Düsseldorf’s office letting market recorded take-up of around 263,000 sq m in 2023. This is 8 percent less than a year earlier (284,000 sq m) and 22 percent less than the 5-year average (2018–2022) of 338,000 sq m. With 100 leases signed, the 4th quarter saw the strongest momentum of the year, with take-up of just under 80,000 sq m.
Martin Höfler, Head of Office Agency Düsseldorf at C&W, explains: “Location and property quality will play a central role in the back-to-office strategies of many companies in the coming years. However, there is no question that future demand cannot be met solely in the popular central locations and new-builds. From today’s perspective, it will be all the more important for owners to explore options for action at an early stage regarding existing properties and in less central locations. Real estate investors are therefore increasingly looking at repositioning or conversion concepts as well as ESG measures in order to maintain competitiveness.”
Take-up: Major deals cushion fall in take-up in 2023
- In 2023 as a whole, 351 office letting deals were registered, around 8 percent fewer than in the same period the previous year (383 deals).
- With take-up of 169,700 sq m, the second half of the year was significantly livelier than the first half (93,000 sq m). This was mainly due to several major deals of over 5,000 sq m.
- The largest letting of the year took place in Q4 to the international law firm Freshfields Bruckhaus Deringer who leased around 11,300 sq m in the Le Coeur project which is currently under construction. This was also the largest letting of the past ten years in Düsseldorf’s CBD submarket. The largest deal in the market area continues to be the owner-occupation concluded by an insurance firm for 27,100 sq m in the Twin Cubes on Heerdter Lohweg in Q3.
- The largest contributor to take-up by size category was by lettings of less than 500 sq m (24 percent and 63,900 sq m of take-up). There was a significant increase in take-up in the 1,000 to less than 3,000 sq m category, to 33,100 sq m over the year as a whole, 84 percent more than a year earlier.
- At over 56 percent, letting activity was largely concentrated in the CBD and central locations (City, City-Ost, City-Süd, Kennedydamm, Medienhafen, Grafenberger Allee).
Rental prices: Prime and average rents reach record highs
- The sustainably achievable prime office rent in Düsseldorf at the end of Q4 2023 is at EUR 40.00/sq m per month. Compared to the previous year, this corresponds to an increase of EUR 5.00/sq m (14 percent). The main reason for this is a number of high-priced leases concluded for development projects currently under construction in the CBD. In view of the persistently high demand for high-quality space, prime rents are expected to continue to rise in 2024, but not at the same rapid rate.
- The weighted average rent is currently quoted at EUR 20.30/sq m per month and has risen by around 4 percent over the past twelve months.
Vacancy rate: 10 percent mark exceeded
- Total office vacancy amounted to 971,000 sq m at the end of Q4 2023, corresponding to a vacancy rate of 10.4 percent. Compared a year earlier, an increase of 29 percent. The vacancy rate is at its highest level since 2014.
- Furthermore, the supply of office premises in the form of subletting space is high. At the end of Q4 2023, a total of 155,000 sq m of subletting space is available. A year previously, this figure was around 86,000 sq m.
- The vacancy rate is expected to increase further in the course of 2024. Not only because of the reduced office space requirements due to desk sharing, but also because of difficult marketing prospects for older extant buildings, especially outside central locations.
Completions: Low office completion volume and many development stops in 2023
- The office completions in Düsseldorf totalled just 34,500 sq m in 2023. Compared to the previous year, this corresponds to a decline of 70 percent. On completion, 73 percent of had already been let or assigned to owner-occupiers.
- At the end of 2023, the construction volume (office space under construction) was 403,500 sq m. The pre-letting rate in these developments is around 42 percent. At the end of 2022, around 377,000 sq m of office space was under construction.
- A total of 268,000 sq m of office developments have been put on hold or cancelled in Düsseldorf at the current time. Of this, around 147,000 sq m took place in the 4th quarter alone.
