According to international real estate consultancy firm Cushman & Wakefield (C&W), office take-up via lettings and owner-occupancy in the Frankfurt real estate market totalled 93,800 sq m in the first quarter of 2024. This is around 2 percent higher than a year previously (Q1/2023: 92,200 sq m).
Christian Lanfer, Head of Office Agency Germany at C&W, explains: “Banks, financial service providers and consulting firms in central locations continue to dominate office space take-up in Frankfurt. However, two of the three largest lettings in Q1 were to industrial companies at the airport and in Eschborn. The high space requirements of this sector, combined with complex additional requirements for new space, offer good prospects for high-quality office properties in the future.”
Take-up: Largest new letting since 2019 in Frankfurt’s office market
- The quarterly take-up of 93,800 sq m is 11 percent above the 5-year average, but fell short of the 10-year average by 7 percent.
- At around 38,100 sq m, the largest leasing in the 1st quarter was by the European Central Bank’s banking supervision agency in the Gallileo high-rise building in Frankfurt’s banking district. At the same time, this is the largest lease concluded in the Frankfurt market since 2019 and the only one in excess of the 10,000 sq m mark in the quarter. The second-largest deal of around 5,100 sq m was concluded by a company from the industrial sector in The Move Blue at Frankfurt Airport, followed by another industrial company with a lease of around 2,900 sq m in Horizon Tower in the Eschborn submarket.
- With a share of 47 percent via take-up of 43,800 sq m, Banking District was the best performing submarket in Frankfurt’s office letting market in the first quarter – not least due to the ECB deal. This is followed by the Eschborn submarket with 10 percent via take-up of 9,600 sq m.
- Excluding the ECB’s lease, Q1 would be one of the weakest since C&W’s began keeping records, with take-up of just 55,700 sq m. Around a third of this would be in the size segment from 1,000 sq m to less than 3,000 sq m, while spaces of 5,000 sq m to less than 10,000 sq m would have the lowest share at around 9 percent. These figures underline the trend towards downsizing office space in new leases.
- Quality and location, as well as the amount of office space actually required, are more important to companies than ever before. This has resulted in a decline in space requirements, which is reflected in the Q1 result. To the end of the year, C&W expects total take-up to reach just under 400,000 sq m.
Rental prices: Prime rent quoted at EUR 48.50/sq m per month at the end of March 2024
- Prime rent in Frankfurt rose by EUR 0.50/sq m to EUR 48.50/sq m in the first quarter of 2024. Compared to the 1st quarter of 2023, this is an increase of EUR 1.00/sq m or 2.1 percent.
- The weighted average rent across all new lettings in the past twelve months was EUR 25.80/sq m per month. Compared to the previous quarter, this corresponds to an increase of EUR 2.10/sq m or 8.9 percent. The ECB’s large-scale leasing contributed significantly to the increase in average rents. Compared to the equivalent quarter last year, a slight increase of EUR 0.10/sq m or 3.6 percent was also recorded.
Vacancy: Vacancy rate in Frankfurt rises to 9.6 percent
- At the end of March, around 1.12 million sq m of office space was available for immediate occupancy. This corresponds to a vacancy rate of 9.6 percent and an increase of 0.9 percentage points compared to a year previously. Compared with the previous quarter, the vacancy rate increased by 0.3 percentage points.
- At around 137,000 sq m, the supply of subletting space has increased by around 63,000 sq m compared to a year previously and currently accounts for around twelve percent of vacancy.
Completions: High pre-letting rate for completions planned in 2024
- Around 14,200 sq m of office space was completed in the Frankfurt market area in Q1 2024. This included the new Matchbox development in Eschborn and the Liebig 19 refurbishment project in Frankfurt’s Westend. Only 8 percent of the office space remained unlet on completion.
- For 2024 as a whole, C&W expects a completion volume of around 205,000 sq m. 77 percent of this space has already been pre-let. A particular factor in the high completion forecast in 2024 is the completion of Four T1, with some 72,000 sq m of office space.
- The coming years will be marked by lower completion volumes. Due to the increase in the pre-letting rate in recent years and also in the pre-letting rate required for construction to commence, hardly any speculatively-built office space will come onto the market. It is therefore important for users to start looking for new office space at an early stage.
- At the end of March 2024, 416,300 sq m of office space was under construction. Compared to March 2023, this corresponds to a decline of 23 percent. Around 33 percent of the space under construction is still vacant.
