With take-up of 154,000 sq m, the third quarter was the Hamburg office letting market’s strongest this year. In the first three quarters of 2021, the international real estate consultancy firm Cushman & Wakefield (C&W) thus noted take-up of around 365,000 sq m (Q1: 126,000 sq m; Q2: 85,000 sq m). Although the result is seven per cent below the Q1-Q3 five-year average and one per cent less than the ten-year average, it is an increase of 46 per cent compared to last year's figure.
Six major lettings of over 10,000 square metres
With around 400 leases signed between January and the end of September, both the result for the equivalent period last year (370) and the Q1-Q3 five-year average (380) were exceeded. C&W has noted six large-scale lettings this year with a total of around 89,000 sq m of office space, of which more than 71,000 sq m was in development projects, and accounting for a good 24 per cent of the total take-up thus far. The largest transaction is the leasing by Berenberg Bank of around 19,200 sq m in the new Ipanema development project in the City-Nord submarket in the third quarter.
Prime rent rises to new high of EUR 30.50/sq m per month
The high level of interest in office space in city centre locations and in new buildings caused the prime rent to rise in the third quarter for the first time since the beginning of the Covid-19 pandemic. It is currently at a record high of EUR 30.50/sq m per month. This corresponds to a year-on-year increase of 0.50 euros or around two per cent. The continuing construction boom with simultaneously rising construction costs and the "rethinking" of the office working world with a focus on high location and fit-out quality lead to expectations of further moderate growth in prime rents in the medium term.
The weighted average rent also rose slightly compared to last year, to EUR 18.00/sq m per month across all building classes. This is 1.10 euros or seven per cent more than at the end of September 2020. The decisive factor for this development is in particular large-scale lettings in the new development projects that characterise the city, such as the Elbtower, the Deelböge office campus or the Ipanema.
Industrial companies lead lettings, Hamburg City remains most sought-after submarket
Companies from the industrial, banking and financial services sectors were primarily responsible for the upturn in market activity. Industrial companies accounted for 24 leases with a total of around 59,000 sq m of office space, and banks and financial service providers for 16 leases totalling 35,000 sq m.
Hamburg City remains the most sought-after submarket with around 85,000 sq m or a good 23 per cent of take-up. City South, with 47,000 sq m, or 13 per cent of take-up, is in second place, closely followed by City North.
Tobias Scharf, Head of Office Letting Hamburg at Cushman & Wakefield, explains: “After a long phase of waiting due to Covid-19, we are sensing a clear desire for change among companies. After the development of new workplace strategy concepts, the implementation follows. This is already reflected in the revival in lettings. In the course of the year so far, large-area deals that had previously been postponed for a longer period of time contributed significantly to the high level of take-up. Likewise, lettings in attractive development projects drove take-up and led, for example, to peak values for prime rents in City-Nord.”
Supply of space in Hamburg’s office market grows year-on-year
Over the past twelve months the vacancy rate has risen by 0.5 percentage points to 4.2 per cent. The absolute vacancy increased by 90,000 sq m to 637,000 sq m. In the third quarter of 2021, there was no further increase in vacancy q-o-q.
Construction activity and pre-letting rates remain high
During the first nine months of 2021, around 112,000 sq m of new and core refurbished office space was completed in Hamburg, 92 per cent of which is already let or allocated to owner-occupiers. The largest completion is the Olympus Campus in City Süd in Q2 with around 47,000 sq m of office space, which is fully let to Olympus and Design Offices.
A total of 550,000 sq m of office space is under construction. Of this, 62 percent has already been allocated to users. In addition, there are further concrete plans for further development projects providing 700,000 sq m of office space, of which more than one third has already been let.
Total result for the year significantly above the level of 2020
Due to the increased demand and further major deals in the pipeline, C&W again expects take-up in excess of 100,000 sq m in the final quarter. With an expected total annual take-up of around 480,000 sq m, the year-end result would then be significantly above the 2020 level of 343,000 sq m.
