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Düsseldorf’s office letting market opens year more strongly

Verena Bauer • 11/04/2024

In the first quarter of 2024, Düsseldorf’s office letting market achieved a take-up of 58,500 sq m, reports international real estate consultancy firm Cushman & Wakefield (C&W). Compared to the equivalent period of the previous year, this corresponds to a slight increase of 3 percent. With a total of 102 leases signed, letting activity is broadly at the level of the previous quarters. However, large-area lettings were rare.

Martin Höfler, Head of Office Agency Düsseldorf at C&W, explains: “Ongoing space optimisation and downsizing are leading to a consistently high vacancy rate, mainly driven by the increased supply of subletting space in recent quarters. Over the course of the year, however, we expect a slight decline due to new lettings and back-to-office strategies. However, in the case of subletting space in older existing buildings outside the city centre, there is a risk of their becoming entrenched as structural vacancy.” 

Take-up: brisk letting activity in the small-scale space sector

  • Although take-up increased slightly compared to a year earlier, the result fell short of the Q1 5- and 10-year averages by 23 percent and 30 percent respectively.
  • The high level of leasing activity is not currently reflected in take-up. The main reason for this is the lack of major deals, where by far the largest area readjustments and reductions continue to take place.
  • To date, the only lease for over 5,000 sq m was concluded by the international law firm Noerr LLP with around 6,000 sq m in the Le Coeur development currently under construction at Königsallee 37 in the CBD submarket.
  • At around 34,000 sq m, small-scale lettings of less than 1,000 sq m contributed the majority of take-up (58 percent) in Düsseldorf. This is almost 6,000 sq m more than a year earlier.

Rental prices: Prime rents have risen again

  • At the end of the 1st quarter of 2024, the sustainably achievable prime office rent in Düsseldorf was EUR 42.00/sq m per month. Compared to a year earlier, this corresponds to an increase of EUR 4.00/sq m (11 percent). The main reason for this is a number of high-priced lettings in development projects currently under construction in the CBD. In view of the persistently high demand for high-quality space, prime rents are likely to remain at least at this level for the remainder of the year. 
  • The weighted average rent is currently quoted at EUR 20.05/sq m per month and has fallen only slightly by around 4 percent over the past twelve months. The decline is mainly due to the scarcity of high-priced large-scale lettings.

Vacancy: Still above the 10 percent mark

  • Office vacancy at the end of Q1 2024 was around 950,000 sq m, corresponding to a vacancy rate of 10.2 percent. Compared to 12 months go, the amount of available space has increased by 8 percent. The last time the vacancy rate was at a comparably high level was in 2014.
  • The supply of available subletting space is still high. Compared to the previous year, the amount  of space available for subletting has risen slightly by almost 3,000 sq m to 149,000 sq m.
  • In the course of 2024, no significant reduction in vacancy is expected. Not only because of the fall in demand for office space due to desk sharing, but also because of the more difficult marketing of older existing buildings – especially outside central locations. On the other hand, a slight decline is expected in the amount of subletting space available.

Completions: Areas under construction are decreasing, but a high proportion of renovations are being carried out

  • In the 1st quarter of the year, office completions in Düsseldorf totalled only around 14,000 sq m, of which just under half (48 percent) is already let or assigned to owner-occupiers.
  • The construction volume (office space under construction) stood at 392,400 sq m at the end of March 2024 and has been steadily decreasing in recent quarters. The peak in office development projects under construction was reached in Q3 2023 at 448,000 sq m. At present, around 57 percent of the space is still available to let. 
  • Of the total 392,400 sq m of office space under construction, just under 129,000 sq m is attributable to modernisation and renovation of existing buildings (33 percent). A year ago, this figure was around 73,000 sq m (20 percent).
  • The insolvencies of some property developers continue to have a significant impact on construction volumes. In total, the construction projects that have been cancelled, or are unlikely to be continued in the near future, total around 267,000 sq m.

C&W Office Letting Market Düsseldorf Q1 2024

 

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verena bauer
Verena Bauer

Head of Business Development Services, Germany • 60311 Frankfurt am Main

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