Offices Hamburg 2014: Take-up grows by a fifth

Total over 500,000 m² for first time since 2011

Press release | Hamburg

Figures from property services provider Grossmann & Berger indicate that the take-up of office space in Hamburg reached 525,000 m² in 2014. Compared with the year before (440,000 m²) the take-up of space shot up by about a fifth to pass the 500,000 m² mark for the first time in three years. Discounting the owner-occupier share of some 19%, new lettings totalled 426,000 m², a figure only slightly above the result in 2013 (423,000 m²). “Hamburg saw an unusually high number of contracts for large amounts of space; this added more than 180,000 m² to the total and made a vital contribution to the good result for the year. However, half of these transactions were concluded by owner-occupiers,” remarks Andreas Rehberg, managing director of Grossmann & Berger.

Offices Hamburg 2014: Take-up grows by a fifthOffices Hamburg 2014: Take-up grows by a fifth
Five large contracts in the 4th quarter
16 contracts involving over 5,000 m² were concluded in 2014, twice the prior year’s number (seven contracts), which more than trebled the total take-up in this segment of the market from 59,000 to 184,000 m². Accounting for 35% of the total, contracts to take up large amounts of space represented the biggest segment of the market, with five such transactions noted in the final quarter alone. The largest contract in the 4th quarter, and third-biggest of the entire year, was signed by PricewaterhouseCoopers, a consultancy, to rent 16,000 m² at Alsterufer 1-3 (Alster West) in a building project that is still under construction. The 2nd-quarter rental agreement signed by Telekom Deutschland to take about 32,000 m² of office space at Überseering 2 (City North) remains the largest contract of the year. Around 19% of total take-up related to office suites from 501 to 1,000 m², with the remainder of the market relatively evenly spread between the other size categories, which accounted for between 14 and 16% each.

Much activity in City North
In 2014 about 30% of take-up involved offices in the central sub-markets of City and HafenCity, whereby City remained the most popular sector overall, with a share of 23% (119,000 m²). In this sub-market the biggest transaction of the year occurred in the 3rd quarter with the letting to the Funke Mediengruppe of 10,300 m² of space in the Burstah Offices (Großer Burstah 18-30). The second-biggest contract in City was signed in the 4th quarter, when MDS Möhrle, a consulting and accounting firm, decided to rent 7,150 m² of space in Height 1, the former “Spiegel” highrise, (Brandstwiete 19). City South was the next most popular sub-market, accounting for 65,100 m² of take-up and a share of some 12%. Thanks to the Telekom Deutschland contract mentioned earlier and the 4th-quarter purchase of an existing block on New-York-Ring 13 with 14,300 m² of office space that the new owner, food retailing firm Edeka, intends to occupy itself, City North became the 3rd most sought-after office location.

Top 3 industries have even shares of take-up
As in the same period last year, companies from the information and telecommunications sector were the most active, renting 113,300 m², which translates into 22 % of total office take-up. The previously mentioned Telekom and Funke Mediengruppe leases both fell into this category. At 17% (87,200 m²) companies in the trade and gastronomy sector were the next most active group, thanks to the construction start by Marquard & Bahls, a trading company, of a new building with 15,000 m² of office space for its own use in HafenCity (Koreastrasse 7) and Edeka’s purchase of the building at New-York-Ring 13 for its own use; consulting firms were close behind, with a share of 16% (84,000 m²). Noteworthy transactions by this sector of industry include the previously mentioned PricewaterhouseCoopers agreement and the 3rd-quarter letting of some 12,600 m² of office space on the site of the old Zeise Halls on Friedensallee (Altona) to WPP Deutschland.

Big-ticket contracts push rents up
Several transactions for expensive properties pushed the premium rent (top price segment accounting for 3% of lets in the past twelve months) slightly higher in the 4th quarter than the year before, for a rise of 50 cents to €24.50/m²/month. The average rent, weighted by space taken, likewise rose by 50 cents to reach €14.50/m²/month. “Although most of the rental agreements were concluded for properties costing no more than €10/m²/month, the high number of contracts for large amounts of space in new or good as new buildings has doubled the volume of expensive lettings compared with 2013. That pushes up the average rent too,” explains Rehberg.

Significant growth in the office-building sector
“The combination of high take-up and low completion levels served to further reduce vacant space in 2014,” comments Rehberg. From its 2013 level of 932,000 m², the figure has fallen to about 799,000 m² of empty space. With the total stock of office space standing at 13.35m m², the vacancy rate including sublet space was 6.0 % or 1.0% lower than a year ago. 41 current projects are expected to add 408,000 m² of office space to the Hamburg market in 2015 and 2016. “Most of these projects will, however, not be finished until 2016, for example the Überseering 2, Fleet Office, Alsterufer or the new Barmeker VBG head office. But the total volume of completions is considerably higher than in the past four years. The increasing shortage of large, contiguous office suites and good-as-new space has correspondingly motivated many project developers and owner-occupiers to embark on major projects of their own,” says Rehberg. Contracts have already been signed for 52 % of the total. Building activity will be concentrated in the inner city of Hamburg, where 15 projects are set to deliver some 94,000 m².

Continued optimism regarding take-up in 2015
Although the German economy’s growth lost momentum last year, the positive environment in Hamburg points to continued progress on the market for office space in the city. “The port is flourishing, the number of overnight visitors is rising, the population is growing and firms need new employees. These factors combine with the diversity of Hamburg’s business landscape and the current volume of enquiries to generate optimism as we start this new year. Many transactions with long lead times that were launched in 2014 are likely to be completed in the months ahead. Take-up of space in 2015 could therefore be higher than the ten-year average of 486,000 m²”, says Rehberg.

You may soon find the detailed market survey on our website for download.

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