COMMERCIAL PROPERTY MARKET GERMANY'S TOP 7 CITIES 2018/Q1-2 - INVESTMENT | OFFICE LETTING
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LOCAL EXPERTISE – ACROSS GERMANY
INVESTMENT | OFFICE LETTING
COMMERCIAL PROPERTY MARKET
GERMANY’S TOP 7 CITIES
2018/Q1-2
WWW.GERMANPROPERTYPARTNERS.DE
LOKALEEXPERTISE
LOCAL KOMPETENZ– ACROSS
– DEUTSCHLANDWEIT
GERMANY MARKTBERICHT INVESTMENT/BÜROVERMIETUNG
MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
ABOUT US
GERMAN PROPERTY PARTNERS
Each of us being a leading commercial real estate company We have founded German Property Partners with the aim
in its respective region, we have joined together to form a of providing our special services in all of Germany’s major
Germany-wide real estate network. We are five strong real estate centres. That way, whatever your commercial
partners. real estate requirements, wherever you are in Germany,
you can obtain your advice from a single provider, and that
In Northern Germany, Grossmann & Berger offers its real is us. Via our network and thanks to our respective market
estate services out of its locations in Hamburg and Berlin, positions, we can offer you outstanding local knowledge LOCAL EXPERTISE – ACROSS GERMANY
while E & G Real Estate covers Southern Germany from and preferential market access throughout Germany.
its bases in Stuttgart and Munich. ANTEON Immobilien is GERMAN PROPERTY PARTNERS
the firm to contact about property matters in and around The many years of service our employees have put in with
Düsseldorf, while GREIF & CONTZEN Immobilien are your us, make German Property Partners a reliable partner for Dear Readers,
eyes and ears in the metropolitan area of Cologne and long-term collaboration in the fields of commercial real
Bonn. blackolive guarantees full market coverage in the estate and finance. 2018 started with demand for commercial properties re- also on each of the top 7 locations and the sub-markets
Frankfurt region. maining high in Germany’s top 7 cities. Both property in- within each of these.
vestors and firms looking for offices are in search of real
estate to suit their needs. The choice available, especially We hope you find the survey an informative and illumi-
Partner to potential office tenants, is shrinking all the time, so that nating read. We would be happy to hold personal talks with
not every request can be satisfied fully or by the required you and answer your specific questions about property
Grossmann & Berger Anteon GREIF & CONTZEN dates. This has affected office take-up in the top 7 loca- matters.
A real estate consultant with expe- Anteon is an owner-managed real This owner-managed service company tions, and by the end of the first half year the result was
rience stretching back for over 80 estate consultancy firm that spe- has been providing consultancy, evalu- slightly lower than in 2017. When it came to investments, Guido Nabben
years, Grossmann & Berger is one of cializes in brokering office lets, invest- ation, brokering and management ser- however, the top 7 cities closed the 1st half year with a con- Spokesman for German Property Partners
the leading service providers for the ments and industrial & logistics prop- vices for commercial and residential siderably larger volume of transactions than before.
sale and letting of commercial and resi- erties. In addition, as one of the market properties in the metropolitan region of
dential real estate in Northern Germany, leaders, Anteon offers property mar- Cologne | Bonn for over 40 years, and is This market survey provides a review of the first half of
and is an affiliate in the HASPA-group of keting, project support and research experienced in the entire value chain of 2018 as it played out on Germany’s top 7 markets. In ad- CONTENT
companies. services. real estate transactions. dition to drawing comparisons between the top 7 markets,
we offer a detailed look at the investment and office Top 7 | Overview and Key figures.................................4/5
letting markets in Hamburg, Berlin, Düsseldorf, Cologne, Economic environment.................................................... 6
blackolive E & G REAL ESTATE Frankfurt, Stuttgart and Munich. This survey includes a Spotlight: Coworking space............................................ 7
blackolive is an owner-managed real E & G is one of the leading providers of new section on the economic environment and one called Top 7 | Investment.........................................................8/9
estate consultancy firm that focuses on real estate services in South Germany “Spotlight” - in this edition we shall be shedding more light Top 7 | Office letting..................................................10/11
office letting and investment. The man- and has many years’ experience in the on the providers of coworking space. Hamburg....................................................................12/13
aging directors both have more than 26 fields of investment in commercial and Berlin..........................................................................14/15
years of experience and stand for an in- residential properties and the com- This market survey was made possible by the partnership Düsseldorf.................................................................16/17
depth understanding of the market. mercial letting of office, retail, indus- between five of the leading service providers specialized in Cologne......................................................................18/19
trial or logistics premises. commercial properties based in north, central and south Frankfurt................................................................... 20/21
Germany - the nationwide network German Property Stuttgart................................................................... 22/23
Partners (GPP). Our detailed knowledge of local markets Munich....................................................................... 24/25
gives us access not only to data on the overall market, but
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LOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OVERVIEW KEY FIGURES
TOP 7 | 2018/Q1-2 TOP 7 | 2018/Q1-2
INVESTMENT OFFICE LETTING
»» Hamburg, Stuttgart and Frankfurt grow most, Cologne »» Take-up of office space sinks further due to lack of prop-
slips furthest back erties
»» Prime net returns on office investments sink further, »» Amount of empty space shrinks to new, all-time low HAMBURG BERLIN
apart from in Stuttgart »» Average rents rising in all cities but premium rents 250,000 m² (-17 %) 330,000 m² (-20 %)
»» Sale of the “Gallileo” office tower block in Frankfurt is slightly down in Hamburg and Stuttgart 26.00 €/m² (-2 %) 32.00 €/m² (+12 %)
biggest 2nd-quarter transaction in the top 7 »» Shortage of space forces providers of coworking space 15.70 €/m² (+6 %) 20.50 €/m² (+20 %)
3.9 % (-1.0 pp) 2.0 % (-0.9 pp)
»» Lower total sales volume expected for 2018 to look outside the centre € 2.30bn (+70 %) € 2.45bn (-4 %)
2.90 % (-0.4 pp) 3.00 % (-0.2 pp)
Office letting
Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7
2018/Q1-2
Take- up of space DÜSSELDORF
250,000 330,000 182,000 125,000 259,300 120,000 450,500 1,716,800
[m²]
182,000 m² (-11 %)
Year-on-year change [%] -17 -20 -11 -22 +2 +4 +16 -6 27.00 €/m² (+2 %)
Average rent 15.80 €/m² (+9 %)
15.70 20.50 15.80 14.40 20.50 14.60 18.00 - 8.0 % (-1.5 pp)
[net €/m²/mth]
€ 1.16bn (+25 %)
Year-on-year change [%] +6 +20 +9 +6 +11 +4 +8 - 3.30 % (-0.4 pp)
Premium rent
26.00 32.00 27.00 22.00 42.00 23.50 36.10 -
[net €/m²/mth]
Year-on-year change [%] -2 +12 +2 +2 +8 -2 +2 -
Vacant space
536,200 390,000 590,000 230,000 875,000 172,000 520,000 3,313,200
[m²]
Year-on-year change [%] -20 -29 -18 -32 -26 -17 -31 -25
Vacancy rate COLOGNE FRANKFURT
3.9 2.0 8.0 2.9 7.6 2.2 2.3 3.7
[%] 125,000 m² (-22 %) 259,300 m² (+2 %)
Year-on-year change 22.00 €/m² (+2 %) 42.00 €/m² (+8 %)
-1.0 -0.9 -1.5 -1.5 -2.5 -0.5 -1.0 -1.2 14.40 €/m² 20.50 €/m²
[percentage points (pp)] (+6 %) (+11 %)
2.9 % (-1.5 pp.) 7.6 % (-2.5 pp)
Completions
330,000 612,000 218,000 200,000 319,000 215,000 500,000 2,394,000 € 0.73bn (-28 %) € 3.23bn (+43 %)
2018/2019
3.40 % (-0.4 pp) 3.30 % (-0.3 pp)
Pre-let rate [%] 59 58 68 79 59 53 77 65
Investment
Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7
2018/Q1-2
Transaction volume
2,300 2,450 1,160 725 3,227 860 3,332 14,054 STUTTGART MUNICH
[m€]
Year-on-year change [%] +70 -4 +25 -28 +43 +46 +37 +27 120,000 m² (+4 %) 450,500 m² (+16 %)
23.50 €/m² (-2 %) 36.10 €/m² (+2 %)
Share CBD [%] 29 28 0 47 29 11 3 20 14.60 €/m² (+4 %) 18.00 €/m² (+8 %)
Share of foreign 2.2 % (-0.5 pp) 2.3 % (-1,0 pp)
19 65 30 34 50 50 66 49 € 0.86bn (+46 %) € 3.33bn (+37 %)
investors [%]
3.50 % (0 pp) 3.00 % (-0.2 pp)
Share of asset class
60 50 60 54 84 35 65 63
Office [%]
Prime yield
2.90 3.00 3.30 3.40 3.30 3.50 3.00 3.20
Office [%]
Year-on-year change [pp] -0.40 -0.20 -0.40 -0.40 -0.30 0.00 -0.20 -0.27
Prime yield KEY FIGURES OFFICE LETTING/INVESTMENT:
2.90 2.90 3.20 2.90 3.00 2.80 2.45 2.88
Commercial premises [%]
Take-up of space (year-on-year change) Vacancy rate (year-on-year change)
Year-on-year change [pp] -0.40 -0.10 -0.30 -0.60 -0.40 -0.50 -0.25 -0.36
Prime yield Premium rent (year-on-year change) Transaction volume (year-on-year ch.)
4.60 4.40 4.60 4.50 4.40 4.50 4.20 4.46
Logistics [%]
Average rent (year-on-year change) Prime yield office (year-on-year ch.)
Year-on-year change [pp] -0.30 -0.70 -0.30 -0.40 -0.50 -0.60 -0.90 -0.53
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LOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
GERMANY SPOTLIGHT
BUSINESS ENVIRONMENT PROVIDERS OF FLEXIBLE OFFICE SPACE
Companies such as Design Offices, WeWork or rent24 are PREFERRED LOCATIONS
The latest surveys revealed that business managers are yielding just under 3.11 % in mid-May, their highest rate in renting increasing amounts of space in the top 7 cities. In The providers of flexible office space prefer premises in
tending to roll back their expectations of the economy. the past four years. In consequence, most 10-year Federal 2017 their take-up of space rose by 276 % compared with the centres of the top 7 cities. Alternative locations can
This probably has something to do with the opaque pol- bonds rose from their low in mid 2016 (-0.16 %) to 0.70 % in 2016 to 224,000 m². They focussed on central city loca- be chosen for strategic reasons, e.g. at airports or in cre-
icies of the president of the USA. So far the economic in- January 2018. Mortgage rates usually track the changes in tions, which accounted for 62 % of the total. In the 1st ative districts of the the city. Due to the shortage of space
dicators for Germany have not been affected by recent Federal bond rates. The ECB continues, for the moment, half of 2018 these firms took 40,500 m² of office space in in the top 7 locations, some providers, such as Design Of-
developments and remain at high levels. Therefore, when to pursue a zero-interest policy, so that it is unlikely that Munich, 30,500 m² in Frankfurt and 16,900 m² in Berlin. fices, are expanding into B and C locations such as Leipzig,
business people make decisions on location and invest- mortgage rates will rise by very much before the end of Overall, the industry absorbed some 117,000 m² of office Nürnberg or Heidelberg.
ments they still find favourable conditions in Germany. 2018. Thus the cost of borrowing money for real estate re- space in the top 7 cities during the 1st half of 2018. The
mains at an all-time low. Experts do not expect to see a rise volume taken up is thus double the amount rented in the OUTLOOK
LABOUR MARKET IN GERMANY in the base rate before the spring of 2019. same period last year. The industry’s strong growth illus- The larger providers of coworking space remain on an ex-
In June 2018 the number of jobless people in Germany trates a pressing need for flexible workspaces. pansionary course. Their flexible workspace concepts are
dipped below the 2.3m mark. Seasonally, it rose slightly in IFO SURVEY OF BUSINESS CONFIDENCE IN GERMANY a response to the demands of a new generation of workers
July. Year on year the unemployment rate fell by 0.5 per- The ifo index of business confidence shows that German TYPES OF PROVIDER and the desire of companies to reduce their fixed overhead
centage points to 5.1 %. Despite growing conflict about business managers are in slightly less optimistic mood, In general this new trend is known as coworking, although costs. This trend has, however, had no effect on demand
trade and a more sceptical view of economic prospects, ex- largely due to the current protectionist tendencies of this form - open plan offices and a focus on communication for classic long-term rental agreements. On the other
perts expect unemployment to fall further. Many German certain countries. In June the index stood at 101.8 points, and cooperation - is not the only model in the new work hand, the increased amount of coworking space is exac-
companies have full order books and are thus able to down from 102.3 a month before. Service providers were world. Classic business centres, which have existed since erbating the shortage of office space on the market, espe-
continue adding to their payrolls. The ifo employment ba- slightly less optimistic when rating both their current and the 1990s, focus on providing private spheres for their cus- cially in central locations.
rometer indicated an inclination among German business future business expectations. tomers. The most rapidly growing model is a hybrid mix of
TOP KNOWN OFFICE LETTINGS | TOP 7 CITIES
managers to create more new jobs. The index slipped both of these concepts. Only between 10 % and 20 % of 2018/Q1-2
slightly in June 2018, falling to 104.0, having reached its FORECAST GDP coworking space is actually in open plan offices.
highest mark in January 2018 at 105.5 points. In the case The major economic institutions in Germany forecast rented space
Provider Project/Property
[ca.m²]
of service industries, the firms most likely to be seeking growth of 1.8 % to 2.1 % in 2018. Some of the insti- WHO USES COWORKING SPACE?
