to space totalling some 85,100 m². The main drivers of turnover in HafenCity, accounting for more than 50 % of take-up of office space, were:
Gruner + Jahr, 34,000 m² (building lots 73/74, Am Hannoverschen Bahnhof)
Kühne & Nagel, 5,800 m² (“Shipyard”, Überseeallee 12)
Garbe, 4,000 m² (“Campustower”, Versmannstrasse) within its own project development
Co-working facilities rent 50,000 m² of office space
More than half of the total take-up of space in Hamburg was spread fairly evenly between four industries. The rental agreement signed by Gruner + Jahr boosted take-up by the information and telecommunications
sector to 101,000 m² or 16 % of the total; manufacturing
followed in second place with a share of 14 % (89,000 m²) just ahead of construction and properties
at 13 % (85,100 m²). The main reason why the construction and properties sector has leapt up from last year’s 9 % (50,100 m) is because business centres and co-working space providers have increased their engagement in the market. In terms of take-up of space, they reached a significant size in 2017. Whereas in 2016 business centres/co-working space providers rented 7,000 m², this figure rocketed to 50,000 m² in 2017. The biggest lets were the more than 6,000 m² taken by WeWork in the “Hanseforum” and the “Europa Passage” mall, and Regus’ rental in the “Kallmorgen Tower”. “Co-working space providers remain set on expansion. Because little vacant space is available, especially in the central locations, they are competing directly with traditional office clients,” says Rehberg
Premium rent stable, average rent slightly lower
At the end of 2017 the premium rent (prices paid in the most expensive 3 % of newly let space in the past twelve months) remained unchanged at €/26.00/m²/month. The average rent, weighted by space occupied, fell slightly from €15.50 in 2016 to €15.20/m²/month. In the various sub-markets considerable variations in rentals were observed, generally due to the varying quality of the space on offer. “Year on year the average rents in the central sub-markets of City and City South stayed the same. In HafenCity, however, they rose by 16 per cent due to numerous lets in new builds. Therefore, one needs to differentiate carefully when placing a fair market value on any particular location,” says Rehberg
, putting the fall in the average rent into perspective.
Vacancy rate hits all-time low
As had been expected, reductions in the amount of space standing empty continued in the 4th quarter. By the end of 2017 the vacancy rate had sunk to the new record low of 4.3 %. A mere 580,000 m² of space was available to new tenants within a period of three months. “This level of vacancy is reminiscent of the New Economy boom at the start of the millennium. The market was practically sold out then. Things are not quite as dramatic yet, but the market is becoming noticeably tighter, certainly for companies seeking rental premises within the immediate future. Those requiring large amounts of space must be prepared to wait for longer,” says Rehberg
, describing the supply situation. “The volume of completions still in the pipeline does not really promise to ease the shortage of new office space. 57 per cent of the 327,000 square metres of office space due to be completed in 2018 and 2019 have already been pre-let or will be occupied by the owners.” 32 developments are likely to add 160,000 m² of space in 2018, followed in 2019 by a further 167,000 m² in 24 developments. The focus of building activity this year and next will be the City sub-market, where 20 developments are scheduled to deliver some 95,000 m². 38 % of this space has been pre-let.
“Above all, the overall economic climate will determine how the office market in Hamburg develops. The forecasts for 2018 in Hamburg are positive in terms of employment and of the GDP, so that enterprises will continue to require a great deal of office space. Nevertheless, the growing shortage of suitable offices makes a new record unlikely. Therefore we are assuming a cooling period on the market in 2018 and forecast take-up of space at around the ten-year average of 512,000 square metres,” says Rehberg.
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