Office market top-7 4Q2015

Take-up of space at highest since 2011


Press release | Hamburg
04.01.2016


German Property Partners (GPP) report that take-up of space in Germany’s top 7 office property locations increased by 16.6 % year on year. Office take-up in 2015 totalled some 3.36m m². In the 4th quarter alone about 1.07m m² of office space was newly let. As in the prior year, owner-occupiers accounted for around 10% of the total. “For the first time since 2011 and 2012, the top 7 locations registered take-up of office space in excess of 3 million m². Berlin and Stuttgart posted record results, and Düsseldorf came within a whisker of its highest-ever total, recorded in 2007. This big increase was driven by the many companies in the IT sector who took large amounts of space,” remarks Björn Holzwarth, spokesman for German Property Partners.

Office market top-7 4Q2015Office market top-7 4Q2015
Take-up of space: Record figures in Berlin and Stuttgart
Two of the top 7 locations returned record take-up figures in 2015, and four posted double-digit growth rates. The biggest increase was noted in Düsseldorf, where the final figure of 420,000 m² represented year on year growth of some 77%. Most of this rise is attributable to transactions involving more than 5,000 m² which made up some 160,000 m² of the total. The largest lease in Düsseldorf was signed in the 4th quarter when a service company took about 30,000 m² at Franziusstrasse in the “MedienHafen”. Overall, four of the six largest leases in Düsseldorf were for space in new-build projects.

Munich saw take-up rise by around 30%. Some 755,000 m² of office space was newly occupied in 2015, with fourth-quarter transactions alone accounting for 259,000 m² (including owner-occupiers). The proportion of owner-occupiers, at 8.5%, was unusually high for Munich. The 2015 construction start of the new Criminal Justice Centre at Leonrodplatz comprising 39,000 m² was the biggest owner-occupier transaction in Munich, and the second biggest lease in any of the top 7 locations. In 2015 the largest rental agreement in Munich related to the 15,000 m² taken by IBM at Mies-van-der-Rohe-Strasse 4-10.

Cologne posted an increase of roughly 12% compared with 2014. Around 290,000 m² of office space was taken up, 80,000 m² of which related to 4th quarter transactions. In Cologne-Longerich construction started on one of the year’s biggest contracts – 11,000 m² of office space for a new Bundeswehr HR department.

In Berlin, take-up of space rose by 11% to reach a record level of 700,000 m². The key contributors to this result were 18 rental or owner-occupier agreements in the size category 5,000 m² or more, of which ten were for more than 10,000 m² and three for over 20,000 m². The two largest rental agreements of 2015 were signed by Allianz* for its new Berlin headquarters with 50,000 m² in Rudower Chaussee, Adlershof, and Zalando for some 28,300 m² of space in Mühlenstrasse, Friedrichshain district. The Allianz agreement was the lease with the biggest volume in 2015 at the top 7 locations.

Stuttgart likewise achieved a record result, with take-up of space rising by a good 4% year on year to a total of 290,000 m². Owner-occupiers accounted for some 22% of take-up. The building start for the new “Bosch IT Campus” with 30,000 m² of office space in the Feuerbach district was the fourth-biggest owner-occupier transaction in any of the top 7 locations. The rental agreement signed by Porsche in the 4th quarter for 29,800 m² of office space (Mittlerer Pfad, Weilimdorf) played a key role in producing the record figure for office take-up in Stuttgart, being the largest such transaction in the city and eigth-biggest in the top 7 locations.

Total take-up of 382,100 m² in Frankfurt translated into a 4% increase compared with 2014. However, apart from the owner-occupier agreement signed by the financial consultancy Deutsche Vermögensberatung (Windmühlenstrasse 14) for 32,000 m² of office space, no transactions involving more than 10,000 m² were recorded. Instead, tenant interest shifted to premises sized between 5,000 and 10,000 m²; whereas in 2014 one agreement was registered in this category, the number rose to eight in 2015, involving a total of 48,500 m² of space.

Take-up of office space in Hamburg totalled 523,000 m² or 0.4% less than the figure at the end of 2014. The result was much helped by the 4th-quarter agreement for 39,000 m² of office space in the Bahrenfeld district that was signed by an insurance company. Despite this lease and the purchase of Section C (32,000 m²) of the Axel-Springer complex by its future occupier, the number of large transactions dipped slightly below the prior year’s figure.