The Office “Oper 46” 6,500
additional workers are those in the logistics and transport tutes expect to see the German economy take a “cyclical Part of the demand for flexible office space comes from Group Bockenheimer Anlage 46 | Frankfurt
sector. downturn” because heightened “potential for geopolitical workers in the “gig economy”, i.e. free-lancers and inde-
Spaces “3hoch5” 6,000
and global economic conflict” poses threats to the German pendent contractors who are hired for short-term “gigs”. (Regus) Breite Strasse 3-5 | Düsseldorf
INTEREST RATES economy. In particular, a trade war with the USA would en- But large companies also relocate individual departments Design Erftstrasse 19 | Köln 5,600
Mortgage rates bottomed out in mid-2016. There is an in- danger the economy. or project groups into flexible office space. Usually the Offices
creasing number of reports about rising interest rates. The hybrid model is their first choice, as the company can hire Spaces “Kornmarkt Kontore 1+2” 5,100
ECB’s exit from its quantitative easing programme and private offices and also benefit from the innovative buzz (Regus) Berliner Strasse 55 | Frankfurt
developments on the US capital markets are thought to generated by fellow coworkers. Design Koppenstrasse 93 | Berlin 5,000
Offices
indicate coming rises. Ten-year US treasury bonds were
Employment Ifo business climate Germany Providers of flexible office space Top 7 | Take-up of space by flexible office space
2013-2018/06 | year end values | in millions 2013-2018/06 | Index 2015 = 100 2013-2018/Q1-2 | in 000s m2
Business centre
Unemployed Unemployment rate Registered job offers Business situation »» Target groups: companies, Share CBD
6.9% Business climate self-employed persons/freelancers Take-up of space 62 %
6.7%
6.4% Business expectations
105.1 »» Focus on private atmosphere (individual + group offices)
0.46
6.1%
5.7% »» Providers: Regus, Contora, Dussmann, etc.
0.49 Employment barometer 104.0
0.57 5.1%
0.66 Coworking space
0.73
101.8 »» Target groups: companies, self-employed persons/
0.82
freelancers, startups
»» Focus on communication and collaboration, open 38 %
98.6 spaces
»» Providers: Beehive, Places, etc. 50 %
Hyprid model: mix of business centre and coworking
»» Target group: mix of the target groups business 86 % 19 % 53 %
2,95 2,90 2,80 2,69 2,53 2,32
centre and coworking, corporates 11 9 30 82 224 117
2013 2014 2015 2016 2017 2018/07 2013 2014 2015 2016 2017 2018 »» Mix of open space, individual + group offices 2013 2014 2015 2016 2017 2018/Q1-2
»» Providers: Design Offices, WeWork,
Source: Destatis, Bundesagentur für Arbeit Source: ifo Institut
rent24, Spaces, Mindspace, etc. Source: German Property Partners (GPP)
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INVESTMENT
TOP 7 | 2018/Q1-2
In the 1st half of 2018 the volume of investment transac- INVESTORS AND VENDORS
tions in commercial properties (excepting buy-to-let res- International investors accounted for about half of the TOP 10 TRANSACTIONS | TOP 7 LOCATIONS | 2018/Q1-2
idential) in Germany’s top 7 cities totalled €14.05bn and volume sold. Year on year, their share of the market has Purchase
translates into robust year-on-year growth of 27 %. thus grown further. Their share of the transaction volume City Project/property Buyer Investor price
was highest in Berlin (65 %) and Munich (66 %). Portfolio [ca. €m]
TRANSACTION VOLUME sales also took a larger slice of the market, although still
Local government centre, Wealthcap
Buyers concentrated on office properties, which ac- modest at 10 %. Frankfurt Aroundtown 500
Gutleutstrasse 116-124 HFS Deutschland
counted for 63 % (€8.86bn) of the volume traded. The next
most popular class of asset was the hotel property, ac- YIELDS Management company for
“Springer Quartier” (Sections MOMENI / Black Horse
Hamburg professionals’ pensions, 400
counting for a 10 % share of the market (€1.44bn). €2.81bn, Without exception the top 7 cities saw falling prime yields A+B), Kaiser-Wilhelm-Strasse Investments
Hannover
or a fifth of the volume of transactions in the top 7 cities, on offices, commercial buildings and logistics properties.
involved property sales in the central business districts On office buildings in the top 7 locations the prime yield is “Gallileo”, Capital and Commercial Trust Fund managed by Triuva for
Frankfurt 356
Gallusanlage 7/Kaiserstrasse (CCT) South Korean investor
(CBD). This proportion was practically identical to last now only 3.20 %. This is also a reflection of the narrow cor-
year’s. ridor in which prime net yields move throughout the top 7
Hilton Berlin, Listed property investment com-
cities, from 2.90% in Hamburg at one extreme to 3.50 % in Berlin Aroundtown 297
Mohrenstrasse 30 panies - AG/REITs
Munich accounted for about a quarter of the total volume Stuttgart at the other.
traded in the top 7 cities (€3.3bn, +37 %). Frankfurt was “Correo Quartier”,
close behind, with total trades of €3.23bn (+43 %), followed OUTLOOK Munich Paul-Heyse-Strasse/Bayerstrasse/ Credit Suisse Postbank 275
Schwanthalerstrasse
by Berlin with €2.45bn (-4 %). The biggest year-on-year rise There has been no change in the dynamics of the in-
was 70 %, noted in Hamburg (€2.30bn). The biggest known vestment market for commercial real estate observed in “SZ-Tower”,
Axa Real Estate Managers /
transaction of 2018 was concluded in Frankfurt. The the 1st quarter. At some locations the pace has noticeably Munich Art-Invest Norges Bank Real Estate 244
Hultschiner Strasse 8
Management
closed property fund Wealthcap HFS Deutschland sold accelerated, although results could have been better
the building at Gutleutstrasse 116-124, let on a long-term if it were not for the shortage of properties. A great deal Old police headquarters,
Frankfurt Friedrich-Ebert-Anlage/ Gerch Group State government of Hesse 213
lease to local government departments, to Aroundtown for remains in the pipeline for the 2nd half of the year. The Mainzer Landstrasse
some €500m. The second-biggest transaction involved the coming weeks are expected to bring several big-ticket
“Springer Quartier” in Hamburg (Kaiser-Wilhelm-Strasse, transactions in nearly every one of the cities. The year “AVIVA”,
Munich Korean state fund KGAL >200
City); it was sold for €400m by a joint venture comprising 2018 is forecast to end with a total transaction volume of Carl-Wery-Strasse 34
the MOMENI Group and Black Horse Investments to a €28.8bn in the top 7 cities.
