Office and Investment Markets - an Overview - CITY SURVEY Germany 2017/2018 - Colliers International
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CITY SURVEY
Germany
2017/2018
Accelerating success.
Office and Investment Markets –
an Overview
Beyond all
expectations!
At the start of 2017, we already forecast unusually strong re-
sults in Germany‘s seven investment and office hubs. The year
finished off even stronger than expected, with 2017 bringing in
the highest take-up and transaction volumes we have seen this
Matthias Leube decade.
Chief Executive Officer In view of the exceptionally strong landlord and seller market,
matthias.leube@colliers.com there is naturally always the chance that increasing shortage
of supply will be a limiting factor.
Our outlook for 2018 is almost a blueprint of last year‘s fore-
cast. In light of the fact that the current economic trend as well
as the trends we are seeing in terms of investment capital and
the real estate market are set to continue in the medium term,
activity in both market segments are expected to remain lively.
However, the shortage of supply on both the leasing and in-
vestment market continues to intensify with vacancy rates and
additional capital declining. Questions regarding how long the
low-interest environment will hold, the stability of the eurozone
and the geopolitical landscape will also remain hot topics in
2018. Nevertheless, Germany‘s export activities and domestic
economy are extremely robust at the moment, guaranteeing
the country an exceptionally stable, diversified real estate mar-
ket in this environment with demand from both German and
foreign occupiers and buyers continuing to rise.
As such, take-up and transaction volumes will not be the only
indicators in 2018 to highlight the strong trend in the German
real estate hubs. Increasing purchase prices that have yet to
hit the ceiling, widespread rent hikes, the lowest vacancy rates
ever recorded and the high number of bids on deals being
marketed will also reflect and accompany this remarkably
consistent, ongoing boom.
2 City Survey | 2017/2018 | Germany | Colliers International
Contents
Market Data
Office Leasing and Investment 4
Commercial Real Estate Market Gemany
Office Leasing 6
Investment 8
Retail Investment 10
Industrial and Logistics Investment 12
Hotel Investment 14
Berlin
Office Leasing 16
Investment 18
Düsseldorf
Office Leasing 20
Investment 22
Frankfurt
Office Leasing 24
Investment 26
Hamburg
Office Leasing 28
Investment 30
Cologne
Office Leasing 32
Investment 34
Munich
Office Leasing 36
Investment 38
Stuttgart
Office Leasing 40
Investment 42
Research Services 44
Glossary / Definitions 46
Locations / Contacts 47
City Survey | 2017/2018 | Germany | Colliers International 3
Market Data
Office Leasing
TOP 7 BERLIN DÜSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH STUTTGART
STOCK OF OFFICE SPACE 90.52 19.50 7.60 11.57 13.75 7.85 22.40 7.85
in million sq m
OFFICE SPACE TAKE-UP 4,156,700 937,000 333,000 710,100 622,000 302,000 984,200 268,400
2017 in sq m
Change year-on-year in % 6 9 -9 29 14 -20 26 -38
FORECAST
for 2018
OFFICE SPACE TAKE-UP 3,167,900 634,300 331,800 462,700 505,130 261,000 718,400 254,600
(for the entire year)
10-year Ø
PRIME RENT 31.30 27.00 41.00 26.00 21.50 35.60 24.30
in €/sq m
FORECAST
for 2018
AVERAGE RENT in €/sq m 19.15 15.40 20.00 15.40 12.90 17.30 13.40
FORECAST
for 2018
VACANT OFFICE SPACE in sq m 3,652,800 390,000 532,400 1,104,900 625,000 314,000 535,900 164,600
VACANCY RATE in % 4.1 2.0 7.0 9.6 4.5 4.0 2.4 2.1
Change year-on-year in basis points -80 -100 -50 -160 -50 -100 -60 -70
FORECAST
for 2018
The data for Berlin, Düsseldorf, Hamburg and Cologne are related to the respective city area. The data for Frankfurt, Munich and Stuttgart are related to each of the respective markets on the whole.
Investment
GERMANY TOP 7 BERLIN DÜSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH STUTTGART
TRANSACTION VOLUME 57,289 29,954 7,522 2,740 6,912 3,410 2,000 6,170 1,200
2017 in million €
Change versus prior year in % 9 4 54 26 13 -31 14 -10 -37
FORECAST
for 2018
TRANSACTION VOLUME 33,667 18,490 4,090 1,538 3,790 2,912 1,110 4,100 950
(for the entire year)
10-year Ø
PRIME YIELD 3.20 3.75 3.30 3.30 4.25 3.20 3.80
OFFICES in %
PRIME YIELD 3.20 3.50 2.80 3.20 3.50 2.80 3.10
HIGHSTREET RETAIL in %
PRIME YIELD 4.65*
INDUSTRIAL & LOGISTICS in %
*) Refers to the defined logistics market areas
4 City Survey | 2017/2018 | Germany | Colliers International
TOP 7 Cities
Market Conditions for Occupiers and Investors
City Survey | 2017/2018 | Germany | Colliers International 5
Fast Facts
OFFICE LEASING TOP 7 2017 CHANGE
Office Leasing
Office Space Take-up in sq m 4,156,700 6%
Vacant Floor Space in sq m 3,652,800 -17 % Take-up
Vacancy Rate in % 4.1 -80 bp*
Take-up throughout all of Germany‘s seven office hubs ex-
Office Space Stock in sq m 90,52 1%
ceeded 4 million sq m for the first time in 2017, reflecting a 6 %
*) basis point
increase from the previous year‘s record result of 3.9 mil-
lion sq m. 2017 results also surpassed the 10-year average by
Office Space Take-up in the TOP 7 31 %.
(in million sq m)
Munich came out at the top of the ranks among Germany‘s Big
4.0 4.2 7 with take-up exceeding 980,000 sq m, registering the highest
3.9
3.5 result since 2000. Berlin posted an all-time high with
3.5
3.0 937,000 sq m in take-up, thus solidifying its position as one of
2.9 3.0 the most popular locations for office tenants and occupiers
2.5
nationwide. Strong demand in Frankfurt throughout all space
2.0
segments, including a number of deals other than those for
1.5 more than 10,000 sq m typical to Germany‘s banking capital,
1.0 boosted take-up to over 700,000 sq m for the first time since
0.5 2000. Hamburg came in 4th with over 620,000 sq m in
take-up.
0.0
2013 2014 2015 2016 2017 2018
Whole year Forecast Some cities, however, recorded a yoy drop despite above-av-
Average of the past 10 years erage take-up levels in a long-term comparison. This particu-
larly applies to Stuttgart, which recorded the lowest take-up
result among the Big 7 at 270,000 sq m. This decrease can
Completions of Office Properties in the
primarily be attributed to drastically limited supply insufficient
TOP 7 in total (in 1,000 sq m)
to meet the high demand in the city.
1,400
1,363 The drop in take-up recorded in Cologne by year-end can also
1,200
1,194
be attributed to an extraordinarily strong previous year result,
996
1,000 1,067 which was primarily due to a large-scale lease. The city, how-
939 782
ever, still managed to post decent office take-up results of
800 874 842
770
300,000 sq m. The neighboring city of Düsseldorf posted take-
600 up of 330,000 sq m, a markedly milder yoy drop indicating fa-
400 vorable overall office leasing fundamentals.
