Cushman & Wakefield (C&W) reports take-up of 139,500 sq m in Berlin’s office letting market in the first quarter of 2024. This corresponds to a decrease of one percent compared to the first quarter of 2023 despite significantly more space taken up by owner-occupiers in the public sector. Pure letting take-up fell by 23 percent.
Dominic Rausch, Director Office Agency Berlin at C&W, commented: “It is clear that tenants’ improved negotiating position is no longer being manifested exclusively by high incentives, such as rent-free periods, but is now also being reflected in rents themselves. For the first time in a long while, we are seeing a slight decline in average rents, while prime rents remain at a high level.”
Take-up: Five deals account for half of the quarterly total
- Around 139,500 sq m of office space was let or assigned to owner-occupiers in Berlin’s office real estate market area in the 1st quarter of 2024.
- Take-up was around 100,800 sq m, with owner-occupiers accounting for 38,700 sq m.
At 141, the number of contracts signed in the 1st quarter of 2024 was lower than in the previous quarter (160), but higher than in the 1st quarter of 2023 (139). - In the 1st quarter of 2024, there were only six deals in the 3,000 sq m and above size category, five of which were in the public sector.
The largest letting was to the Federal Ministry of Housing, Urban Development and Construction, which is to occupy around 25,000 sq m in X8. - Owner-occupiers accounted for a large proportion of take-up, partly due to the start of construction work on the extension to the Federal Chancellery and an interim building for the Office of the Federal President.
- Companies in the information and communications sector are still among the most important tenants. However, they were more subdued at the beginning of the year than in any first quarter of the past ten years. Their take-up of 20,600 sq m in the first three months is almost 60 percent below the 5-year quarterly average.
Vacancy: Around 7.4 percent of Berlin’s total office stock is available for immediate entry
- The office vacancy rate in Berlin has risen for the ninth successive quarter to 1.56 million sq m at the end of Q1 2024. This corresponds to a vacancy rate of 7.4 percent, rising from 6.9 percent at the end of 2023.
- More than one in ten vacant spaces is subletting space: a total of 178,000 sq m. This represents an increase of 12 percent over the past three months.
Completions: Over 200,000 sq m of new office area in Berlin
- In Q1, 206,300 sq m of office space was completed (new-build or core refurbishment), such as “twentyone” (Saarbrücker Strasse) and “the middle” (Müllerstrasse).
- At almost 800,000 sq m, last year's record level (669,200 sq m) will be exceeded again in 2024. Half of the space in these projects is currently unoccupied.
- At the end of the 1st quarter, 1.30 million sq m of office space was under construction, compared to 1.48 million sq m three months earlier. This decline illustrates that more projects are being completed or cancelled than new ones are being started.
Rental prices: Average rent falls slightly – Prime rent remains constant
- In Q1, the prime rent remained at EUR 45.00/sq m per month, the level of the previous quarter, and was thus EUR 1.00 higher than in Q1 2023.
- The area-weighted average rent is €29.00/sq m per month based on leases concluded in the past twelve months. It has therefore fallen by € 0.25 compared to the previous quarter.
- Rent-free periods in Berlin's prime inner-city locations remain at 5.8 per cent, based on a 5-year lease.
