Two major deals were largely responsible for the high sales volume in the 3rd quarter. For example, 27,100 sq m was allocated for an insurance company owner-occupancy in the "Twin Cubes" on Heerdter Lohweg in Left Bank of the Rhine submarket. A further 5,600 sq m was let to the Office of Facility Management at Elisabethstrasse 65 in the City submarket. Overall, take-up between June and September 2023 totalled 90,400 sq m, the highest performing quarter since Q2 2022.
Martin Höfler, Head of Office Agency Düsseldorf at C&W, explains: "The development of rental prices over the past 18 months, and in particular the recent increase to 40 euros per square metre, shows how important property and location qualities have become. The gap is widening in one aspect: prime development projects in prime location are enjoying strong demand and achieving absolute prime rents, while peripheral locations and existing buildings of average quality are increasingly falling out of the grid. This space makes up a significant proportion of vacant subletting space. In the short-to-medium term, there are good opportunities for repositioning and repurposing."
Vacancy rate continues to rise, but is still below the 10 percent mark
Total office space vacancy at the end of the 3rd quarter was 904,300 sq m, which corresponds to a vacancy rate of 9.7 percent. Compared to a year ago, vacancy has increased by almost 24 percent. The significant increase in the supply of subletting space continues to be the main driver of vacancies. At 151,300 sq m, a new high has now been reached, while in the 1st quarter, the sublet space supply was 146,100 sq m, it was however slightly lower at 129,200 sq m in the 2nd quarter.
Office developments under construction higher than at any time in 20 years
In the first three quarters, office space completions in Düsseldorf totalled only around 8,400 sq m. This is almost 89,000 sq m less than a year earlier and thus the lowest level of the past six years. However, the majority of new construction completions have been shifted to the 4th quarter. Around 38,300 sq m of new office space is expected here, bringing the total annual volume to just under 47,000 sq m.
Unshaken by this, the construction volume (office space under construction) at the end of the 3rd quarter was 447,700 sq m, the highest level in the past 20 years. The pre-letting rate within these projects is around 39 percent, which is on a par with the previous year (just under 38 percent).
The recent reports of some property developers’ insolvencies are currently also affecting construction projects in Düsseldorf. This affects a total of around 49,000 sq m of office space, for which there are currently no concrete plans for further realisation.
Prime office rent reaches the 40-euro mark
At the end of the 3rd quarter of 2023, the sustainably achievable prime office rent in Düsseldorf reached a new high and is currently quoted at EUR 40.00/sq m per month. This applies in particular to the CBD submarket, where the prime rent level has increased by EUR 10.00/sq m per month within 12 months. Compared to the previous quarter, this is an increase of around 5 percent. The main reason for this is a number of high-priced lettings in the development projects currently under construction in the CBD submarket.
The weighted average rent is currently EUR 20.50/sq m per month and has risen significantly by around 11 percent in the past twelve months. Only at the end of the 1st quarter of 2023 was a higher rental price recorded at EUR 20.80/sq m per month. This means that the average rental price level has been continuously above the 20-euro mark since the beginning of the year.