200 Rents
744 832
0
2013 2014 2015 2016 2017 2018 2019 Strong leasing performance led to higher rents in most loca-
Completions Average 2013 – 2017 tions. As in the previous year, Berlin continued to experience
Pre-let
extraordinary rental growth. Prime rent at year-end came to
€ 31.30 per sq m, up almost 10 % compared to December 2016.
Vacancy Rate in the TOP 7 (in %) and That makes Berlin the third city among the Big 7 to list prime
Vacancy (in million sq m) rents of more than € 30 per sq m, just behind Munich (€ 35.60)
and Frankfurt (€ 41.00).
8
More than one-third of take-up in Berlin was recorded in the
6 segment of over € 20.00 per sq m. Average rent increased
7.7% markedly by 18 % to € 19.15 as a result, approaching the
4 6.7% € 20.00 per sq m recorded in Frankfurt with Germany‘s bank-
5.6%
4.9% ing capital leading the pack in terms of prime rent as well.
4.1%
2 Frankfurt managed to exceed the € 40.00 mark in H2 2017 for
6.8 6.0 5.0 4.4 3.7
the first time since 2001.
0
2013 2014 2015 2016 2017
6 City Survey | 2017/2018 | Germany | Colliers International
Average rent rose considerably particularly in Munich to Vacancy Rate in the TOP 7 (in %)
€ 17.30 per sq m (+8 %). That put Munich well ahead of
15
Hamburg and Düsseldorf (€ 15.40 per sq m each), Stuttgart
(€ 13.40 per sq m), and Cologne (€ 12.90 per sq m), all of which
recorded moderate increases during the year ranging from
2 % in Hamburg to more than 3 % in Düsseldorf. 10
Supply and Vacancy
Vacancy continued to drop rapidly in all locations for the sev- 5
enth year in a row. For the first time, the amount of space
available for immediate tenancy at the end of December (less
than 3.7 million sq m) was lower than take-up for the entire year.
The vacancy rate has now reached 4.1 %, 80 bp below previ- 0
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
ous-year results. Berlin Düsseldorf Frankfurt
Hamburg Cologne Munich
The drop in vacancy was particularly strong in Frankfurt, Berlin Stuttgart
and Stuttgart. Down 160 bp to 9.6 %, the vacancy rate in
Frankfurt moved into the single-digit range for the first time
since 2002. Nevertheless, the city still has 1.1 million sq m avail-
able for immediate tenancy, the highest among Germany‘s Average Rents in the TOP 7 (in €/sq m)
Big 7. 22
In Berlin and Stuttgart a drop of one percentage point within
20
the year resulted in the lowest vacancy rates nationwide at
2.0 % and 2.1 %, respectively. As a result, only 390,000 sq m of 18
office space was vacant in the German capital at year-end with
only around 165,000 sq m available in Stuttgart. 16
With vacancy at 2.4 %, only 536,000 sq m was available for 14
immediate tenancy at year-end in Munich as well, proving in-
creasingly challenging for office tenants on the lookout for 12
modern space in downtown locations. Even Cologne and
Hamburg, with vacancy rates at 4.0 % and 4.5 %, respectively, 10
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
were not able to maintain the 5.0 % necessary for market equi- Berlin Düsseldorf Frankfurt
librium. The general situation in Düsseldorf was somewhat Hamburg Cologne Munich
more relaxed with vacancy at 7.0 %, although the amount of Stuttgart
space available in the city continues to pursue a downward
trajectory.
Only roughly 2.5 million sq m are expected to be added to the
market by property developments in 2018 and 2019. In light of
unabated high demand, however, this new space will not be
sufficient to significantly ease the situation.
Summary and Outlook
The general situation on the office leasing market will remain
unchanged in 2018. We expect the conditions for ongoing lively
take-up activity in the office sector to remain extremely favora-
ble due to Germany‘s continued robust economic fundamen- Susanne Kiese
tals, which are increasingly being supported by a broad eco-
Head of Research I Germany
nomic recovery across Europe and which will drive corporate
+49 211 862062-47
investment even more than in 2017. Supply will continue to
susanne.kiese@colliers.com
shrink dramatically as a result. In light of these trends, we con-
sider strong take-up in 2018 of up to 3.5 million sq m realistic,
with results, however, remaining below 2017 take-up levels.
City Survey | 2017/2018 | Germany | Colliers International 7
Fast Facts
INVESTMENT 2017 2016 CHANGE
Investment
Transaction Volume 57,289 52,590 9%
in million € Transaction Volume
Total TOP 7 29,954 28,666 4%
The German commercial investment market closed out 2017
TYPE OF TRANSACTION 2017 2016 CHANGE with a transaction volume of € 57.3 bn, a 10-year record high.
Individual Transactions 36,808 33,189 11 %
2017 is the third consecutive year to post a total-year result of
Share in the TOP 7 12 %
over € 50 bn, also beating out 2015‘s recent high of € 55.4 bn. A
24,527 21,900
70 % increase compared to the 10-year average also points to
Portfolio Transactions 20,482 19,401 6%
an exceptionally favorable market situation.
Share in the TOP 7 5,427 6,766 -20 %
Transaction volume was primarily driven by four deals in the
SOURCE OF CAPITAL 2017 2016 CHANGE
billion-euro range. The largest deal of the year involved a logis-
Share by International 25,612 20,857 23 %
tics platform deal with China Investment Corporation acquiring
Buyers
a pan-European real estate portfolio from Blackstone subsidiary
Share in the TOP 7 14,752 10,689 38 %
Logicor. China Investment Corporation paid more than € 2 bn for
Share by International 24,761 15,240 62 %
Sellers the properties located in Germany alone. The Primus portfolio
Share in the TOP 7 11,058 5,852 89 % deal was the second-largest transaction of the year. The portfo-
lio‘s five high-reputation prime assets were sold for € 1.5 bn by
RFR Holding to Austrian Signa Prime Selection. The third-larg-
est transaction involved the sale of a portfolio comprising more
than 40 assets. Intown Invest, an asset/fund manager handling
Israeli capital, purchased the portfolio for roughly € 1.2 bn from
Transaction Volume in Germany Apollo Global Real Estate.
(in billion €)
The share generated by portfolio transactions was down slightly
60
compared to the previous year at 36 % despite the portfolios
57.29
50 55.42
52.59 that changed hands in the billion-euro range. High-volume sin-
gle-asset deals included the sale of the Sony Center in Berlin
40
39.80 for roughly € 1.1 bn by South Korean sovereign wealth fund NPS
30
30.70
to Canadian pension fund OMERS. Single-asset deals claimed a
20
share of 64 % at year-end.
10 Supply and Demand
14.70 20.01 24.60 24.92 26.68
0
2013 2014 2015 2016 2017 2018 In terms of transaction volume‘s regional distribution, Germa-
Transaction Volume in Germany Forecast ny‘s seven investment hubs continued to dominate the field at
thereof Office Properties Average 2013 - 2017 around 52 %, reflecting a slight drop of 3 percentage points
compared with 2016. Many of the high-volume portfolios trad-
ed in 2017 contained assets located outside the Big 7. This ap-
plies not only to logistics, retail warehouse and hotel portfolios,
but also in increasing numbers to office portfolios.