company that manages professionals’ pensions. “Sumatrakontor”,
Hamburg REAL I.S. The Blackstone Group 190
Überseeallee 1-3
“TSK1”,
Frankfurt Credit Suisse The Blackstone Group confidential
Theodor-Stern-Kai 1
Top 7 | Transaction volume Top 7 | Strongest buyer groups by location Top 7 | Prime Yields Office Top 7 | Transaction volume
2013-2018/Q1-2 | in € bn 2018/Q1-2 | Transaction volume in € millions 2013-2018/Q2 | (Net) initial yield | in % 2018/Q1-2 | by asset class
Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich
Retail
5-year average (2013-2017): Listed property investment companies-AGs/REITs Logistics
Forecast Frankfurt 983
ca. € 25.4bn 3%3%
28.8 Other
4%
Fund managers
Berlin 718 Undeveloped land
7%
Pension insurers and providers of professional pensions Commercial
Hamburg 679 premises
9%
Project developers
Munich 434
3.50 Hotel Office
Other Funds 3.40 10% 63%
Cologne 370 3.30
Q1-2 Asset managers 3.00
17.3 22.0 29.3 28.8 29.9 14.1 Düsseldorf 205 2.90
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
Open-end real estate funds
Stuttgart 153 Hamburg Berlin Düsseldorf Köln
Frankfurt Stuttgart München
Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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OFFICE LETTING
TOP 7 | 2018/ Q1-2
Take-up of office space in Germany’s top 7 cities de- RENTS
creased further due to a shortage of properties. In the Rents increased in almost every top 7 location. Only TOP OFFICE LETTINGS >10,000 m² | TOP 7 LOCATIONS | 2018/Q1-2
1st half of 2018 take-up fell by some 6 % year on year to Hamburg and Stuttgart, where premium rents were down
1.72m m². The somewhat stronger 2nd quarter accounted by 2 %, reported any decline at all. Premium rents were Rented space
City Project/Property Tenant/Owner-occupier
[ca. m²]
for about 868,000 m². at their highest in Frankfurt at €42.00/m²/month and in
Munich at €36.10/m²/month. The highest average rents
Bludenzer/Steiermärker Strasse Robert Bosch GmbH
TAKE-UP OF SPACE were posted in Frankfurt and Berlin, at €20.50/m²/month. Stuttgart 50,000
(Project development) (owner-occupier, construction start)
Although German business managers are slightly less Berlin posted the biggest increases in rents; here the
optimistic, the demand for office space remained very average rent grew by 20 % to €20.50/m²/month and the “Heinrich Campus”,
Düsseldorf Deloitte GmbH Wirtschaftsprüfungsgesellschaft 35,500
high in the 1st half of 2018, but suitable premises are in premium rent by 12 % to €32.00/m²/month. Heinrich-Erhardt-Strasse 61
short supply. Although take-up of space was actually
higher in Munich (+16 %), Stuttgart (+4 %) and Frankfurt AVAILABLE AND VACANT SPACE Berlin Hildegard-Knef-Platz 2 Vattenfall GmbH 29,000
(+2 %), this should not obscure the fact that in some lo- The vacancy rate in the top 7 locations fell even further,
cations available space has reached a critically low level. to a new, all-time low of 3.7 %. Without exception, the
At the end of the 2nd quarter the other top 7 cities posted stock of space available at short notice sank in each city. Frankfurt Europa-Allee 92, building lot 43 Frankfurter Allgemeine Zeitung GmbH (FAZ) 24,000
two-figure declines in the amount of space taken up. The Hardest hit by the shortage of space are Berlin, Stuttgart
biggest drop was -22 % in Cologne. and Munich, where vacancy rates range between 2.0 %
Department of IT and Communications Technology
and 2.3 %. In Germany’s top 7 cities 253 developments are Munich Agnes-Pockels-Bogen 1 23,000
(State Capital Munich)
Munich posted the largest share of overall take-up of scheduled for completion in 2018 and 2019, delivering a
space in the top 7 locations, reporting 450,000 m² or 26 % projected 2.39m m² of space. Contracts have, however,
of the total. Berlin and Frankfurt placed second and third already been signed for 65 % of this total. In 2018 only Munich Hofmannstrasse 61, 63, 69 State Capital Munich 17,000
with 330,000 m² and 259,300 m² respectively. a quarter of the office space in new developments will
become available on the open market.
Munich Werinherstrasse 83-95 Deutsche Postbank AG 16,900
Take-up of space by the providers of coworking facilities
or business centres was almost double its share a year OUTLOOK
before (117,000 m² and 7 % of total take-up). Only 38 % of Office premises will continue in great demand. Although
Berlin Am Borsigturm 100 S-Servicepartner Berlin GmbH 14,300
this office space is in the CBD of a top 7 location. Although some clients in Berlin, Düsseldorf and Frankfurt are
their turnover in the CBDs rose year on year by a modest looking for large office suites, it would seem that the top 7
3 %, as a proportion of total take-up the CBD share fell cities are far from settingy any new records on the office Berlin Euref-Campus GASAG AG 12,000
from 72 % to 38 %. This indicates that providers of cow- market. This situation is not expected to ease before 2020
orking space are also obliged to seek space in non-central and firms must therefore be prepared to face rising rents
State government of Baden-Württemberg
areas. for offices in the top 7 cities. Stuttgart Kriegsbergstrasse 32 10,800
(bought by occupier)
Top 7 | Take-up of space Office letting | Strongest industries by location Top 7 | Vacancy rate Top 7 | Completions | Pre-let rate
2013-2018/Q1-2 | in millions m2 | incl. owner-occupiers 2018/Q1-2 | Take-up of space in m2 2013-2018/Q2 | in % 2014-2019 | in 000s m2
Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich 131
Internet/Media/Telecommunications
Berlin 98,000 122
5-year average (2013-2017): 114 57 %
ca. 3.5m m² Forecast Public administration/Social services providers 104
Munich 83,000 Number of projects
3.6
89
80
Düsseldorf 57,400 Lawyers/Tax accountants
75 %
8.0%
Industry 7.6%
Stuttgart 53,000
Internet/Media/Telecommunications
Frankfurt 51,300
3.9%
Tourism/transport 2.9%
Q1-2 Hamburg 41,800 2.3%
2.2%
2.9 2.9 3.5 3.9 4.1 1.7 2.0% 971 927 983 946 983 1,412
Public facilities, associations and federations
2013 2014 2015 2016 2017 2018/Q1-2 Cologne 19,000 2013 2014 2015 2016 2017 2018/Q2 2014 2015 2016 2017 2018 2019
Hamburg Berlin Düsseldorf Köln
Frankfurt Stuttgart München
Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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OFFICE LETTING
HAMBURG
The first half of 2018 has closed with office take-up in AVAILABLE AND VACANT SPACE
Hamburg some 50,000 m² below the results of the prior In the 2nd quarter the vacancy rate contracted once more
year. The result for the half year was a total of 250,000 m². and stood at 3.9% at the end of the quarter. Therefore,
This translates into a 17% drop in office take-up. The pro- the four per cent barrier has fallen. Year on year 20 % less
portion of owner-occupiers was slightly higher than in office space was available to tenants within three months
the first quarter, rising to 7%. as vacancies fell to only 536,000 m².
TAKE-UP OF SPACE OUTLOOK
Six very large lets were registered in the 1st half of 2018. Many companies are still looking for new offices. There
The biggest agreement was the 1st quarter lease taken by are limits to how well their demands can be met due to the
insurance group Signal Iduna for temporary space in the drastic reduction of available premises and the resultant
“Vattenfall Building” (Überseering 12, City North). A further keener competition. The final figures for office take-up
three large agreements were signed in the 2nd quarter. are not expected to match the record set in 2017 and the
f & w fördern und wohnen, a social housing company owned year should end somewhere in the region of the ten-year
INVESTMENT by the Free and Hanseatic City of Hamburg, will be moving average of 512,000 m².
into some 8,600 m² of offices in the “Economic Quarter” at
HAMBURG Heidenkampsweg 96-98. Other clients taking more than
5,000 m² included the Federal Building Dep. of the Ministry
56 transactions on the market for commercial properties OUTLOOK for Urban Development and Housing (BSW) which took
were reported in Hamburg, totalling €2.3bn at the close Although the market seems to be practically sold out, no some 6,900 m² at Nagelsweg 47 (City South) and Lufthansa TOP 3 SUB-MARKETS (take-up of space / average rent)
of the 1st half of 2018. Year on year, the result has soared downturn in trading is anticipated. Investors are still very which opted for around 5,300 m² in the “Hanse 10ter Grad”
by 70 %. Adding to the two sales for over €100m each in willing to buy and enough building developments that have (Essener Bogen 21-23, Hamburg West). The biggest new CITY / 60,500 m² / €19.40/m²/month
the 1st quarter, two more big transactions followed in the not yet been sold remain on the market. Developers are, lease in the City was signed by Zeaborn for space in the CITY SOUTH / 46,500 m² / €12.40/m²/month
2nd quarter. moreover, actively seeking to buy existing properties and “Tower am Michel” (Ludwig-Erhard-Strasse 22) in the first HARBURG / 22,800 m² / €10.10/m²/month
plots of land in order to begin new projects. It is therefore quarter of the year.
