Office Hamburg 2Q2016

High level of letting in mid-sized segment bolsters result

Press release | Hamburg

In the 1st half year the most notable aspect of Hamburg’s office letting market was the absence of leases for large amounts of space. The high level of letting in the mid-sized segment was largely responsible for the final result. Business was very brisk, especially in the 2nd quarter. Figures from Grossmann & Berger show that in the 1st and 2nd second quarters new occupants were found for a total of 240,000 m². “It is true that the year on year result has slipped back by around four per cent. But in view of the absence of large-scale agreements this is, however, a minor blip. In the prior year, around 60 per cent more space was taken up in units of 5,000 m² or more,” remarks Andreas Rehberg, managing director of Grossmann & Berger. “Overall, we are seeing a great deal of activity on the letting market. This reflects the comparatively low ratio of owner-occupiers, which is now about 9 per cent.”

Office Hamburg 2Q2016Office Hamburg 2Q2016
No contracts for 10,000 m² or more
330 rental agreements and owner-occupier transactions were signed in the 1st half of 2016, ten contracts more than in the prior year. On the other hand, no leases were agreed for more than 10,000 m² of space, a category that accounted for a fifth of total take-up the year before. In the 1st half of 2016, however, the proportion of total take-up involving leases for between 2,000 and 5,000 m² of space grew from 11 to 24%, making this the most popular size category. New tenants included Sprinkenhof GmbH which took some 4,600 m² in “Sprinkenhof” (Burchardstrasse 8-14/Altländer Strasse, City) and DVV Media Group which rented around 2,500 m² at Heidenkampsweg 73-79 (City South). The biggest contract of the year thus far was that signed by AXA insurance to rent some 9,700 m² in the “Fleet Office” new-build development (Heidenkampsweg 74+76, City South).

City and City South account for half of total take-up
City, together with HafenCity, was the top-ranking sub-market with some 34% of the total take-up of space. Here, the biggest transactions included the lease signed by Performance Media Deutschland, a consultancy, for about 4,100 m² of space in the “Work Life Center”, Gorch-Fock-Wall 1a, and the decision by eSailors IT Solutions to take 3,200 m² in the “Emporio”, Valentinskamp 70. City South sub-market also retained its traditional second place, accounting for some 22% of the total. Like the AXA Group, this is also the sub-market that TUI Cruises chose; the firm is renting around 6,500 m² in the “Double XX” office block, Heidenkampsweg 58. A long way behind, Hamburg East followed in third place with a share of about 9%. This figure owed much to the 1st-quarter construction start of a new office block for Otto Group on Haldesdorfer Strasse.

Consultancies biggest group of new occupants
With a share of some 19% (46,600 m²), consultancies accounted for close to a fifth of take-up. New leases signed in the 2nd quarter by companies such as Performance Media Deutschland, the eprofessional agency for digital marketing, and HR consultancies Egon Zehnder and Russell Reynolds Associates helped contribute to this industry’s high level of take-up. The construction and property industry followed in second place, taking a good 13% (30,800 m²) of the total. The third-highest level of demand came from the information and telecommunications sector, whose share was about 12% (27,900 m²). This industry’s biggest transactions each involved 2,500 m², namely leases signed by eSailors IT Solutions, akquinet enterprise solutions and the DVV Media Group.

Average rent at highest-ever level
Over the past twelve months a number of high-price contracts for large amounts of space caused a rapid rise in the average rental figure. With an increase of 30 cents compared with the prior quarter, the average rent, weighted by area occupied, rose to €14.90/m²/month at the end of the 1st half year to stand at the highest rate yet seen in Hamburg. On the other hand, the premium rent (that paid for the most expensive 3% of newly let space in the past twelve months) fell from €25.00 to €24.50/m²/month. “By the end of the first half year some of the most expensive agreements were no longer within the relevant 12-month period and this led to a lower figure for the premium rent. The rise of the average rent to a record height does, however, reflect the underlying trend for rents in Hamburg,” says Rehberg, commenting price developments in general.

Speculative new-builds with excellent marketing prospects
At the end of the 2nd quarter the vacancy rate in Hamburg, including sub-let space, sank to 5.4% from 5.5% in the same period a year before. 723,400 m² of space was available at short notice. “In view of the dynamic market, much of the office space is not freely available because prospective tenants are negotiating terms of agreements. This is especially true of offices in the central sub-markets. We are still able to offer clients a large range of properties. But those who want offices in specific segments now have appreciably less choice. Above all, in view of these facts, we rate the marketability of speculative new-build quality space as excellent,” says Rehberg commenting on the decline of empty space.

The volume of completions in Hamburg is set to reach a high of 288,000 m² in 2016. However, less than 30% of this total will be speculative space. In 2017 too, considerably more office space - 178,000 m² - will be completed than in the years 2014 and 2015. Here too, however, only the relatively low level of 50% of space is still available. The focus of development activity this year and next year will be the central sub-markets City (123,000 m²), City South (54,000 m²) and HafenCity (54,000 m²).

Outlook 2016
“The British have voted for Brexit. At present there is no telling what the consequences for the German economy might be. But so far, Hamburg’s companies show little sign of the uncertainty that has gripped financial markets. Only in isolated cases has the result of the Brexit referendum had an effect on current negotiations. We therefore expect to see further dynamism on the market in the second half of the year and forecast that take-up of space will be more than 450,000 m² for the year,” says Rehberg.

The detailed market survey will be ready for download on our website shortly.

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