Transaction Volume according to Size We saw an increased presence of foreign investors on the
Categories in Germany (share in %)
German investment market. The share of foreign direct invest-
up to € 10 m ments increased year-over-year from 40 % to 45 % with 16 %
of foreign capital coming from the US and 11 % from the UK.
above € 250 m 7
€ 10 m to € 25 m Due to the exceptional platform deals traded in 2017, France
12
30 shared 3rd place with China, both claiming an 8 % market
share. Another Asian country, Singapore, placed high in the
15
ranks practically neck-and-neck with China.
€ 25 m to € 50 m
20
€ 100 m to € 250 m 16
€ 50 m to € 100 m
8 City Survey | 2017/2018 | Germany | Colliers International
Open-ended real estate funds and special funds continued to Buyers and Sellers in Germany
dominate the German market buy-side in 2017, claiming more (in billion €)
than one-quarter of total transaction volume. Asset/fund man- Open-ended real estate
funds / Special funds
agers, which are increasingly acting on behalf of foreign inves- Asset managers /
tors, took 2nd place with a 21 % market share. They were active Fund managers
Property developers
sell-side as well, dominating the market at year-end with 22 %,
Listed property
in the lead ahead of property developers with 17 %. companies
Pension funds
Yields Other investors
Excess demand for investment opportunities and the ongoing
Asset managers /
boom on the leasing markets continued to put yields under Fund managers
pressure in some of Germany‘s seven investment hubs, Property developers
although compression did lose some of its momentum due Opportunity funds /
Private equity funds
to high prices. Open-ended real estate
funds / Special funds
Private investors /
Prime yields for office properties fell most significantly in Family Offices
Other investors
Frankfurt and Hamburg to a current 3.30 %. Berlin and Munich
also saw slight adjustments with yields currently at 3.20 %. 0 5 10 15 20
Cologne (4.25 %), Stuttgart (3.80 %) and Düsseldorf (3.75 %) Buyers Sellers
came in at the other end of the narrow spectrum. Investments
in buildings featuring an office-retail mix in prime locations of
Germany‘s top 7 cities continued to record the lowest yields. Types of Properties in Germany
Prime yields for this property type in Frankfurt and Munich (Volume in billion €)
came to 2.80 %, with Cologne and Düsseldorf claiming the
26 30
highest yields at 3.50 %. Prime yields of 4.65 % proved the
norm in the logistics segment across all locations and experi- 25
enced the highest compression in 2017, in some cases drop- 20
ping from well over 5 %.
15
Office Investment 10
Office properties maintained their status in 2017 as the most 5
coveted asset class. Similar to the previous year, they account-
0
ed for a market share of 47 % with a transaction volume of Office Retail Industrial Hotel Mixed Building Other
€ 26.7 bn. In contrast to the other asset classes, properties & Logistics use site proper-
(commercial) ties
located in the Big 7 dominated transaction activity, accounting
in Germany thereof TOP 7
for 78 % of transaction volume. Landmark deals such as the
sale of the Sony Center and Frankfurt‘s Tower 185 office high-
rise for € 775m together with other Frankfurt high-rises con-
tributed their fair share to this result. Office Prime Yield in the TOP 7 (in %)
5,5
Summary and Outlook
With the central banks, especially the ECB, continuing to pursue a 5,0
low-interest policy and in light of ongoing strong economic growth
and rents increasing in almost all asset classes, most investors 4,5
continue to find German real estate highly attractive. We therefore
expect to see a similarly high transaction volume in 2018 some- 4,0
where in the range of € 55 bn. If one thing proves limiting, it will be
a lack of products suitable to meet demand and not a lack of
3,5
capital.
3,0
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
Berlin Düsseldorf Frankfurt
Hamburg Cologne Munich
Stuttgart
City Survey | 2017/2018 | Germany | Colliers International 9
Fast Facts
INVESTMENT 2017 2016
Retail Investment
Transaction Volume in million € 11,956 9,253
Transaction Volume
Portfolio Transactions 63 % 48 %
TOP 7 23 % 22 % The sale of German retail assets generated a transaction vol-
Share by International Buyers 37 % 35 % ume of € 12 bn in 2017. Although this result fell shy of 2015‘s
Share by International Sellers 58 % 39 %
€ 16 bn, it did come in high in the double-digit billion-euro
range, putting it among the top results recorded over the past
Prime Yield Highstreet Retail 2.80 % 2.90 %
ten years. 2017 retail transaction volume also managed to ex-
ceed the long-time average by 35 %.
The three largest transactions of the year were portfolio deals
of between € 650m and € 700m. In addition to the major deal
announced in Q2, in which Corestate sold 90 buildings featur-
ing an office-retail mix to Universal Investment on behalf of
Bayerische Versorgungskammer, two additional deals changed
Transaction Volume Retail (in billion €)
hands in a strong Q4. One of these deals involved two retail
16 assets from the mixed Primus portfolio, which RFR Holding
15.96 sold to Austrian Signa Prime Selection. The two assets are the
14
Upper Zeil property development in Frankfurt and a 50 %
12 share of the Karstadt department store at Munich central
11.96
10 station. The other deal involved 13 Karstadt department stores
located primarily in secondary and tertiary cities, which were
8 9.25
7.78
8.42 sold by Israeli businessman Beny Steinmetz to RFR Holding.
6 Total market share generated by portfolio deals increased yoy
4 from 48 % (2016) to 63 % (2017), reflecting a transaction
volume of € 7.5 bn.
2
0 The largest single-asset deals involved three shopping centers:
2013 2014 2015 2016 2017 the Rhein-Ruhr-Zentrum in Mülheim an der Ruhr, the Nova
Whole Year Average 2013 - 2017 Eventis Shopping Center near Leipzig and East Side Mall in
Berlin, which opened in October 2017 and was sold during the
project phase.
Supply and Demand
Unlike what one would expect from the mega deals mentioned
above, small-scale retail warehouse portfolios, individual retail
Transaction Volume by Type of Building warehouses and retail parks dominated market activity. Thus,
(in %) broken down into individual retail formats, this format account-
Retail Warehouses /
ed for a 47 % share of transaction volume, well ahead of shop-
Shopping Centers Retail Parks ping centers (27 %) and downtown buildings featuring an of-
27 26 fice-retail mix (26 %). Supermarkets, discounters and
hypermarkets, i.e. food retailers, were once again particularly
popular among investors.
The current demand structure is seeing a relatively high share
of investments in assets located outside of Germany‘s invest-
47
ment hubs (over 75 %).
High Street
10 City Survey | 2017/2018 | Germany | Colliers InternationalForeign capital accounted for a market share of 37 %, or Transaction Volume by Buyer
roughly € 4.4 bn, in 2017. This share continues to lag consider- Groups (in billion €, share in %)
ably behind foreign capital generally spent on German com- 0.0 0.5 1 1.5 2 2.5 3 3.5
mercial properties amounting to 45 %. However, we are cur- Open-ended real estate
26 %
funds / Special funds
rently seeing intensified market research activity by German
asset/fund managers on behalf of foreign investors and expect Asset managers /
18 %
Fund managers
the share claimed by foreign investors to increase in 2018. US
investors accounted for the largest share of foreign invest- Listed property
companies
13 %
ments at 10 %, followed by the UK (7 %) and Austria (6 %).
