In 2023, international real estate consultancy firm Cushman & Wakefield (C&W) registered take-up of around 440,000 sq m in Hamburg’s office letting market. This is 22 percent less than the previous year (562,000 sq m), which was still being influenced by pandemic-related catch-up effects, and 11 percent less than the 5-year average (2018–2022) of 492,400 sq m. Q4 2023 take-up of 113,000 sq m, was only slightly below that of Q2, the year’s strongest quarter (120,000 sq m).
Tobias Scharf, Head of Office Agency and Head of C&W’s Hamburg branch, comments: “2023 ended with relatively weak take-up. However, there is solid demand in Hamburg, as modern office space in the central sub-markets in particular continues to be popular with office users. At the same time, the high demand for location and building quality makes it difficult to re-let existing properties in district locations. The right positioning in the market is now more important than ever and may require repositioning or repurposing by the owners.”
Take-up: Large deals are shrinking, but still made a major contribution to the annual result
- For the year as a whole, 482 transactions were recorded. This is 17 percent fewer than in the previous year and 10 percent fewer than the 5-year average.
- As in the past three years, the largest proportion of office take-up (23 percent) was in the size range from 1,000 sq m to less than 3,000 sq m (61 deals; 102,000 sq m).
- Four major deals of 10,000 sq m or more, two of these in the 4th quarter, totalled around 63,700 sq m. Although the number is now in line with the 10-year average, a major deal in this size class averaged around 19,700 sq m over this period. In 2023, this fell to 15,900 sq m.
- The largest deal of the year was the owner-occupier purchase of Am Strandkai 1 in HafenCity with office space of around 22,000 sq m by the Hamburg Port Authority in the 4th quarter. With around 19,000 sq m, it will use the largest part of the building itself.
- Telecommunications, media and technology are the sector with the highest turnover, with 65 deals totalling 89,300 sq m. The result was significantly influenced by four deals of over 5,000 sq m. The largest of these was the leasing of 17,200 sq m at Koreastraße 7 in HafenCity by RTL. 2nd place goes to the education, social affairs, administration and lobbyists sector. Companies from the industry, transport and traffic sector, which were the strongest revenue driver on a 5-year average, are in 3rd place in the 2023 industry ranking.
- At over 54 percent, letting activity was concentrated in the CBD and in central locations (city centre, HafenCity, Hafenrand and City South).
- In view of changing occupier requirements, increasing desk sharing and the associated lower demand for office space, C&W expects market momentum in 2024 to be at a similarly moderate level as in 2023. While pre-pandemic take-up was around 520,000 sq m on a 10-year average (2010–2019), the “new normal” is expected to settle at between 450,000 sq m and 500,000 sq m in the coming years.
Rental prices: Prime rent rises to record high, average rent stable
- The prime rent reached a new high of EUR 34.00/sq m per month at the end of 2023. This represents an increase of 3 percent over the 12-month period. The persistently high demand for high-quality space in central locations is expected to cause prime rents to rise slightly again in 2024.
- The weighted average rent of all transactions in the past twelve months is quoted at EUR 21.20/sq m per month. This is EUR 0.20 more than at the end of 2022.
Vacancy rate: Year-on-year increase in available space
- Compared to the previous year, the vacancy rate increased by 0.4 percentage points and stood at 4.8 percent at the end of the fourth quarter. Absolute vacancy grew by 57,700 sq m to around 722,700 sq m.
- The supply of subletting space also continues to rise: around 50,000 sq m is on offer for immediate occupancy, 51 percent more than a year previously.
- Vacant existing space and space released for subletting, as well as the reduction of space by many companies in the course of renewals, will cause the vacancy rate to rise further in the coming years.
Completions: Decreases due to completion and construction stops
- In 2023, around 204,000 sq m of new and refurbished office space was completed in Hamburg. At the time of completion, 89 percent of this was already let or assigned for owner-occupation. The largest completion of the year took place in the 4th quarter: The Deutschlandhaus in the city centre, rented by Hamburger Sparkasse, provides around 30,000 sq m of office space.
- The construction volume at the end of 2023 was 513,800 sq m, 5 percent below the level of a year previously and 7 percent below the 5-year average – with around 40 percent of the space still vacant. Without the construction stops on the Signa projects “Elbtower” and “FlüggerHöfe”, the construction volume would have been over 80,000 sq m higher.