INVESTMENT PROPERTIES highly likely this year’s total will exceed the €3.6bn traded TOP 3 CONTRACTS
The first quarter sale of the “Springer Quartier” (Kai- last year and that 2018 will close at more than €4.0bn. RENTS
ser-Wilhelm-Strasse, City) was the biggest transaction in The premium rent dropped by 50 cents year on year, which 1. SIGNAL IDUNA GRUPPE
the 1st half year; a joint venture comprising the MOMENI translated into a modest fall of 1.9%. At the close of the “Vattenfall building”, Überseering 12 / ca. 10,000 m²
Group and Black Horse Investments sold the property for 1st half of 2018 the premium rent was €26.00/m²/month. 2. F & W FÖRDERN UND WOHNEN AÖR
some €400m to a company that manages professionals’ However, the average rent, weighted by rental area, rose by “Economic Quarter”, Heidenkampsweg 96-98 / ca. 8,600 m²
pensions. And in the 2nd quarter Blackstone sold the “Su- 6.1% from €14.80/m²/month a year ago to its current level 3. HARBURG-FREUDENBERGER MASCHINENBAU GMBH
matrakontor” (Überseeallee 1-3, HafenCity) for around of €15.70/m²/month. Schlachthofstrasse / ca. 7,700 m²
€190m to REAL I.S. The next-biggest transaction in the
€100m plus bracket was the sale of the mixed use property
“LaHoMa” (Langenhorner Markt 1-18, Hamburg East) that Hamburg | Transaction volume Hamburg | Take-up of space Hamburg | Premium and average rent
was announced in the first quarter. 2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
Prime yields on all asset classes fell further below the Forecast Premium rent
5-year average (2013-2017):
levels seen a year before. The prime net yield on offices 5-year average (2013-2017): 4.5
ca. 539,000 m² Forecast 26.00 26.00 26.00
ca. € 3.7bn 25.00
and commercial buildings dipped below the 3 per cent 550 24.00
24.50
mark, dropping 0.4 percentage points to 2.90 %.
INVESTORS AND VENDORS
With a share of 30 % (€680m) professional pension schemes
Average rent
and pension funds were the biggest group of buyers on the
15.70
market in the 1st half of 2018. As a group, project devel- 15.50 15.20
14.50 14.50
opers were easily the most dominant vendors, accounting 14.00
Q1-2 Q1-2
for 48 % of the market (€1.1bn). National players also pre- 2.8 3.7 4.0 4.5 3.6 2.3 440 525 540 550 640 250
dominated on the selling side of the market, with a 69 %
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
share of the volume traded (€1.6bn).
Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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LOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OFFICE LETTING
BERLIN
Year on year take-up of space in Berlin offices sank by AVAILABLE AND VACANT SPACE
20 % despite a large number of agreements to rent big Empty space stood at a record low of 2.0 % or 390,000 m²,
amounts of space, thus closing with a rather average which was 29 % below the level noted in the prior year.
total of 330,000 m². However, this decline is not because Berlin therefore has almost no space left to rent. This
demand is flagging, but because not enough space is poses problems for firms wishing to move or expand their
available. premises and those seeking large amounts of space are
turning to new build projects. This trend is leading to a
TAKE-UP OF SPACE further rise in new developments being built, but the ef-
At the end of the half year twelve agreements for more than fects will not be clearly felt until 2019 or 2020. In 2018 some
5,000 m² of space had been noted and six for more than 237,000 m² of office space will be completed, in 2019 the
10,000 m²; these included premises let to power company scheduled volume is 375,000 m².
Vattenfall (about 29,000 m², Hildegard-Knef-Platz 2,
Periphery South), to S-Servicepartner Berlin (about OUTLOOK
14,300 m², Am Borsigturm 100, Reinickendorf) and to In the medium to long term more space on the market will
INVESTMENT energy supplier GASAG (about 12,000 m², Euref-Campus, ease the situation for tenants and keep rents reasonable.
Schöneberg). In 2018 take-up is expected to total some 850,000 m² even
BERLIN though so little space is available on the market.
The most popular sub-market was Charlottenburg with a
Overall, commercial properties valued at some €2.5bn INVESTORS AND VENDORS share of some 17 %, followed by Periphery South (about
were sold in the 1st half year. Despite a drop of 4 %, this International investors played a bigger role in Berlin than 16 %) and Mitte (about 15 %). The Periphery South sub- TOP 3 SUB-MARKETS (take-up of space / average rent)
nevertheless represents the third-highest volume of trans- in the year before. Their share of the volume of transac- market now frequently places in the top 3 districts, thus
actions recorded during a half year in the national capital. tions rose by about a third to 65 %. As vendors, interna- underlining the shift in take-up locations. With a 23 % CHARLOTTENBURG / 56,000 m² / €15.50/m²/month
tional traders accounted for 54 % of the market. With 29 % share of the total take-up of space, the Internet/media/ PERIPHERY-SOUTH / 54,000 m² / €16.00/m²/month
INVESTMENT PROPERTIES of investments in the Berlin market, fund managers were telecoms sector was the biggest group of new tenants. MITTE / 48,000 m² / €25.70/m²/month
The market’s dynamism showed particularly in properties the biggest group of buyers. Developers were prominent
traded for over €100m each. Their number jumped from two among the vendors, accounting for a quarter of the total RENTS TOP 3 CONTRACTS
in the 1st quarter to eight by the end of the 2nd quarter. In traded. Within the space of a year the average rent rose by 20 % to
what is thus far the biggest sale to be announced in Berlin, the new record level of € 20.50/m²/month. What is now the 1. VATTENFALL GMBH
Aroundtown paid Park Hotels & Resorts some €300m for OUTLOOK average rent was the premium rent in 2011. The premium Hildegard-Knef-Platz 2 / ca. 29,000 m²
the “Hilton Berlin” (Mohrenstrasse 30, Mitte 1a) in the 2nd In the 2nd half year a number of property sales agreements rent grew by 12 % and its new level of € 32.00/m²/month 2. S-SERVICEPARTNER BERLIN GMBH
quarter of this year. will be ready for signing, so that the volume traded is set to was last seen in 1995. Am Borsigturm 100 / ca. 14,300 m²
grow considerably and is likely to reach €5.0bn. 3. GASAG AG
Although still the most sought-after asset class, office prop- Euref-Campus / ca. 12,000 m²
erties made up only 50 % of the total volume, down from
72 %. Mixed-use properties were the second-most traded
assets, accounting for 17 % of the market. Much of this Berlin | Transaction volume Berlin | Take-up of space Berlin | Premium and average rent
result is attributable to the 2nd-quarter sale of the “Forum 2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
Landsberger Allee” (Landsberger Allee 177, Periphery East) 32.00
for which Patrizia Grundinvest paid Peakside Capital around 30.00
€100m. Hotel properties made up 15 % of the market. 5-year average (2013-2017):
ca. 736,200 m² Forecast 27.50
Several hotels were traded in the 2nd quarter, including the 5-year average (2013-2017): 750
“Hilton Berlin” which passed into new ownership. ca. € 5.5bn Premium rent 24.00
Forecast
22.00 22.50 Average rent
Whereas prime yields on office properties and commercial 5.0 20.50
19.50
buildings fell appreciably less than before, dropping by
0.2 and 0.1 percentage points respectively, the yield on 16.10
14.90
logistics properties plummeted. Prime yields on the latter
13.20
fell 0.70 percentage points to 4.40 %. On office properties 12.30
Q1-2 Q1-2
the prime yield was 3.00 %, and on commercial buildings 3.4 4.0 7.8 5.0 7.3 2.5 521 630 810 820 900 330
2.90 %. In the CBD and adjoining neighbourhoods yields
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
are moving sideways, whereas in non-central and pe-
ripheral locations they are still falling. Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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LOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OFFICE LETTING
DÜSSELDORF
The 1st half year closed with take-up of office space in AVAILABLE AND VACANT SPACE
Düsseldorf totalling 182,000 m². Thus 11 % less space The amount of office space standing empty in Düsseldorf
was let than in the same period a year ago, down from continues to fall, and has dropped year on year by some
205,000 m². 130,000 m² to 590,000 m². This is equal to a vacancy rate of
8.0 %. In mid 2017 the figure was 9.5 %.