Pension funds 11 %
Asset/fund managers were very active both buy and sell-side
in 2017. Acting as intermediaries, they accounted for roughly Private investors /
5%
Family offices
€ 2.2 bn, or 18 %, of transaction volume in 2017, exceeded only
by open-ended real estate funds and several new special Other investors 27 %
funds, which invested € 3.1 bn, or 26 %. Asset managers were
even more dominant on the market sell-side, disposing of retail
assets for a total of € 3.4 bn (28 %) often only after relatively
short holding periods and benefitting from recent price in-
creases. Developers and private investors/family offices trailed
Transaction Volume by Seller
behind with market shares of 11 % and 10 %, respectively.
Groups (in billion €, share in %)
Yields 0.0 0.5 1 1.5 2 2.5 3 3.5 4 4.5
Asset managers /
Fund managers
28 %
Prime yields have yet to bottom out. Despite the fact that
momentum is beginning to slip somewhat due to current price Property developers 11 %
levels, we saw further yield compression at the end of 2017.
Looking at office-retail mix properties in prime locations, the Private investors /
Family offices
10 %
yield spread among Germany‘s Big 7 currently comes to
Opportunity funds /
70 bp. Munich and Frankfurt (2.80 %) are at the lower end of Private equity funds
8%
the spectrum with Düsseldorf and Cologne (3.50 %) recording
Open-ended real estate
the highest yields. Prime yields for shopping centers remain funds / Special funds
7%
low, ranging from 3.80 % to 4.80 %. In comparison, retail
Other investors 36 %
warehouses and retail parks are currently recording the high-
est prime yields. Individual retail warehouses located in the
Big 7 are still posting 5.00 % or higher, but retail parks in
some locations have already fallen below the 5.00 % mark.
Summary and Outlook
Prime Yield Highstreet Retail in the TOP 7
The German retail investment market and the commercial in- (in %)
vestment market in general are in full swing. This trend is set
5.0
to continue throughout 2018 also in the retail segment due to
the solid overall economic conditions such as the strong job
4.5
market, income growth and low inflation. Assuming sufficient
real estate product becomes available, we can expect to see a
4.0
transaction volume of over € 10 bn in 2018. Current price
levels, however, could prove a limiting factor, particularly if an
3.5
increasing number of long-term portfolio managers begin to
anticipate the peak of the current cycle and decide to reduce
3.0
reselling.
2.5
2.0
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
Berlin Düsseldorf Frankfurt
Hamburg Cologne Munich
Stuttgart
City Survey | 2017/2018 | Germany | Colliers International 11Fast Facts
Industrial and
Logistics Investment
INVESTMENT 2017 2016
Transaction Volume in million € 8,662 4,579
Portfolio Transactions 71 % 40 %
TOP 7 21 % 40 %
Share by International Buyers 65 % 38 %
Transaction Volume
Share by International Sellers 60 % 30 % German industrial and logistics assets recorded a new record
Prime Yield Industrial and Logistics 4.65 % 5.40 % high in 2017 at € 8.7 bn, accounting for a 15 % share in total
in the TOP 7 (average in %)
commercial real estate transaction volume and representing
the third largest asset class following office and retail. At mid-
year (June 2017: € 5.4 bn), industrial and logistics assets had
already surpassed the total transaction volume generated in
2016 (€ 4.6 bn).
High demand for logistics properties can be attributed to the
e-commerce boom, which is driving demand for new and
modern logistics space in Germany and pushing rents up in
Transaction Volume the logistics regions. Prime core assets, i.e. new-builds with a
Industrial and Logistics (in billion €) strong-covenant tenant under long-term lease, are often being
8.66 snapped up before construction has even begun.
9
1.03
8 Supply and Demand
7
6
Several portfolio deals in the billion-euro range changed hands
5 4.58 over the past 12 months. The highest-volume deal in 2017 was
3.97
3.59 Blackstone‘s sale of the European logistics platform Logicor to
4 1.42
1.27 China Investment Corporation. The German share alone ac-
3 2.28 970
counted for € 2 bn of total deal volume (€ 12.2 bn), almost a
2 365
quarter of 2017‘s total transaction volume. Singapore-based
1 GLP, the world‘s largest supplier of logistics space, announced
1.92 2.62 2.70 3.16 7.63
0
2013 2014 2015 2016 2017 at the end of Q3 that it would be entering the European market
Logistics Average 2013 - 2017 with its acquisition of property developer and investment com-
Industrial pany Gazeley. The acquisition comprises a € 2.4 bn European
portfolio, roughly € 815m of which are assets in Germany.
Portfolio deals changed hands for roughly € 6.1 bn in 2017, or
around 71 % of total transaction volume. Foreign investors
were involved in the majority of portfolio deals (80 %).
Asian investors such as GLP and China Investment Corpora-
tion managed to acquire several assets in Europe and Germa-
Transaction Volume according to ny with just a single deal in 2017, securing significant market
Size Categories (in %) shares in a relatively short amount of time. Investors from the
Middle East showed interest in German investments as well.
up to € 10 m
4
€ 10 m to € 30 m Foreign investors poured a total of roughly € 5.6 bn (65 %) into
11 German industrial and logistics assets in 2017, up a whopping
€ 30 m to € 50 m 71 % yoy. Foreign investors also appear to be increasingly will-
8
ing to take risks in their investments in Germany, focusing not
only on traditional core and core+ properties but also increas-
11 € 50 m to
66 € 100 m ingly on the value add sector, which almost tripled its share
yoy to 13 %.
above € 100 m
12 City Survey | 2017/2018 | Germany | Colliers InternationalYields Transaction Volume by Buyer
Groups (in billion €, share in %)
The combination of increasing demand for logistics invest- 0.0 0.5 1 1.5 2 2.5 3
ments and a lack of immediately available product again put Open-ended real estate
33 %
yields under pressure at the end of 2017. Gross prime yields funds / Special funds
for core assets in Germany‘s Big 7 investment hubs plummet- Pension funds 24 %
ed by 75 bp from roughly 5.4 % in December 2016 to a current
4.65 %. Logistics assets recorded the strongest yield compres- Asset managers /
19 %
Fund managers
sion in the past 12 months compared to other asset classes
such as office and retail. Property developers 14 %
We expect to see sustained growth in the light-industrial seg- Corporates /
3%
Owner-occupiers
ment in 2018 as well as lively activity both buy-side and sell-
side. Due to mega trends like globalization and digitization Other investors 7 %
combined with Industry 4.0, the German industrial sector is
undergoing a transformation. Germany has strong interest in
consolidating and expanding its leading position in the manu-
facturing sector. Technological progress will therefore also
drive demand for innovative and flexible warehouse and office Transaction Volume by Seller
concepts suitable for undertakings such as the increased use Groups (in billion €, share in %)
of robots in factories. This, in turn, will spark the interest of 0.0 0.5 1 1.5 2 2.5 3 3.5 4
investors who can expect to see attractive yields of up to 6 % Asset managers /
45 %
Fund managers
for light-industrial assets in the Big 7 markets.
