In H1 2023, international real estate consultancy firm Cushman & Wakefield (C&W) registered take-up of around 226,000 sq m for the Hamburg office letting market. With the exception of 2020 and 2021, which were marked by Covid-19, this is the lowest result since H1 2013. It is 25 percent below the strong prior-year period.
Fewer deals and only one for over 10,000 sq m
In H1, 246 deals were recorded. This is 23 percent less than in the equivalent period last year, which was strongly influenced by pandemic-related catch-up effects.
At 25 percent, the largest contribution to office take-up was from the 1,000 sq m to less than 3,000 sq m size category. 33 lettings totalled 56,000 sq m, which corresponds to a 19 percent year-on-year decline in take-up. The sharpest decline, by 59 percent to 17,200 sq m, was registered in the largest space category, over 10,000 sq m, where the only deal was RTL’s leasing at Koreastrasse 7 in the HafenCity submarket.
For the beginning of the H2 2023, C&W notes a slowdown in market momentum and a declining number of large property searches. Therefore, a total take-up of around 450,000 sq m is expected for 2023 as a whole. This would be around 12 percent below the 10-year average.
Tobias Scharf, Head of Office Agency and Branch Manager of C&W in Hamburg, comments: "The take-up result reflects the structural change in terms of workplace strategy as well as the economic situation, making many users hesitant to act. Consolidations and new workplace concepts are increasingly leading to second thoughts regarding the leasing of new space and users are more likely to remain in their current premises if conditions are good or release parts of the leased office space for subletting."
Prime and average rents stable at record level
The prime rent continues to be quoted at a high of EUR 33.00/sq m per month. Compared to a year ago, this corresponds to an increase of EUR 1.00 or around 3 percent. Around 27 percent of the total take-up was concluded in H1 for a monthly rent of at least EUR 30.00/sq m, compared to a 5-year average of only about 6 percent (2018-2022). The persistently high demand for high-quality space is expected to cause prime rents to rise slightly over the remaining course of the year.
The weighted average rent of all leases concluded over the past twelve months remains unchanged from the previous quarter at a record high of EUR 21.45/sq m per month. That is EUR 1.60 and 8 percent more than at the end of June 2022.
ICT sectors/online platform sector with the highest take-up
Significantly influenced by two deals concluded by telecommunications companies, each for than 5,000 sq m, ICT sectors and online platforms were the sectors with the highest take-up in H1 2023 (22 deals; 32,500 sq m of office space). Companies from the media, publishing and advertising sectors followed with 15 leases contributing a total of 27,400 sq m.
Focus on the quality of location and furnishings
The demand for modern office space in prime locations such as the City Centre, HafenCity and Hafenrand submarkets remains high. Around 46 percent of leasing activity is accounted for by these areas, 69 percent of which are buildings classified as quality A.
Availability stable
Vacancy grew by 66,700 sq m to 699,700 sq m and the vacancy rate increased by 0.4 percentage points year-on-year to 4.6 percent at the end of June. Compared to Q1 2023, the vacancy rate remained stable.
Vacancies in existing space and space released by an increasing number of companies for subletting are expected to cause the vacancy rate in Hamburg to continue to rise moderately by the end of 2023.
High construction volume and deferred projects
In H1 2023 around 148,200 sq m of new and renovated office space was completed in Hamburg. The largest of these projects is Kap 5 in City North, which was built for Signal Iduna and provides around 23,000 sq m of office space.
In total, there is currently around 544,000 sq m of office space under construction and for completion by 2026. This is roughly the same level as over the past five years. Of this, 64 percent is already allocated to users. In addition, there are concrete plans for development projects in excess of some 476,600 sq m. This is 26 percent or around 170,000 sq m less than at the end of 2022. This is due to projects that have been postponed due to increased construction and financing costs, especially in the absence of pre-letting. Speculative projects in peripheral locations are currently no longer being initiated.
