The year began with moderate take-up in the Frankfurt office market, reports international real estate consultancy firm Cushman & Wakefield (C&W). Lettings and owner-occupation deals totalling 92,200 sq m were completed in the first quarter. While this represents a 12 per cent increase in take-up compared to the weak Q4 2022, the year-on-year result is 14 per cent weaker. Both vacancy and rents are rising.
Number of small lettings on the increase
Despite a lower year-on-year take-up, the number of lettings increased by around 13 per cent. While 114 deals took place in Q1 2022, there were a total of 129 in Q1 2023. This trend applies above all to the size segment up to 500 sq m.
The largest letting in the first quarter was concluded by Universal Investment for just under 9,600 sq m in the Timber Pioneer development project in Frankfurt's Europaviertel. The next largest deal was concluded by a public administration tenant, who leased around 9,100 sq m at Breitlacher Straße 92 in Frankfurt Rödelheim. A further 5,800 sq m was taken by Massif Central in Bethmannhof in the city centre.
High completion volume in 2023 and 2024
Average rent continues to rise
The weighted average rent across all new lettings in the last 12 months is 25.70 euros/sq m per month. Compared to Q4 2022, this corresponds to an increase of 0.90 euros/sq m or 3.6 per cent. Compared 12 months previously, the weighted average rent has risen by 2.70 euros/sq m (11.7 per cent). The growth is mainly due to lettings in modern, energy-efficient, and thus higher-priced, office space. The prime rent at the end of the first quarter was 47.50 euros/sq m per month, unchanged from the previous quarter. Over the last 12 months, the prime rent has risen by 1.00 euro/sq m. C&W expects a further increase in rents, as the willingness of many occupiers to rent higher-quality, ESG-compliant space in central locations remains high.
