Office Hamburg 1Q2016

Mood optimistic although lettings below prior year’s figure

Press release | Hamburg

Hamburg’s office letting market made a hesitant start to the new year. Figures for the 1st quarter of the year from property services provider Grossmann & Berger indicate that take-up of space totalled 100,000 m², some 23,000 m² less than the amount brokered in the same quarter of the year before. With the exception of two owner-occupier transactions, there were no agreements involving more than 5,000 m². Overall, owner-occupiers comprised about 20% of the market (19,000 m²). “A lot is happening on the market. Many firms are thinking about moving office or are negotiating terms for new properties. Therefore, despite the lower result for the first quarter, we remain very optimistic,” says Andreas Rehberg, managing director of Grossmann & Berger, commenting on the current state of the market.

Office Hamburg 1Q2016Office Hamburg 1Q2016
Only two owner-occupier transactions top the 5,000 m² mark
In the 1st quarter of 2016 only two agreements were signed for office suites larger than 5,000 m². One was concluded by an insurance company in the Wandsbek sub-market for owner-occupancy of some 6,500 m² (Wandsbeker Zollstrasse 91) and the other was the start of the new building on Haldesdorfer Strasse in Hamburg East to provide the Otto Group with 6,000 m² of office space. The most popular size segment was 501 to 1,000 m², which accounted for some 26% of take-up (26,000 m²). The next most traded size was 2,001 to 5,000 m² with 25% of take-up (25,000 m²), appreciably more than in the same quarter of the prior year. The two biggest contracts in this segment were signed by AERIUS Marine, a specialist for ship air conditioning systems, for some 4,400 m² of space in the “Hamburger Welle” (a wave-shaped building at Lübecker Strasse 128, St. Georg) and by the technology enterprise Sharp Electronics for around 4,000 m² in the “Cambium” (Nagelsweg 33-35, City South).

Hamburg East sub-market ahead of City South
City is traditionally the sub-market with the largest share of total take-up and the 1st quarter of 2016 was no exception; accounting for about 30% of the total (29.400 m²) City topped the ranking. Speaking of inner-city lets Rehberg says, “With 57 agreements, City was also the focus of letting activity in the first quarter of the year. One of our successes was to secure a Business Centre for the prestigious new-build development at Alter Wall.” The largest new agreements in City, each for more than 2,000 m², were posted for space in “Wallhöfe” (MedX Gesellschaft für medizinische Expertise, Neuer Steinweg 28), the “Giradet Höfe” (Facelift bbt, Gerhofstrasse 19) and in the “Europa Passage” mall (FCB Deutschland, Ballindamm 39-40). Due to the building start for Otto Group on Haldesdorfer Strasse and two other rental agreements for more than 1,500 m², the spread out sub-market Hamburg East found itself uncharacteristically placing second in the 1st quarter. Accounting for a share of some 14% (14,300 m²), this sub-market finished ahead of City South with 12% of the total (12,200 m²). For example, City South was the chosen location for both the Bundesanstalt für Immobilienaufgaben, a Federal real estate company incorporated under public law, which took about 1,400 m² of office space in “Spaldinghof” (Spaldingstrasse 74), and the Igepa group, a paper wholesaling company, which took some 1,000 m² (“Fleet Office II”, Heidenkampsweg 74 + 76)

Retail and restaurants account for a fifth of take-up
With a share of about 21% (20,900 m²), retail and restaurants accounted for around a fifth of total take-up, a larger proportion than any other sector of business in the 1st quarter. Four of the biggest owner-occupiers or new tenants in the 1st quarter were trade/retail firms – Otto Group, Sharp Electronics, MedX Gesellschaft für mediznische Expertise and motorbike distributor Detlev Louis Motorrad-Vertriebsgesellschaft (Brandhofer Deich 68). Second place, with a share of 19% (18,600 m²), went to consultancies, followed by the construction and real estate sector which accounted for about 13% (12,700 m²).

Premium rent stable, average rent slightly higher
The premium rent (that paid for the most expensive 3% of newly let space in the past twelve months) remained as it was in the previous quarter to close the 1st quarter of 2016 at €25.00/m²/month. In contrast, the average rent, weighted by amount of space taken, saw a modest 10-cent rise to €14.60/m²/month. Some fairly large construction projects are now underway in the central city and HafenCity, for example at Alter Wall, the “Stadthöfe”, the “Esplace” development, the building ensembles “Shipyard” and “Watermark”, and the “Campus Tower”. “Some of these new-build developments are speculative and as a rule the asking rents will be appreciably higher than €20.00/m²/month. Leases for space in these buildings are likely to boost the average rent over the course of the year,” says Rehberg.

Slightly more empty space than in prior quarter
Compared with the prior quarter, slightly more space stood empty. Whereas at the end of 2015 some 698,000 m² of office space was available at short notice in Hamburg, this figure had risen by some 5.9% to 739,000 m² by the end of the 1st quarter of 2016. “Partly this is because projects that have just been completed are now available for rent and partly because some large companies have started restructuring measures and are returning sections of the space they occupy to the market,” comments Rehberg.

However, the level of vacancies was significantly lower than in the same period of last year. At the end of the quarter the vacancy rate, including sub-let space, was 5.5% of a total stock of 13.4m m², whereas it was still 6% at the end of Q1, 2015. In all likelihood the volume of completions in 2016 and 2017 will be some 457,000 m² in 50 projects. Construction is concentrated in the City sub-market, with 21 new developments. Around 56.7 % of the space in these developments has been secured by advance contracts.

Outlook 2016
“For 2016 we expect to see fewer agreements for large amounts of space, which were the main reason for the good result in 2015. As far as one can tell now, the total take-up of office space in Hamburg will probably be around 450,000 m² by the end of the year,” says Rehberg.

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

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