Property developers 23 %
Summary and Outlook
Corporates /
12 %
Looking back at 2017 it becomes clear that Germany remains Owner-occupiers
one of the world‘s most popular investment locations and an Private investors /
6%
Family Offices
increasing number of investors are looking to Germany due to
a variety of factors including the country‘s considerable eco- Open-ended real estate
5%
funds / Special funds
nomic stability. The rapidly growing e-commerce sector con-
tinues to stimulate demand for warehouse and logistics assets Other investors 9 %
in Germany as well. Property developments and new space
hitting the market are struggling to keep up with demand,
however, which is why forward funding will become increas-
ingly important on the industrial and logistics investment mar-
ket. We expect a similar run on logistics assets in 2018, limited Prime Yield Logistics in the TOP 7
only by scarcity of supply. (Average in %)
7.0
6.5
6.0
5.5
5.0
4.5
4.0
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
City Survey | 2017/2018 | Germany | Colliers International 13Fast Facts
INVESTMENT 2017 2016
Hotel Investment
Transaction Volume in million € 4,186 5,161
Transaction Volume
Portfolio Transactions 31 % 46 %
TOP 7 69 % 52 % The German hotel investment market cooled down somewhat
Share by International Buyers 46 % 54 % in 2017 in the wake of several record-breaking years but still
Share by International Sellers 41 % 40 %
managed to post a strong annual result. With a transaction vol-
ume of roughly € 4.2 bn, 2017 fell short of record year 2016 by
Prime Yield Hotel 4.10 % 4.50 %
19 %, nevertheless giving us the third-best result we have seen
in the past ten years.
Single hotel assets again accounted for the majority of trans-
actions in 2017. The lack of assets available on the hotel in-
vestment market limits transaction volume despite ongoing
high demand and could be felt in the shrinking share of
high-volume portfolio deals. Portfolio deals saw a yoy de-
crease of 15 percentage points with a 31 % share of transac-
Transaction Volume Hotel
tion volume, or more than € 1.3 bn. Single-asset deals account-
(in billion €)
ed for just under € 2.9 bn. One of the larger transactions to
6.0
change hands in 2017 was the sale of a Hamburg hotel project,
5.0
comprised of a Holiday Inn and a Super 8, to Union
5.16
Investment.
4.0 4.47
4.19
Supply and Demand
3.0
3.10
Compared to the previous year, German investors claimed the
2.0 lion‘s share of the market from foreign investors, basically
1.0
1.70 trading places in terms of market share. Whereas in 2016
foreign investors accounted for around 54 % of transaction vol-
0.0 ume, in 2017 German investors were involved in the majority
2013 2014 2015 2016 2017
of investments buy-side, pouring almost € 2.3 bn into the
Whole Year Average 2013 - 2017
German hotel market.
Activity was similar sell-side with German investors disposing
of hotel assets for almost € 2.5 bn, maintaining their 59 %
share.
4-star hotels again generated the largest share of transaction
volume in 2017, down a mere 2 percentage points yoy and
Transaction Volume by Star Segment accounting for roughly € 2.2 bn of total transaction volume, or
(in %)
52 %. They were followed by 3-star hotels, which represent
2 Stars
1 Star Other the lion‘s share of all rated hotels in Germany. They increased
Boarding House their market share yoy by 7 percentage points to around
4 12 € 1.1 bn. 5-star-hotels managed to maintain a relatively stable
5
5 Stars share of transaction volume with around € 400 m. 1 and 2-star
10
hotels generated around € 230 m. Boarding houses again in-
creased their share of transaction volume, accounting for
52 4 Stars
roughly € 220 m.
26
3 Stars
14 City Survey | 2017/2018 | Germany | Colliers InternationalAs in the two previous years, open-ended real estate funds Transaction Volume by Buyer
and special funds were most active buy-side, down by 2 per- Groups (in billion €, share in %)
centage points yoy to 28 % (€ 1.2 bn). Asset/fund managers 0.0 0.2 0.4 0.6 0.8 1 1.2
followed in the ranks, accounting for roughly € 780m. REITs Open-ended real estate
28 %
funds / Special funds
came in third with a transaction volume of roughly € 480m
(12 %). Asset managers /
19 %
Fund managers
Property developers and development companies came out on Listed property
companies
12 %
top sell-side, disposing of hotel assets for just under €1.2 bn
(28 %). Open-ended and special funds followed in the ranks at Private investors /
10 %
Family Offices
18 %, corporates and owner-occupiers accounted for 13 %.
Corporates /
8%
Yields Owner-occupiers
Other investors 23 %
Lower yields, which can primarily be attributed to scarce sup-
ply and high demand, resulted in price hikes, particularly in
prime locations. Germany‘s seven major hotel locations, Berlin,
Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich and
Stuttgart, generated almost € 2.9 bn, or 69 % of total transac- Transaction Volume by Seller
tion volume. The majority of deals, however, took place outside Groups (in billion €, share in %)
the Big 7. The shortage of suitable properties in prime loca- 0.0 0.2 0.4 0.6 0.8 1 1.2
tions goes hand-in-hand with rising prices, forcing an increas-
Property developers 28 %
ing number of investors to shift their focus to secondary loca-
tions. Property developments in the BIG 7 particularly Open-ended real estate
18 %
experienced significant price increases, which, in combination funds / Special funds
with rising construction costs, considerably impacted their cost Corporates /
13 %
Owner-occupiers
effectiveness. Nevertheless, property developments managed
to maintain a fairly stable share of transaction volume at 19 %, Asset managers /
12 %
Fund managers
trailing behind stock buildings (61 %). Buildings under con-
struction and new-builds accounted for a combined share of Opportunity funds /
Private equity funds
10 %
12 %. The lively activity we saw on the part of developers/con-
struction companies is also an indication of Germany‘s robust, Other investors 19 %
prospering tourism sector, which favors an increase in accom-
modation capacity.
Summary and Outlook
Prime Yield Hotel in the TOP 7 (in %)
Even though 2017 fell shy of 2016‘s record result, it was still a
6.5
strong year for the German hotel investment market. High de-
mand combined with limited supply put a damper on the over-
all result. Stock properties and portfolios proved particularly 6.0
popular but were in short supply. We therefore expect inves-
tors to increasingly shift their focus to property developments
5.5
and assets in secondary locations. Despite the unabated short-
age of product and the yield compression that goes with it, we
expect 2018 to perform similarly to a strong 2017. 5.0
4.5
4.0
Q4 13 Q4 14 Q4 15 Q4 16 Q4 17
Berlin Düsseldorf Frankfurt
Hamburg Cologne Munich
Stuttgart
City Survey | 2017/2018 | Germany | Colliers International 15Berlin
City Facts Office Leasing
BERLIN
Take-up
Population in 1,000 3,688
Employees Paying Social Security Contributions 1,366 Demand for office space in Berlin is at a record-high. Take-up in
in 1,000
Germany’s capital came to 937,000 sq m in 2017, up around 9%
Unemployment Rate in % 8.4 yoy and reaching an all-time high. Spurred by ongoing strong
Per Capita Disposable Income in ¤ 20,800 demand, the Berlin office market has once again surpassed all
expectations. The fact that office take-up in Berlin again experi-
Fast Facts enced a slight increase reflects the city’s growing importance for
OFFICE LEASING BERLIN 2017
Change vs. prior office occupiers. A number of large-scale leases for over 5,000
year
sq m, several of which were signed by coworking providers,
Office Space Take-up 937,000 sq m 8.6 %
boosted take-up and accounted for around 40% of total office
Leasing Take-up 836,800 sq m 11.6 %
take-up. The market particularly benefited from an increasing
Prime Rent € 31.10/sq m 9.8 % number of large-scale leases signed for more than 10,000 sq m.
