The market for office letting in Hamburg started the new year with a pronounced increase. Provisional figures for the 1st quarter of the year prepared by the property services provider Grossmann & Berger indicate that take-up of space reached 123,000 m², some 17% more than in the same quarter a year ago. Owner-occupiers accounted for a share of some 43% in the 1st quarter, a far greater proportion than in the same period a year before. As a result, the figure for lettings was 69,000 m² and thus lower than in Q1, 2014 (75,000 m²). “Following a lengthy period of negotiation, the City of Hamburg decided to acquire part of the Axel-Springer complex to provide new offices for the Borough Council of Hamburg-Mitte and the purchase was notarized at the beginning of the year. This owner-occupier transaction - brokered by Grossmann & Berger - made a crucial contribution to the strong quarterly result,” remarked managing director Andreas Rehberg
.Four good-sized owner-occupier transactions
Four fairly large owner-occupier transactions dominated market activity in the 1st quarter of the year. The City of Hamburg purchased part of the Axel-Springer complex of buildings (Caffamacherreihe 3, City) to provide offices for Hamburg-Mitte Borough Council. Next year the Council will move into 32,000 m² of offices. The second biggest owner-occupier transaction was the purchase of an office and logistics property in the west of Hamburg offering some 7,000 m² of office space plus warehousing and hall space. Construction also started on the new head office for the Engel & Völkers Group (6,500 m² at Grosser Grasbrook, building lot 60) in HafenCity and Eurofins, a company specialized in bio-analysis, bought an existing building (Neulaender Kamp 1, Harburg) which offers over 3,000 m² of office space. In the 1st quarter the share of take-up in the size category 5,000 m² or more was lower than in the same period of 2014, whereas the share of smaller units increased. Suites measuring 500 m² or less accounted for 27% (33,000 m²) and the 501 to 1,000 m² size segment made up 20% (24,000 m²). “The spread of agreements concluded reflects the current market situation. At the moment we are advising many companies looking for new offices who require more than 1,000 m² of space. However, larger companies often take longer to make decisions and the process of sounding out the market is correspondingly involved,” comments Andreas Rehberg.Central sub-markets account for 65% of take-up
In the 1st quarter, 65% of the space taken up and some 50% of all agreements concerned properties in the central sub-markets City, HafenCity and City South. City led the field with a share of 44% (54,100 m²) of take-up, streets ahead of HafenCity (14% and 17,000 m²) and City South (7% and 8,700 m²). The strong year on year growth of take-up in the City sub-market is primarily the result of the City of Hamburg’s owner-occupier transaction. Apart from this agreement, most of the activity in Hamburg City related to transactions for less than 1,000 m². Two exceptions to this were registered, one of them being a lease signed by Counsel Treuhand, an accountancy and tax consultancy, at Neuer Wall 50 (around 1,500 m²). In HafenCity ground was broken not only for the Engel & Völkers head office but also for the Strabag and ECE project “Intelligent Quarters” next to the HafenCity university; there were also two lets for over 2,000 m² each. Dr. Weiland and Partner, a law, accounting and tax consulting firm is renting some 3,000 m² (Am Kaiserkai 60-62) and cruise ship operator AIDA Cruises chose 2,800 m² of office space in the “Centurion Commercial Center” (Grosser Grasbrook 9). The two biggest leases in City South were concluded by Kiwa Deutschland, a certification company, which is to occupy some 1,200 m² at Gruener Deich 1-3, and by the transport consultancy and management company Hamburg Consult, which took some 1,100 m² in the “Spaldingtor”, Spalding Strasse 64-68.Public administration tops the take-up ranking thanks to Hamburg-Mitte Borough Council
In the 1st quarter more take-up of space was attributable to the public administration sector than to any other single segment, partly due to the owner-occupier transaction for the Mitte Borough Council. Overall, this sector accounted for a 31% share (38,300 m²) of the total, compared with 8% in the same quarter of the prior year. Consultancies and companies in the tourism and transport industries were also prominent players on the letting market, with shares of 15% (18,300 m²) and 13% (15,700 m²) respectively.Average rent leaps up
The premium rent (top price segment accounting for a market share of 3% of lets in the past twelve months) increased year on year by 50 cents to €24.50/m²/month. The increase of take-up in the higher price segments during the period under review led to a noticeable leap in average rents, weighted by area let, to a new rate of €14.80/m²/month. “In the past twelve months the largest share of take-up - 27% - fell to properties renting for between €15.01 and €17.50/m²/month. A detailed analysis of the agreements concluded reveals that in 50% of the leases for large office suites totalling 5,000 m² or more the agreed price was over €19.00/m²/month,” says Rehberg
.Vacancies fall by a further 100,000 m²
Due to the brisk pace of take-up, the volume of vacant office space fell from 910,000 m² in the 1st quarter of 2014 to 800,000 m² in Q1, 2015. At the end of the quarter the vacancy rate, including sublet space, was 6.0% of the total stock of office space of 13.3m m². This year and in the coming year, 2016, some 45
projects are expected to add 411,000 m² to the total stock of office space. Contracts have already been signed for more than half of the space. “A closer look reveals that the pre-letting rate for 2015 is over 70%. This shows that the market has responded well to the projects currently under construction. Exciting new buildings stand a good chance of attracting tenants,” adds Rehberg
Following the positive start to the year, it is expected that 2015 will end with total take-up of space on a par with the prior year at over 500,000 m². “Last year Hamburg registered its highest take-up of space since 2011. The economic environment promises a successful year for new lettings and as far as one can tell at the moment, the market will remain as dynamic this year as it was last year. There are, moreover, clients out there looking for large amounts of office space, who can probably be accommodated during the course of the year,” says Rehberg
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