Office Letting Market HH 1H/2014
Half-Year Result Stable Thanks to Telekom
Hamburg | 03.07.2014
Figures from Grossmann & Berger show that take-up of office space in Hamburg was slightly higher at the end of the 1st half of 2014 than in the same period a year ago. Take-up of space in Hamburg totalled some 225,000 m². Owner occupiers alone accounted for 45,000 m² (20 %). By contrast the letting performance, i.e. take-up of rental space, amounted to only 180,000 m² of office premises, and was thus appreciably lower than in the same period a year ago. “Letting activity in Hamburg was rather subdued during the second quarter. The half-year result was rescued by Telekom Deutschland. This company signed a lease for 32,000 m² in the CONICO new building project in City North,” says Andreas Rehberg, managing director of Grossmann & Berger, commenting on the market in Hamburg.
CONICO Registers Biggest Rental Agreement Since 2007
The size category 5,000 m² and larger accounted for more than 40 % of the take-up of space in the 1st half year. Eight new agreements were signed in this segment. The largest new lease in the 2nd quarter was that signed by Telekom Deutschland for space in the CONICO project on the site formerly occupied by BP headquarters (Überseering 2, City North). This agreement to rent 32,000 m² of office space is also the largest lease signed in Hamburg since 2007. In that year Germanische Lloyd rented over 40,000 m² at Brooktorkai (HafenCity). The next-smaller size segment, 2,001 to 5,000 m², posted a mere 12% of total take-up. The largest new lets within this size category were to the advertising agency Serviceplan, which took space in the Elbhof (Steinhöft 9, City) and to Signal Iduna, an insurance company, which decided to rent office space in the new building project at Überseering 8 (City North). In each of the two mid-sized categories, 1,001 to 2,000 m² and 501 to 1,000 m², a 15% share of take-up was reported for the first half of the year, whereas the category 500 m² or less accounted for 18% of space turnover.
City North is Top-Ranked Sub-Market
Thanks to the huge Telekom lease, City North shot to the top of the ranking of sub-markets. Accounting for 19% of the total take-up of space (42,000 m²), City North edged ahead of City - traditionally the largest section of the market - whose share was 18% (40,000 m²). However, in terms of the number of rental agreements signed, City remained the indisputable number 1, with 31% of all new leases in 2014. Apart from the previously named contract with the Serviceplan advertising agency for 4,000 m² (Elbhof, Steinhöft 9), three leases were signed for around 2,000 m² of office space each - by Drees & Sommer (LES_1, Ludwig-Erhard-Str. 1), MLP (Admiralitätsstrasse 10) and Conergy Deutschland (Kaufmannshaus, Bleichenbrücke 10). Third- and fourth-biggest sub-markets in terms of space turnover were HafenCity with 14% (31,000 m²) and City South (23,000 m²) with 10%. “The Telekom contract adds another prominent tenant to City North, which has once again proved that it is an attractive district for large companies seeking office space in Hamburg. The modern, efficient new building will enable the telecom services provider to move into premises that are ideally suited to the company’s specific needs,” remarks Andreas Rehberg.
Information and Telecom Companies Invigorate Take-Up of Space
Companies from the information and telecom sectors have invigorated the take-up of space in the 1st half year. This industry took some 24% of newly let space (53,000 m²) and was thus the biggest group of new tenants, closely followed by retail and gastronomy with a share of 20% (45,000 m²). Trailing some way behind, manufacturing occupied third place with 14% (31,000 m²) of space taken up, due to some fairly large construction starts for owner-occupiers. Consulting firms, normally a very active part of the letting market, closed the first half year in fourth place with a share of 12% (27,000 m²). “This situation will probably change by the end of the year, because some big consulting companies are currently looking for new premises in Hamburg,” says Andreas Rehberg, commenting on this pattern of take-up.
Office Rents Rising
Year on year, the premium rent in Hamburg has risen by one euro. At the end of the half year the premium rent in Hamburg (top price segment with a market share of 3% of lettings in the past twelve months) stood at 24.50 €/m²/month. The average rent, weighted by area occupied, rose to 14.30 €/m²/month, its highest level since 2011. “In the past 12 months many firms requiring larger amounts of space opted for offices in new buildings or good-as-new properties at correspondingly high rents, which of course had a noticeable effect on the average figure,” says Andreas Rehberg by way of explanation.
Vacancy Rate Falls Below 7 Per Cent
In Hamburg about 900,000 m² of office space is available for rent at short notice. At the end of the 1st half year the vacancy rate was 6.8%, including sub-let space (6.5% excluding sub-let space) and thus 0.3 percentage points lower than the prior year’s figure. The probable volume of completions in the years 2014/2015 is some 250,000 m² of new office space in Hamburg, spread over a total of 37 projects. The pre-letting rate, i.e. the percentage of space already bound by contracts, is currently higher than 50%. “Many interesting projects will be completed this year and next. However, despite the variety of different projects, there is limited choice for clients seeking large amounts of space at short notice,” says Andreas Rehberg.
Annualized Take-Up Slightly Higher than in 2012 and 2013
“Even though letting activity on the Hamburg market lost some momentum during the second quarter, we expect that by the end of the year the final result will be slightly higher than the fairly good figures for 2012 and 2013. To be specific, we expect to see office take-up in the region of 450,000 m². The optimistic outlook for the economy and the sturdy labour market are a good foundation for a successful letting year,” forecasts Andreas Rehberg.
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