Average Rent € 19.15/sq m 17.5 % Nine new leases in this segment accounted for 230,000 sq m
Vacancy Rate 2.0 % -100 bp* combined. Due to the extremely limited supply of stock space,
Office Space Stock 19.50 m sq m 3.0 % project developments accounted for the lion’s share. Examples
Achieved Rents
96 109
10
Price range Average rent
BERLIN
in € /sq m in €/sq m
96a
1 City West 11.30–42.00 22.20 114 11
111
2 City East 10.10–35.00 20.85
Pankow
3 Potsdamer Platz / 17.00–30.40 23.35 Reinickendorf
2
Leipziger Platz 158
10
4 Central Station 20.00–23.50 21.10 105 109
5 Mediaspree 12.50–31.80 27.55
Spandau Mitte
6 City Area West 9.30–30.70 18.30 8
7
Marzahn-Hellersdorf
4 Berlin
2
7 City Area East 8.00–27.50 20.45 5
2
1
5 1
Lichtenberg
6 1 3
11
8 City Margins North 9.00–26.20 16.45 Friedrichshain-Kreuzberg
100 13
9 City Margins South 10.00–22.50 19.00 2
9
Charlottenburg-Wilmersdorf
10 Periphery North 6.90–15.30 11.45 103
11 Periphery West 8.00–29.00 12.10 Neukölln 14
Treptow-Köpenick
Steglitz-Zehlendorf
12
12 Periphery South 4.80–19.20 12.45
13 Periphery East 5.80–14.00 10.60 1
14 Adlershof 8.85–16.75 13.20 Tempelhof-Schöneberg
117
101
15 Schönefeld 8.00–12.50 10.70 96a
15
115
*) basis points 96
113
16 City Survey | 2017/2018 | Germany | Colliers Internationalinclude the deals involving a federal agency at Puschkinallee and Office Space Take-up in 1,000 sq m
Deutscher Gewerkschaftsbund at Keithstraße, both 1,000
owner-occupiers. 900 53 100
800 40 123
Demand for office space was strongest among retail companies 700
600 35
in 2017. Around 179,300 sq m, or 19% of take-up, can be attrib-
500
uted to the retail and e-commerce sector, followed by public ad- 400
ministration. Demand from government and community institu- 300
tions was almost equally strong at 18%, or 175,700 sq m. In 200
100 519 661 790 740 837
terms of number, IT companies clearly took the lead with almost
0
200 leases signed. Because companies in this sector tend to 2013 2014 2015 2016 2017
lease smaller units, however, they only accounted for 165,000 Leasing Owner-occupiers
sq m. The submarkets with the highest take-up volumes were
City South and Mediaspree with 160,000 sq m and 122,000 sq m,
respectively, thanks to several large-scale leases.
Completion Volume (in 1,000 sq m) and
Rents thereof Pre-let/Owner-occupied
500
Average and prime rents skyrocketed in light of exceptionally
high demand for space in CBD locations, up yoy by 15% to 400 434
€19.15 per sq m (average) and by 9% to €31.30 per sq m
300
(prime). The strongest rental growth yoy at 40% was recorded 321
in the Mediaspree submarket where average rents are current- 200 253
205
ly being asked at €27.50 per sq m. The City West submarket
100
also recorded significant rental growth of 20% to a current av- 117
erage of €18.30 per sq m. Prime rents for new leases in the 192 217
0
2015 2016 2017 2018 2019
Upper West office tower located in the CBD West submarket
Completions
currently run at between €36.00 and €42.00 per sq m. More
thereof Pre-let/Owner-occupied
than one-third of total office take-up within Berlin city limits, or
306,000 sq m, can be attributed to the highest price segment
of over €20.00 per sq m with 170 new leases signed in 2017.
The high-priced segment of between €17.50 and €20.00 per
sq m accounted for almost 109,000 sq m. In light of the signifi-
Vacancy Rate (in %) and Vacancy
(in 1,000 sq m)
cant rental growth in the past year, it does not come as a sur-
1,200
prise that not many leases were signed in the lowest price
segment of less than €10.00 per sq m. Only 80 new leases 1,000
were signed for units in this price category, accounting for 800
53,000 sq m. The price segment of between €10.00 and 6.0%
€12.50 per sq m also saw only 80 new leases signed for a to- 600 5.0%
3.7%
tal of 59,000 sq m. 400 3.0%
2.0%
200
Supply and Vacancy 1,090 925 685 567
390
0
2013 2014 2015 2016 2017
Berlin’s office market has basically dried up and new develop-
ments are much needed with vacancy rate at a critical 2%.
This situation is making it increasingly difficult to find suitable
space even in the smaller space segment, particularly in popu-
lar CBD locations. Demand has been shifting to the surround- Prime and Average Rents (in €/sq m)
ing downtown submarkets for some time now.
31.30
28.50
Key Developments 22.00 23.00 24.30
By the end of 2018, we expect around 320,700 sq m of office 19.15
15.10 16.30
space to be completed, 60% of which has already been pre- 13.00 13.70
leased. Considerably more space is expected to hit the market
in 2019 (around 434,000 sq m), around 50% of which, howev- 2013 2014 2015 2016 2017
er, has already been preleased. Prime Rent Average Rent
City Survey | 2017/2018 | Germany | Colliers International 17The submarkets with the greatest development potential are The run on Berlin office properties is expected to continue in
Alexanderplatz with several high-rises in the pipeline as well 2018. The fact that each new year the city manages to outper-
as the southern sections around Alexanderstraße/Dircksen- form the previous year in terms of take-up reflects the growing
straße and Jannowitzbrücke. New-builds encompassing importance of Berlin as an office hotspot. More and more
around 70,000 sq m are currently being developed by OVG, companies are feeling the pressure to compete for modern of-
Ludger Inholte and Hines in the Südkreuz submarket. fice space, which often requires relocating. In light of the ex-
tremely scarce supply of prime office space in coveted down-
Summary and Outlook town locations, many large occupiers are considering a move
to adjacent peripheral locations. We therefore expect 2018 to
The Berlin market lived up to its reputation as a lively, highly
again exceed the 900,000 sq m mark.
attractive market in 2017. Thanks to the German capital’s pop-
ularity throughout Germany and Europe, the continued in-
crease in take-up can primarily be attributed to the influx of
new tenants as well as new businesses, not just to relocations
and expansions.
Fast Facts Investment
INVESTMENT BERLIN 2017 2016
Transaction Volume
Transaction Volume in million € 7,522 4,900
Portfolio Transactions 18 % 25 % The Berlin investment market for commercial real estate
Share by International Buyers 66 % 34 % closed out 2017 with a transaction volume of € 7.5 bn, up 54 %
Share by International Sellers 36 % 35 % yoy. That puts Berlin at the top of all German investment mar-
Most Important Property Type Office: 69 % Office: 61 % kets. 2017 results almost matched 2015‘s record high of
Prime Yield Office 3.20 % 3.50 % € 8.1 bn. The most significant single-asset deal on the market
was the sale of Sony Center for roughly € 1.1 bn by South
Korean sovereign wealth fund NPS to Canadian pension fund
OMERS at the end of Q3.
Commercial Transaction Volume
(in million €) High-volume deals in the triple-digit million euro range led the
8,000 pack with a 55 % share in total transaction volume, with 16
8,100
7,000 7,522 transactions changing hands in this price segment over the
course of the year. Other examples besides the Sony Center
6,000
deal include the West, Axel Springer Headquarters, Axel
5,000
Springer Passage, Allianz Campus, East Side Mall and Zalando
4,900
4,000 Headquarters.