TAKE-UP OF SPACE
The biggest group of clients in the 1st half of 2018 was New developments are expected to deliver 103,000 m² of
comprised of lawyers and tax consultants; altogether space this year and 115,000 m² in 2019. The latest figure
these clients rented some 57,400 m². Deloitte was instru- for the total stock of office space is 7,400,000 m², or 2 %
mental to this good result, signing the biggest transaction less than in the same period a year ago.
to date, a lease for 35,500 m² in the “Heinrich Campus”
(Heinrich-Ehrhardt-Strasse 61) new development in the OUTLOOK
Kennedydamm/Derendorf sub-market, and propelling this A forecast of 400,000 m² of take-up by the end of 2018 is
district to the top of the sub-market ranking with a total perfectly realistic since several clients are still seeking
INVESTMENT 53,700 m² of take-up. The next-biggest rental agreement premises with over 10,000 m², which would take the result
in the 1st quarter of 2018 was signed by the Rhineland tax higher than in 2017 (about 358,700 m²).
DÜSSELDORF and finance office (Oberfinanzdirektion Rheinland) to rent
some 5,260 m² of office space in the “Bürocenter Nord”
A very strong 2nd quarter on the investment market in OUTLOOK (Kanzlerstrasse 2-6/Oberrather Strasse 2-6); the third-
Düsseldorf meant that the first half of 2018 closed with The signs are that the brisk activity on the Düsseldorf biggest was a lease for 5,247 m² in the “Shift” (Klaus-Bun- TOP 3 SUB-MARKETS (take-up of space / average rent)
a good result. Totalling some €1.16bn, the volume traded property market will continue during the rest of the year. gert-Strasse 7) taken in the 2nd quarter by tax consul-
was 25 % higher than the prior year’s result of €930.1m. Because some big-ticket sales are expected by the end tancy WTS Steuerberatungsgesellschaft; both are located KENNEDYDAMM/DERENDORF / 53,700 m² / €19.40/m²/month
of the year, the total traded is likely to close with a simi- in Airport City/North sub-market. CITY / 39,400 m² / €17.00/m²/month
INVESTMENT PROPERTIES larly good result as in prior years and could even pass AIRPORT CITY/NORTH / 28,000 m² / €15.60/m²/month
Office properties remained the most-traded asset class, the €2.6bn mark. Several properties costing in excess of RENTS
accounting for 60 % of the total volume of transactions €100m are currently the subject of exclusive due diligence Year on year the average rent has risen by 9 % from €14.50/ TOP 3 CONTRACTS
(€695.0m). Two of the biggest transactions seen in Düs- processes. m²/month to €15.80/m²/month. The premium rent in-
seldorf during the 1st half of 2018 were the sale of the creased by 2 % over the same period from €26.50/m²/ 1. DELOITTE GMBH (ACCOUNTANTS/AUDITORS)
“Fürst & Friedrich” development (Fürstenwall/Friedrich- month to €27.00/m²/month in the 1st half of 2018. Heinrich-Erhardt-Strasse 61 / ca. 35,500 m²
strasse) and of the “DUO” office building (Louise-Rain- 2. RHINELAND TAX AND FINANCE OFFICE
er-Strasse 7-11). The volume of portfolio sales declined Kanzlerstrasse 2-6 / Oberrather Strasse 2-6 / ca. 5,260 m²
- from €282.7m (30 %) in the first six months of 2017 to 3. WTS STEUERBERATUNGSGESELLSCHAFT MBH
€237m (20 %) in the half-year just ended. Klaus-Bungert-Strasse 7 / ca. 5,247 m²
The prime net yield on office properties was 3.30 % in the
period under review, and thus 0.4 percentage points below Düsseldorf | Transaction volume Düsseldorf | Take-up of space Düsseldorf | Premium and average rent
the first half of 2017. On commercial buildings the prime 2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
net yield was 3.20 %, and 4.60 % on logistics properties.
Forecast
Premium rent
INVESTORS AND VENDORS 5-year average (2013-2017): 400 27.50
26.50 27.00 27.00
5-year average (2013-2017): Forecast ca. 338,900 m² 26.00 26.00
As in the prior year, asset managers were the most active ca. € 2.4bn
2.6
group of investors. But whereas their share in 2017
was 42 % (€387.2m) this group accounted for only 18 %
(€204.5m) of all investments in the half year just ended.
Developers were the biggest vendors in the 1st half of Average rent
2018, and sales of €509.7m translated into a 44 % share of 15.25 15.35 15.80
14.90
the total traded. In the 1st half year foreign investors spent 13.80
14.40
€351.1m on commercial properties in Düsseldorf, taking
Q1-2 Q1-2
a 30 % of the total market. This figure represents a 26 % 1.8 1.9 2.7 2.6 3.0 1.2 347 238 420 331 359 182
drop following investments from overseas of €475.6m in
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
the first half of 2017.
Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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WWW.GERMANPROPERTYPARTNERS.DELOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OFFICE LETTING
COLOGNE
In the 1st half of 2018 take-up of office space in Cologne unlikely to total more than about 60,000 m² of new space.
was some 125,000 m². The result was thus around 14 % About 140,000 m² may be completed in 2019, however
below the median figure (about 145,000 m²) over the past some 75 % of this space has already been pre-let.
five years.
