Office market top 7 locations 3Q2015

Robust growth and hopes for year-end

Press release | Hamburg

German Property Partners (GPP) report that take-up of office space in Germany’s top 7 real estate locations increased by 8.3% compared with the year before. In the 1st three quarters their combined take-up of space totalled some 2.29m m². In the 3rd quarter alone about 810,000 m² of office space was newly let. As in the prior year, owner-occupiers accounted for around 10% of total take-up. “Thanks to a range of agreements for large suites, the top 7 locations have bettered last year’s result. Rapidly expanding companies from the IT sector were especially eager to rent large tracts of office space in the top cities,” remarks Björn Holzwarth, spokesman for German Property Partners.

Office market top 7 locations 3Q2015Office market top 7 locations 3Q2015
Take-up of space: Düsseldorf practically doubles take-up
Once again, Munich registered the largest amount of take-up with a total of 496,000 m² (+8.1%) at the end of the 3rd quarter. Berlin came very close to Munich with take-up of 490,000 m² (+14.5%). Berlin’s good result was attributable above all to a high number of agreements for large amounts of space in the first half-year, such as the Rocket Internet lease (22,000 m²) and the Mercedes Benz transaction (18,000 m²). Düsseldorf returned the biggest year-on-year increase, with take-up of 277,600 m² (+46.9%). The city therefore pulled ahead of Frankfurt, where take-up of 269,000 m² was reported (+2.5%). Two large rental agreements were instrumental in producing the good 3rd quarter result in Düsseldorf. Union Investment has leased 28,000 m² in the former Horten headquarters at Am Seestern 3 to telecoms firm Deutsche Telekom and Immofinanz has let 26,000 m² of space in the Kesselstrasse project in Düsseldorf’s “Media Port” to the travel portal Trivago. The city of Cologne posted a modest year-on-year increase, with take-up of space at 210,000 m² (+5.0%). Take-up in Hamburg reached 355,000 m² (-6.6%) and the figure for Stuttgart was 188,000 m² (-2.6%).

Largest known lets in Germany’s top 7 cities; 1st to 3rd quarters of 2015

Location Project/property Tenant/owner-occupier Rental area (ca. m²)
FAM Windmühlstrasse 14 Deutsche Vermögensberatung (asset consultants) 32,000
HAM Axel Springer buildings, section C Free and Hanseatic City of Hamburg for Borough Council 32,000
STR Bosch IT Campus Robert Bosch 30,000
DUS Am Seestern 3 Telekom 28,000
DUS Speditionsstrasse/Kesselstrasse Trivago 25,900
BER GSW highrise Rocket Internet 22,000

IT and telecommunications companies were the largest groups of new occupiers in Berlin (35.5%), Düsseldorf (27.9%) and Munich (18.1%). In Hamburg and Cologne local government/administration were the most active players on the market with 23.3% and 27.1% respectively. In keeping with tradition, the front-runners in Frankfurt were banks and financial firms (23.9%) and in Stuttgart the car industry (36.2%).

Rents: Marked rise in Berlin
The highest average rents for office space were paid in Frankfurt, at €20.00/m²/month, followed by Munich at €15.40/m²/month. Nearly identical average rents are paid in Hamburg (€14.50/m²/month), Berlin (€14.40/m²/month) and Düsseldorf (€14.40/m²/month). In Stuttgart and Cologne the average rents were €12.70 and €12.75/m²/month respectively. Compared with the prior year’s rates, all locations have seen an increase in average rents. The greatest price increase was the 12.5% rise registered in Berlin.

As far as premium office rents are concerned, Frankfurt is top with €38.50/m²/month, followed by Munich with €31.51/m²/month. The premium rent in Düsseldorf was €26.00/m²/month. In Hamburg the top rate was up to €24.00/m²/month and in Berlin it was €23.00/m²/month. Premium rates in Cologne and Stuttgart were €21.25/m²/month and €21.00/m²/month respectively. In this sector too, the greatest price increase was the 2.2 % rise registered in Berlin.

Vacancies: Downwards trend continues
At all top 7 locations there was a further, appreciable decline in vacancies to a new total of around 5.54m m², or 14.4% less empty space than in the prior year. The steepest fall in vacancies was in Munich, where a drop of 30% to around 1.06m m² was noted. In relation to a total stock of office space of 89.4 million m² in the top 7 locations, the vacancy rate in the 3rd quarter stood at 6.2 %. The vacancy rate was lowest in Stuttgart (3.5%), where there has been a noticeable decline in available space in the City.

The total volume of completions in the top 7 locations will be 1.0m m² in 2015 and again in 2016, spread over some 100 projects. Over the next two years most of this building activity - 440,000 m² - will take place in Berlin (110,000 m² for the Federal Intelligence Services new-build alone) but the majority of space is pre-let. “In coming years there will be hardly any speculative projects in any of the top 7 markets. To counter the trend towards the increasing scarcity of space and rising prices, project developers would do well to start their planned projects now, where possible. Demand for new-build offices in central locations is unabated, and we would thus not expect space to remain empty,” says Holzwarth.

Outlook 2015/2016
“Thanks to a record number of people in employment in Germany, the demand for office space is unabated. Against a backdrop of falling vacancies and persistent demand for space, it is all the more important to build new offices in desirable locations. The excellent figures for the 3rd quarter point to a very good year-end result in the top 7 locations, one that is likely to surpass the prior year’s turnover. We are expecting 2015 to close with a combined take-up of space in the top 7 locations of some 3.2m m²,” concludes Holzwarth.

Press contact

Visitenkarte Xing
Britt Finke

Bleichenbrücke 9
20354 Hamburg

040-350 802 993
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