4,000
3,000 3,510
Supply and Demand
2,000
1,000 An extraordinarily successful 2017 is proof of how attractive
0
Berlin continues to be among both German and foreign inves-
2013 2014 2015 2016 2017
tors. The Berlin investment market saw lively activity through-
out all asset classes and locations. Investors poured just shy of
70 % of total transaction volume, or € 5.2 bn, into office assets.
Types of Properties (in %) Thanks to consistently high demand and tremendous rental
Mixed Use Industrial & Logistics growth, office properties remain the most sought-after asset
Building Site (commercial) class. Retail assets and hotels trailed at some distance with
1
6 2 transaction volumes of roughly € 860m and € 800 m, respec-
Hotel tively. Commercial building sites changed hands for more than
11
€ 450 m.
11
Retail
69
Office
18 City Survey | 2017/2018 | Germany | Colliers InternationalAsset/fund managers were the strongest investor group buy- Transaction Volume by Buyer
side, accounting for around € 1.76 bn of invested capital and a Groups (in million €, share in %)
23 % market share. Pension funds followed in the ranks due to 0 500 1,000 1,500 2,000 2,500
several large-scale transactions, recording a volume of € 1.2 bn, Asset managers /
23 %
Fund managers
or a 16 % market share. Open-ended real estate funds/special
funds invested over € 800m. Pension funds 16 %
Asset/fund managers also dominated market activity sell-side Open-ended real estate
funds / Special funds
11 %
(€ 1.32 bn, 18 %), followed by pension funds (1.17 bn, 16 %) and
private investors/family offices (€ 960m, 13 %). Opportunity funds /
9%
Private equity funds
Foreign investors increasingly focused on the Berlin invest-
Listed property 8 %
ment market over the course of the year thanks to the city‘s companies
growing job market and stable population growth. Other investors 33 %
They accounted for 70 %, or € 5.3 bn, of investments in com-
mercial real estate. As Germany‘s capital, Berlin is considered
a safe haven for investments with high rental upside potential.
Transaction Volume by Seller
Yields Groups (in million €, share in %)
Pressure to invest in 2017 caused gross initial yields to drop 0 500 1,000 1,500 2,000 2,500
further, a development reflected in the fact that numerous Asset managers /
18 %
Fund managers
deals were signed at top prices considerably exceeding vendor
expectations. Pension funds 16 %
Gross initial yields in the office segment have now reached a Private investors /
13 %
Family Offices
low of 3.20 %, putting Berlin at the top of Germany‘s most ex-
pensive real estate markets alongside Munich. As for the logis- Property developers 11 %
tics market, gross initial yields are currently stable at 4.65 %.
Corporates /
Owner-occupiers
9%
Summary and Outlook
Other investors 33 %
Activity on the Berlin investment market remained exceptional-
ly lively in 2017. Berlin is one of the most favored investment
locations not only in Germany but also in Europe. The German
capital continues to be immensely popular among both German
and foreign investors. Persistently high transaction volumes
reflect Berlin‘s growing significance among real estate
investors.
The run on Berlin commercial assets is expected to continue in
2018. Since there is no lack of capital, the only limiting factor
could be the shortage of supply. In view of the far-reaching
economic upswing and rising employment levels, which are
fueling the Berlin office leasing market, we can expect 2018 to
be an exciting year, once again bringing in a total transaction
volume of over € 6 bn.
Margit Lippold
Director | Research
+49 30 202993-43
margit.lippold@colliers.com
City Survey | 2017/2018 | Germany | Colliers International 19Düsseldorf
City Facts Office Leasing
DÜSSELDORF
Take-up
Population in 1,000 636
Employees Paying Social Security Contributions 409 The Düsseldorf office leasing market generated 333,000 sq m
in 1,000
in take-up in 2017, falling short of its excellent previous-year
Unemployment Rate in % 6.9 result by 9 %. A total of 450 leases were signed, six of which
Per Capita Disposable Income in ¤ 27,137 by owner-occupiers. Despite the remarkable number of large-
scale leases signed, 2017 results could not quite keep up with
Fast Facts those posted in 2016. This can be attributed to the yoy decline
OFFICE LEASING DÜSSELDORF 2017
Change vs. prior in take-up involving medi-um-sized units. Nonetheless, 2017
year
results did prove above-average, beating the 10-year average
Office Space Take-up 333,000 sq m -9.0 %
by almost 4 %.
Leasing Take-up 322,200 sq m -10.3 %
Prime Rent € 27.00/sq m 1.9 % Eleven leases were signed in the space segment of 5,000 sq m
Average Rent € 15.40/sq m 3.4 % and up (96,200 sq m), reflecting a yoy increase of roughly
Vacancy Rate 7.0 % -50 bp* 37 %. All other space segments experienced a yoy drop. The
Office Space Stock 7.60 m sq m -0.5 % small-space segment (up to 500 sq m) saw the most moderate
decline (-8 %) with take-up at 80,800 sq m. The space seg-
Achieved Rents
Price range Average rent
DÜSSELDORF
in € /sq m in €/sq m
1 CBD 16.50-27.00 20.90 Ratingen
2 City Center 10.50-25.00 15.60 8
3 Harbor Area 14.00-22.00 16.10 44
4 Kennedydamm 13.50-24.00 18.90 7
Unterrath
5 Left of the Rhine 10.00-17.50 13.70 52
Meerbusch
6
6 D-North 10.00-17.50 13.60
Derendorf
7 Airport City 14.50-16.00 15.30 4 8 Mörsenbroich
2
8 Grafenberger Allee 10.00-12.50 12.10 Golzheim 7
9 City Center East 10.00-14.00 10.90 5 Pempelfort
7 8 Grafenberg
2
10 D-South 9.50-11.50 9.50 Heerdt
Altstadt
1
Oberkassel
*) basis points Düsseldorf
CBD
1
3 9
Friedrichstadt
10
326
Neuss
46
57
477
20 City Survey | 2017/2018 | Germany | Colliers Internationalment of between 1,001 and 2,000 sq m took a 16 % hit to a cur- Office Space Take-up in 1,000 sq m
rent 53,400 sq m. The two remaining space segments regis-
400 7
tered even higher drops. The space segment of between 2,000 16 34
11
350
and 5,000 sq m felt the strongest impact (-34 %) while the
300
space segment of between 501 and 1,000 sq m was down by 23
250
almost 24 %. The following submarkets generated the highest
200
office take-up results: Linksrheinisch (76,000 sq m), City
150
Center (64,600 sq m) and Düsseldorf Nord (57,500 sq m). The
100
CBD posted 32,500 sq m, in line with previous-year results.
50 330 218 357 359 322
Across all space segments, tenants were mostly interested in 0
2013 2014 2015 2016 2017
three submarkets. Boosted by a large-scale lease signed by Leasing Owner-occupiers
HSBC for a property on Hansaallee, the Linksrheinisch sub-
market took pole position with 76,000 sq m (64 leases signed).
Almost twice as many leases were signed in the City Center
submarket, which saw take-up totaling at 64,600 sq m. Completion Volume (in 1,000 sq m) and
Düsseldorf Nord also recorded strong results with around thereof Pre-let/Owner-occupied
57,500 sq m and 68 leases signed.