OUTLOOK
TAKE-UP OF SPACE Overall the economic environment, which is the basis for
Although there is still considerable demand for office office demand in Cologne, remains favourable. The most
space, available properties, especially in the city centre, plausible forecast for take-up by the end of the year is a
are in increasingly short supply. Potential tenants figure below the five-year average of some 300,000 m².
therefore have problems finding the right premises for In view of the shortage of space, rents are unlikely to see
their firms. The biggest agreements included one by re- much change, although a further rise would not come as
cycler DSD Duales System to rent about 6,000 m² (Ed- a surprise.
mund-Rumpler-Strasse 5) and one by Design Offices for
some 5,600 m² in the “Kaiser Hof” (Erftstrasse 19) new
INVESTMENT build development. Public facilities, associations and fed-
erations were the most active group on the market with
COLOGNE about 15 % of total take-up.
By the end of the 1st half of 2018 the volume of investment OUTLOOK RENTS
transactions in commercial properties in Cologne to- Depending on the availability of properties, it could be pos- The falling supply of premises coupled with high demand TOP 3 SUB-MARKETS (take-up of space / average rent)
talled some €725m. The year-on-year contraction of 28 % sible to end the fourth quarter with transactions totalling has served to push rents higher. For the first time, the
is due to the shortage of available properties. some €2.0bn. The cash-rich are still urgently seeking in- premium rent reached some €22.00/m²/month. New CBD NORTH / 20,000 m² / €16.30/m²/month
vestment opportunities. Although selling prices are al- build properties and space in Rheinaufhafen district COLOGNE RING ROAD / 12,000 m² / €16.80/m²/month
INVESTMENT PROPERTIES ready high, further increases cannot be ruled out for any commanded especially high rents. Year on year the av- COLOGNE NORTH / 12,000 m² / €9.20/m²/month
Office buildings accounted for about half of the total segment of the market. It remains to be seen when prices erage rent, weighted by area, rose by around 6 % to reach
traded. However, the most expensive property traded will start to plateau. € 14.40/m²/month. TOP 3 CONTRACTS
was the Maritim Hotel, centrally located at Heumarkt
20, which changed hands for around €120m. A relatively AVAILABLE AND VACANT SPACE 1. DSD DUALES SYSTEM HOLDING GMBH (RECYLING)
large proportion of transactions took the form of portfolio In nearly every sub-market the amount of empty office Edmund-Rumpler-Strasse 5 / ca. 6,000 m²
trades (about 20 %). In these cases the buyers were fre- space sank in the 1st half year to around 230,000 m². This 2. DESIGN OFFICES GMBH
quently foreign investors. Year on year the prime net yields translates into a mere 2.9 % of total stock. In some sub- Erftstrasse 19 / ca. 5,600 m²
on office and logistics properties have fallen by 40 basis markets, such as MediaPark, extremely little property 3. FOND OF GMBH (OWNER-OCCUPIER)
points to 3.40 % and 4.50 % respectively; the decline on is available at all. The volume of completions in 2018 is Vitalisstrasse / ca. 5,000 m²
retail properties was a massive 60 basis points to 2.90 %.
Investors are very willing to part with money if they have
the chance to buy top grade properties. Cologne | Transaction volume Cologne | Take-up of space Cologne | Premium and average rent
2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
INVESTORS AND VENDORS
Various types of fund were responsible for more than Premium rent
half of the volume of transactions. A number of different Forecast
22.00
5-year average (2013-2017): 21.50 21.50
types of investor sold properties, but no single group dom- ca. € 1.6bn 2.0
5-year average (2013-2017):
21.25 21.25 21.25
inated the market. The highest share fell to the property ca. 316,000 m²
Forecast
AGs, which accounted for about 17 % of the total traded.
Around 34 % of the volume of transactions was due to 280
foreign buyers. Average rent
14.10 14.40
13.70
12.70 12.70 12.40
Q1-2 Q1-2
0.8 1.3 1.9 1.8 2.3 0.7 280 260 290 440 310 125
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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WWW.GERMANPROPERTYPARTNERS.DELOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OFFICE LETTING
FRANKFURT
Take-up of office space in Frankfurt was 259,300 m² and by 2.6 percentage points to 7.6 %. Vacancies declined in
thus 2 % higher than at the mid-point of 2017; the number all sub-markets, but the Banking District saw the biggest
of agreements was marginally higher at 377. reduction, with 60 % less space empty. The vacancy rates
vary considerably from sub-market to sub-market, ranging
TAKE-UP OF SPACE from 3.5 % (City Rand) to 18.2 % (Frankfurt North). Although
In the 1st quarter the FAZ newspaper signed in advance 37 development projects are set to deliver 319,000 m² of
for 24,000 m² in a development at Europa Allee 92 in the space in 2018/2019, thus adding considerably more than in
new Europaviertel (City Rand district). This was, by a wide recent years, 59 % of the total has already been let.
margin, the biggest let in the first half year. The next-
biggest agreement was for some 8,250 m² of space in OUTLOOK
Frankfurt North (Olof-Palme-Strasse 35), signed by the Various reasons, such as search queries for large premises
German Finance Agency. Although the financial industry adding up to over 500,000 m², the fact that Siemens AG has
usually dominates take-up, it accounts for only 17 % and secured rights to the “Gateway Gardens” building site and
third place in the current table of clients. The IT cluster of that a financial services provider is on the verge of renting
INVESTMENT industries was behind 20 % of take-up, which had much more than 30,000 m² in City West, lead experts to forecast
to do with the large transaction already mentioned. Con- take-up for the year of between 570,000 and 600,000 m².
FRANKFURT struction and property service providers are also big
clients (18 %) and here demand is fuelled by coworking
By the end of the 1st half of 2018 the volume of investment investors were involved in a good half of the transaction space providers (12 %), who are greatly expanding opera-
transactions in Frankfurt had surged 43 % year on year to volume. tions. The greatest amount of space, 58,800 m², was taken TOP 3 SUB-MARKETS (take-up of space / average rent)
€3.2bn. Over half of the total was attributable to seven up in the Banking District sub-market. The entire CBD is
big-ticket trades worth more than €100m each. OUTLOOK much in demand, 43 % of the total take-up related to prop- BANKING DISTRICT / 58,100 m² / €30.70/m²/month
Despite the shortage of properties, the year is expected to erties in this district. CITY RAND / 50,000 m² / €18.60/m²/month
INVESTMENT PROPERTIES close with a traded volume of €7.0bn, slightly higher than in CITY / 32,800 m² / €21.80/m²/month
The biggest sale was a property from the portfolio of 2017. A few large office properties are still in the pipeline. RENTS
Wealthcap HFS Deutschland 10 in which Aroundtown paid Foreign investors will continue to play a crucial role in the Several rental agreements for large amounts of space TOP 3 CONTRACTS
some €500m for the building at Gutleutstrasse 116-124, let market. Although building completions are adding more in expensive properties and new build developments
on a long-term lease to local government departments. In space to the total, these do very little to counteract the pushed the average rent up by €2.50/m²/month to € 20.50/ 1. FRANKFURTER ALLGEMEINE ZEITUNG GMBH (FAZ)
the 2nd quarter the “Gallileo” office tower (Gallusanlage shortage. m²/month. The premium rent increased by € 3.00/m² to Europa-Allee 92 (building lot 43) / ca. 24,000 m²
7/Kaiserstrasse) changed hands for €356m. The property € 42.00/m²/month. 2. GERMAN FINANCE AGENCY
was sold by a fund managed by Triuva for South Korean in- Olof-Palme-Strasse 35 / ca. 8,250 m²
vestors to Capital and Commercial Trust (CCT). AVAILABLE AND VACANT SPACE 3. FM INSURANCE COMPANY LIMITED
Year on year the amount of empty space has contracted “T8”, Taunusanlage 8 / ca. 6,600 m²
Office properties accounted for 84 % of the total traded,
such a high proportion being typical of the Frankfurt
market. Hotels comprises 9 % of the trading volume. With Frankfurt | Transaction volume Frankfurt | Take-up of space Frankfurt | Premium and average rent
a share of only 3 %, portfolios played a very minor role. For 2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
several years now, investors have reacted to the shortage
of core properties by turning to core-plus and value-add Premium rent
Forecast
42.00
options. However, demand for core properties remains 5-year average (2013-2017):
7.0 39.50 39.75
38.50
strong, a fact that is keeping yields low. Over the course of ca. € 5.5bn Forecast 38.00 38.00
5-year average (2013-2017):
a year the prime net yield on office properties has slipped ca. 389,820 m² 570
back a further 0.3 percentage points, but has remained
unchanged at 3.30 % since the start of 2018.
