International real estate consultancy firm Cushman & Wakefield (C&W) recorded take-up of 544,200 sq m in Berlin’s office letting market in 2023. This represents a decrease of 30 percent compared to 2022 and almost 50 percent compared to the above-average result of 2019. Take-up in Q4 2023 was 113,500 sq m.
Pierre Nolte, Head of Office Agency Berlin at C&W, comments: “With below-average take-up, 2023 closed at roughly the same level as 15 years ago – at that time, however, locations such as Europacity, Adlershof or Mediaspree were scarcely developed. Since then, office stock has increased significantly. The rising vacancy rates show that the right positioning in the market is more important today than ever. At the same time, flexibility in the property on offer must be maintained in order to be able to respond individual tenants’ requirements.”
Take-up: No major deals in Q4 2023
- In the 4th quarter of 2023, around 113,500 sq m of office space was let or allocated to owner-occupiers in the Berlin office property market area.
- For 2023 as a whole, take-up totalled 544,200 sq m (-30 per cent compared to the previous year).
- For 2024, C&W expects take-up to be slightly higher than in 2023.
- The number of deals in Q4 2023 was 164, lower than in the equivalent quarter of the previous year (205). In the whole of 2023, there were 664 deals compared to 799 in 2022 – that's around 17 percent less.
- In Q4 2023, there were only six deals in the 3,000 sq m or more category and none over 10,000 sq m, meaning there were only three such deals in 2023 as a whole, which is very atypical, as over the last ten years there have been an average of ten deals of this size.
- On the other hand, the smallest decline took place in the less than 1,000 sq m size category. In 2023, there were 540 lettings here (-15 percent compared to 2022), which together accounted for 35 percent of take-up.
- Banks and financial services providers as well as the information and communications industry leased significantly less office space in Q4 2023 than in previous quarters. For 2023 as a whole, these sectors fell short of the 5-year averages by 48 and 61 percent, respectively.
Vacancy: Around 6.9 percent of all office space in Berlin available for immediate occupancy
- Vacant office space in Berlin totalled 1.43 million sq m at the end of 2023. This corresponds to a vacancy rate of 6.9 percent and is 2.2 percentage points higher than at the end of 2022.
- Since the historic low at the beginning of 2019, the vacancy rate has thus increased fivefold.
- Around 160,000 sq m of vacant space is subletting space – an increase of 79 percent compared to the end of 2022.
Completions: In 2023 more office space was completed than for many years
- In the 4th quarter, 308,000 sq m of office space was completed (new construction or core renovation) and 669,200 sq m in 2023 as a whole. This marks a new high of the last 25 years. At the time of completion, 70 percent of this space was already let or for owner-occupation.
- Overall, completions exceeded the 5-year average by 62 percent.
- The current construction volume of 1.48 million sq m will decline significantly next year, as a large number of new spaces will be completed and only a few new projects will be started.
Rental prices: Prime rent rises
- In the 4th quarter, the prime rent rose to EUR 45.00/sq m per month and is thus EUR 1.50 higher than at the end of 2022.
- The area-weighted average rent is EUR 29.25/sq m per month for leases concluded over the last twelve months. It has thus risen again, by 20 cents compared to the previous quarter.
- The strengthened position of tenants compared to previous years is likely to be illustrated in the form of incentives. Rent-free periods in Berlin’s central prime locations are at 5.8 percent, based on a 5-year lease.