100
Rents 80 89
79
Düsseldorf CBD prime rents were on the rise in Q4 2017. The 73
60
Kö-Quartier property development saw several high-volume
leases signed, bringing prime rents up yoy by 2 % to a current 40 46 49
€ 27.00 per sq m. We expect to see similar rent levels in 2018. 20
Solid take-up results and the reduced vacancy that co-mes
60 21
with lively leasing activity also caused average rents for new 0
2015 2016 2017 2018 2019
leases to spike almost 4 % yoy to a current € 15.40 per sq m. Completions
That puts weighted average rent in the Düsseldorf municipal thereof Pre-let/Owner-occupied
area at an all-time high.
Supply and Vacancy
The remarkable reduction in excess supply in Düsseldorf con- Vacancy Rate (in %) and Vacancy
tinued in 2017 in the wake of solid take-up results. Take-up at
(in 1,000 sq m)
year-end was recorded at 532,400 sq m, reflecting a vacancy 1,000
rate of 7.0 % (down 0.5 percentage points compared to year-
end 2016). Space available for sublease only played a minor 800
role at just shy of 10,000 sq m. The Linksrheinisch and Düssel- 600 10.8% 10.4%
dorf Nord submarkets continued to exhibit the highest vacancy
8.5%
with 131,600 sq m and 118,500 sq m available, respectively. 400 7.5% 7.0%
31,600 sq m is currently available for immediate tenancy in the
200
CBD, reflecting a vacancy rate of 4.7 %. Only slightly less than 811 788 651 576 532
12,000 sq m, however, can be classified as grade A quality. 0
2013 2014 2015 2016 2017
Key Developments
Completions in 2018 (almost 79,000 sq m) are not expected to
Prime and Average Rents (in €/sq m)
significantly impact vacancy rates as almost 75 % of this space
has already been pre-leased. An additional 50,000 sq m of of-
27.50 26.00 26.00 26.50 27.00
fice space is expected to hit the market in 2019, almost half of
which has already been pre-leased or taken up by owner-oc-
cupiers. The majority of new property developments are fo- 14.80 14.00 14.40 14.90 15.40
cused around the Harbor and CBD/City Center submarkets.
2013 2014 2015 2016 2017
Prime Rent Average Rent
City Survey | 2017/2018 | Germany | Colliers International 21Summary and Outlook Vacancy in Düsseldorf is expected to drop further in light of
high pre-leasing rates for property developments. This could
The Düsseldorf office leasing market recorded a decent, slight- lead to additional moderate rent hikes affecting prime rents as
ly above-average take-up result in 2017. Prospects for 2018 well as weighted average rents.
remain favorable. We expect take-up results to once again ex-
ceed the long-term average with at least 330,000 sq m.
Fast Facts Investment
INVESTMENT DÜSSELDORF 2017 2016
Transaction Volume
Transaction Volume in million € 2,740 2,180
Portfolio Transactions 19 % 18 % With a breathtaking finish to the year (€ 1.2 bn in Q4 alone), the
Share by International Buyers 56 % 53 % Düsseldorf commercial investment market set a new record
Share by International Sellers 50 % 16 % high. The city recorded a total investment volume of € 2.74 bn
Most Important Property Type Office: 80 % Office: 65 % in 2017, reflec-ting an almost 26 % increase yoy and a 7 %
Prime Yield Office 3.75 % 4.15 % increase from the previous all-time high of € 2.55 bn recor-ded
in 2015. If we include all 2017 deals from the neighboring
cities of Ratingen and Neuss, transac-tion volume for greater
Düsseldorf surpassed the € 3 bn mark for the first time.
This result was bolstered by four large-scale deals in the
Commercial Transaction Volume nine-figure range, e.g. the sale of Vodafone headquarters and
(in million €)
the New Office development with HSBC as main tenant (both
3,000
located in the Links-rheinisch submarket). 20 deals changed
2,500 2,740 hands in the € 30 to € 100 million euro range and contributed
2,550 their fair share to the record result.
2,000 2,180
1,920 1,950 Supply and Demand
1,500
Office deals were dominant in 2017, accounting for 80 % of
1,000 total transaction volume. The 20 largest transactions involved
office assets with only two exceptions. Retail assets and com-
500
mercial assets followed in the ranks at around € 200m and
0 € 160m, respectively. Investor interest particularly revolved
2013 2014 2015 2016 2017
around the City Center and Düsseldorf Nord submarkets. The
Kennedydamm submarket deserves particular mention, gener-
ating almost € 400m in transaction volume. The two centrally
located City Center and CBD submarkets accounted for rough-
ly € 850m in transaction volume.
Types of Properties (in %)
Retail German and foreign asset/fund managers dominated buy-side
Hotel
Other with € 1.1 bn in transaction volume. Pro-perty developers/de-
Industrial & Logistics
1 velopment companies followed suit at € 450m, an impressive
4 2
Building Site 6 testament to Düssel-dorf‘s future development potential.
(commercial)
7 Open-ended real estate funds and special funds generated a
simi-lar result at € 430m. Opportunity funds/private equity
funds dominated sell-side at € 640m followed by asset/fund
managers at € 570m.
80
Office
22 City Survey | 2017/2018 | Germany | Colliers InternationalForeign investors once again matched their previous-year re- Transaction Volume by Buyer
sults, snapping up assets for more than € 1.5 bn, or 56 %. Asian Groups (in million €, share in %)
investors played a more significant role on the Düsseldorf 0 200 400 600 800 1,000 1,200
market for the first time in 2017. The Quantum Group acquired Asset managers /
41 %
Fund managers
the North Rhine-Westphalian Ministry of Interior and Commu-
nity Affairs on behalf of Korean institutional investors managed Property developers 16 %
by Capstone Asset Manage-ment. South Korea-based Mirae
Asset Global Investments acquired Vodafone headquarters. Open-ended real estate
funds / Special funds
16 %
Other major foreign players came from France, the UK, the US
and Israel. Numerous foreign investors were active sell-side as Pension funds 10 %
well, accounting for half of total transaction volume.
Opportunity funds /
3%
Private equity funds
Yields
Other investors 14 %
Prime office yields significantly dropped during 2017 to a cur-
rent 3.75 %, or 40 bp yoy. This applies exclusively to absolute
prime CBD locations, but 4.0 % is realistic in very good down-
town locations as well. Prime properties in top locations in the
Kennedydamm and Hafen submarkets are also offering yields Transaction Volume by Seller
of up to 4.0 %. Groups (in million €, share in %)
0 100 200 300 400 500 600 700
Summary and Outlook Opportunity funds /
23 %
Private equity funds
Demand for Düsseldorf commercial real estate in all risk class- Asset managers /
21 %
es remained strong in 2017, resulting in a new all-time high. Fund managers
The 10-year average (approx. € 1.5 bn) was exceeded by 78 %
Property developers 16 %
thanks to an excep-tionally impressive end-of-year rally. We
expect activity on the Düsseldorf market to remain high in Open-ended real estate
funds / Special funds
9%
2018 as well and to reflect the current record result despite
scarce supply in the core segment. Corporates /
8%
Owner-occupiers
Other investors 23 %
Lars Zenke
Director | Research
+49 211 862062-48
lars.zenke@colliers.com
City Survey | 2017/2018 | Germany | Colliers International 23You can also read