Average rent
INVESTORS AND VENDORS 20.50
19.50 20.30
Stock-exchange-listed property investment AGs/real 18.50 18.00 18.00
estate investment trusts comprised the biggest group of
Q1-2 Q1-2
buyers, taking almost a third of the total volume. Devel- 3.4 5.2 5.7 6.5 6.7 3.3 448 368 389 561 729 259
opers, specialist and closed funds each sold between 15 %
2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
and 17 % of the volume traded, whereby developers ac-
counted for more sales than the other two groups. Foreign Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
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WWW.GERMANPROPERTYPARTNERS.DELOCAL EXPERTISE – ACROSS GERMANY MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-2
OFFICE LETTING
STUTTGART
Take-up of some 120,000 m² pushed the result for the no significant increase in available space due to the lack
first half of 2018 a modest 4 % higher than the prior of new build developments. The volume of completions in
year’s figure. Four owner-occupier agreements totalling 2018 is 98,070 m², but 54 % of this space has been let in
65,800 m² and comprising 55 % of overall take-up made a advance. The projected figure for 2019 is 117,300 m², of
crucial contribution to the result. which a massive 68 % has already been pre-let.
TAKE-UP OF SPACE OUTLOOK
50,000 m² of this amount related to the 1st quarter de- Despite the current shortage of available premises,
cision of Robert Bosch to construct a new build in Stuttgart several good-sized agreements will probably be com-
Feuerbach. The state government of Baden-Württemberg pleted by the end of the year, including some in new builds
purchased a building offering 10,800 m² of space in at the planning stage. Take-up of 250,000 m² for the year
Stuttgart city centre. Due to these two owner-occupier therefore seems within reach..
contracts Stuttgart Feuerbach (about 51,500 m² of
take-up) and Stuttgart city centre (around 19,500 m²) were
INVESTMENT the busiest sub-markets. A further consequence was that
45 % of total take-up was attributable to industrial firms,
STUTTGART followed by the public purse with 16 %. The biggest rental
agreement, in Stuttgart Bad Cannstatt, covered only about
Some €860m were invested in Stuttgart real estate open-end and specialist funds with 20 % of the market. 4,700 m² and it too was signed by the state government of
during the 1st half of 2018. This figure was well below the Foreign investors were slightly less prominent, their Baden-Württemberg. TOP 3 SUB-MARKETS (take-up of space / average rent)
half-year result in 2017 of €589m. The 1st quarter of 2018 market share falling from 54 % to 50 % in the first half of
started with an excellent €535m but momentum slowed 2018. RENTS FEUERBACH / 51,100 m² / €11.30/m²/month
somewhat in the 2nd quarter to €325m. As considerably less new build space has been let in the CITY CENTRE / 19,500 m² / €13.10/m²/month
OUTLOOK city due to short supply, the premium rent has slipped 2 % CITY / 17,000 m² / €18.60/m²/month
INVESTMENT PROPERTIES More large transactions are expected to take place in the year on year to €23.50/m²/month. The average rent across
Among the reasons for the good first half year are three second half of 2018, so that the final annual result could the entire city was €14.60/m²/month. This represents a TOP 3 CONTRACTS
sales which totalled some €330m; that of the former be €1.7bn. year-on-year rise of 3.5 %.
railway company headquarters (Heilbronner Strasse 7/9, 1. ROBERT BOSCH GMBH (OWNER-OCCUPIER)
Jägerstrasse 15/17), of the Kodak site in Stuttgart-Wangen AVAILABLE AND VACANT SPACE Bludenzer-/Steiermärker Strasse / ca. 50,000 m²
(Hedelfinger Strasse 50-80) and the sale of the SI Centre in With the vacancy rate persisting at 2.2 %, extremely little 2. BADEN-WÜRTTEMBERG STATE GOV. (OWNER-OCCUPIER)
Möhringen (Plieninger Strasse 100). Altogether, 30 trans- office space is available for rent in the short term. In re- Kriegsbergstrasse 32 / ca. 10,800 m²
actions were completed in the first six months, over 70 % lation to a total stock of some 7.9 m², this means that only 3. VECTOR INFORMATIK GMBH
of which had 8-figure price tags. Partly as a result of the 172,000 m² of office space is empty. Once again, there was Ingersheimer Strasse 24 / ca. 5,000 m²
two big-ticket sales just named, some 35 % of invest-
ments were made in mixed-use properties, just ahead
of office assets which accounted for around 34 % of the Stuttgart | Transaction volume Stuttgart | Take-up of space Stuttgart | Premium and average rent
total traded. Portfolio trades accounted for some 12 % (by 2013-2018/Q1-2 | in € bn 2013-2018/Q1-2 | in 000s m² | incl. owner-occupiers 2013-2018/Q2 | in €/m²/mth (net)
value) of properties sold.
Premium rent
Forecast 24.30
The prime net yield on office assets remained at 3.50 %. 1.7 22.80 23.00
23.50
5-year average (2013-2017):
In the case of commercial buildings in the city centre, the ca. € 1.3bn 21.50
5-year average (2013-2017):
prime yield fell below 3.00 % for the first time, down to ca. 305,600 m² 20.00
2.80 %. The premium return on logistics properties has Forecast
fallen year on year by 0.6 percentage points to 4.50 %. Average rent
250
14.60
INVESTORS AND VENDORS 12.90
13.70
12.50 12.50
Open-end specialist funds were the most active group of 12.00
buyers, accounting for about 18 % of total investments,
Q1-2 Q1-2
closely followed by fund managers with a share of 17 %. 0.9 1.0 1.7 1.8 1.2 0.9 258 278 290 432 270 120
On the selling side of the market, listed property AGs and 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q1-2 2013 2014 2015 2016 2017 2018/Q2
developers were the dominant players, accounting for
26 % and 25 % of total trading respectively, followed by Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)
22 23
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