Known agreements for 20,000 m² or more; top 7 locations 2015
City Project/Property Tenant/owner-occupier Rented space (m²)
FAM * Rudower Chaussee, Adlershof Allianz 50,000
MUC Leonrodplatz (owner-occupier) Criminal Justice Centre 39,000
HAM Gasstrasse 39 Insurance company 39,000
FAM Windmühlstrasse 14 (owner-occupier) Deutsche Vermögensberatung 32,000
HAM Caffamacherreihe 3, Axel Springer Building, Section C (owner-occupier) The Free and Hanseatic City of Hamburg 32,000
STU Borsigstraße, “Bosch IT Campus” (owner-occupier) Robert Bosch 30,000
DUS Franziusstrasse, “Float” Service company 30,000
STU Mittlerer Pfad Porsche 29,800
BER Mühlenstrasse Zalando 28,300
DUS Am Seestern 3 Telekom 28,000
DUS Speditionstrasse/Kesselstrasse Trivago 25,900
BER GSW highrise Rocket Internet 22,000

* Communicated after data evaluation, therefore not considered in statistic.

Information and communications technology firms were the most active players on the markets in Berlin (29%), Düsseldorf (27%) and Munich (18%). Public administration clients predominated in Hamburg and Cologne (20% and 22% respectively), whereas banking and financial services comprised the biggest group in Frankfurt (19%) and in Stuttgart the car industry (42%).

Rents: Rental agreements in new-builds push up rents
The highest average rents for office space were paid in Frankfurt, at €19.00/m²/month, followed by Düsseldorf (€15.25/m²/month) and Munich (€15.03/m²/month). Nearly identical average rents were paid in Hamburg (€14.40/m²/month) and Berlin (€14.00/m²/month). In Cologne and Stuttgart the average rents were €12.50 and €12.40/m²/month respectively. The biggest increase in rates was seen in Düsseldorf, where the 11% rise resulted above all from leases for large amounts of space in expensive new-build projects.

As far as premium rents are concerned, Frankfurt heads the field with €38.50/m²/month, followed by Munich with €32.52/m²/month. Premium rents stood at €26.00/m²/month in Düsseldorf, €25.00/m²/month in Hamburg and €23.50/m²/month in Berlin. Top rates in Stuttgart and Cologne peaked at €22.80 and €21.25/m²/month respectively. The biggest rise in premium rents – 6% – was seen in Stuttgart.

Vacancies: Down by about 14%
Thanks to a brisk 4th quarter, the amount of empty space in the top 7 office property locations declined further and the year closed at some 5.3m m² of vacant space, 13.6% below the level at the end of 2014. Based on a total stock of office space of 89.5m m², the vacancy rate is thus 5.9%.

In Munich vacancies fell more steeply than elsewhere. Around 917,000 m² of space stood empty, a decline of some 31%. “Despite that, space is already in short supply on some of Munich’s sub-markets,” says Holzwarth. “And in Stuttgart, the office market situation is even more extreme, as the city ended the year with a 3.5% vacancy rate, the lowest in any of the top 7 locations.”

In 2015 around 1 million m² of new-build office space in 85 projects was completed. The highest levels of construction activity were in Berlin (304,000 m²) and Munich (240,000 m²). However, 110,000 m² of Berlin’s total is attributable to the new BND (German intelligence services) building.

The volume of completions is set to be slightly higher in 2016, at some 1.13m m². “For 2016 the pre-letting rates for new-build space in the top 7 locations are generally between 50 and 60%. Therefore there is only a limited choice in the new-build sector. Occupants are found for large, contiguous new-build office suites within a very short time,” says Holzwarth.

Outlook 2016
Economic research institutes offer positive forecasts on the growth of the German economy. The only scenario that might affect the German economy is if global economic growth were to falter unexpectedly, particularly if the situation in China should deteriorate. “In 2016 the good employment figures, the highly confident mood of trade and industry bosses and their willingness to hire new employees will have a positive impact on office markets in the top 7 locations. We therefore expect to see take-up of office space in 2016 total around 3 million m²”, forecasts Holzwarth.

Germany’s top 7 office locations, 1st-4th quarter of 2015
HAM BER DUS CGN FRA STU MUC
Space take-up in m² 523,000 700,000 420,000 290,000 382,100 290,000 755,000
Premium rent in €/m²/month 25.00 23.50 26.00 21.25 38.50 22.80 32.52
Average rent in €/m²/month 14.40 14.00 15.25 12.50 19.00 12.40 15.03
Vacant space in m² 698,100 830,000 789,000 440,000 1,357,985 270,000 916,953
Vacancy rate in % 5.2 4.4 10.4 5.7 11.8 3.5 4.0
Sources: GPP-partners, Colliers International Germany (Frankfurt)

Permission is given to reproduce the chart.

Press contact

Visitenkarte Xing
Britt Finke


Bleichenbrücke 9
20354 Hamburg

b.finke@grossmann-berger.de

040-350 802 993
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