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Strong Q2 2022 for office letting in Düsseldorf via to several major deals

Verena Bauer • 07/07/2022

The Düsseldorf office market achieved a take-up of 164,300 sq m in the 1st half of 2022. Compared to a year previously, this corresponds to an increase of around 58 percent. The 2nd quarter in particular saw strong office take-up of 98,200 sq m. 

Three of the four major lettings took place in the 2nd quarter and contributed significantly to the result. The letting of 17,500 square metres to Volkshochschule Düsseldorf (VHS) in the North submarket is the largest lease concluded this year. The auditing company Ernst & Young has secured around 14,700 square metres in the "Pandion Office Home" office development currently under construction in the Medienhafen submarket.

Tenants' quality expectations and willingness to pay are increasing
"For several quarters now, we have been noticing that tenants are paying even more attention to first-class space quality. This is now also reflected in the leases concluded and in the rent levels," explains Martin Höfler, Head of Office Agency in Düsseldorf at Cushman & Wakefield. "The top absorbers of high-quality expensive office space in very good locations primarily comprise consulting companies, with the real estate sector and the finance and insurance sector also prepared to pay higher rents for sophisticated working environments. In contrast to the investment market, the office letting market is not affected by the current difficult financing environment. For the second half of the year, we expect take-up to at least match the level of the 1st half and forecast office take-up for the year as a whole of up to 340,000 square metres."

Office Market Dusseldorf Q2 2022

No further increase in vacancies
The office vacancy rate at the end of Q2 is just under 7.7 percent. Compared to the same time last year, office space available for immediate occupancy has increased by about 10 percent to 717,200 square metres. However, it is pleasing that the increasing vacancy of recent quarters has been arrested for the first time. At the end of the first quarter the vacancy rate was around 7.8 percent.

High pre-letting rates of office projects under construction
In the first half of 2022, office completions in Düsseldorf totalled 59,900 square metres which was almost 33 percent less than at the same point last year. At the same time, the H1 5-year average of just under 47,400 square metres was exceeded by around 26 percent.
In the second half of the year another 71,400 square metres of office space will be completed - if construction progresses according to plan - of which a good 70 percent has already been allocated to users. Overall, the office completion pipeline in Düsseldorf (space currently under construction) amounts to around 349,300 square metres to 2025, of which just under 43 percent is pre-let.

Numerous leases concluded in high-quality space causing rent levels to rise
After the achievable prime office rent in Düsseldorf had remained unchanged at EUR 28.50/sq m per month since the third quarter of 2020, it rose to EUR 30.00/sq m in the second quarter of 2022. On one hand, property developers are forced to make upward price corrections with regard to asking rents due to the rise in construction costs; on the other, the willingness to pay and the quality requirements of companies have also risen significantly. The prime rent continues to be achieved primarily in the Central Business District (CBD) submarket. Leases concluded at similarly high rent levels are also already also being signed for very good locations and ultra-modern space in the City office submarket.

The high demand for high-quality office space is also reflected in the weighted average rent. In the second quarter, this rose to a new record level of EUR 17.75/sq m. Compared to the same period last year, this corresponds to an increase of around 13 percent.

 
 

MEDIA CONTACT

verena bauer
Verena Bauer

Head of Marketing & Communications Germany, Cluster Lead • 60313 Frankfurt am Main

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