In the first quarter of 2024, Cushman & Wakefield (C&W) recorded take-up of around 80,000 sq m for the Hamburg office letting market area. This is 25 percent less than in the equivalent period the previous year (106,000 sq m) and 35 percent less than the Q1 5-year average (2019–2023). The last time take-up fell below the 100,000 sq m mark was in the 4th quarter of 2022.
Tobias Scharf, Head of Office Agency and branch manager of C&W in Hamburg, comments: “The weak take-up at the beginning of the year is mainly due to the lack of large deals. Due to the ongoing economic uncertainty and the changing requirements for office space, large occupiers of 5,000 sq m or more are particularly reluctant to take on new leases and are increasingly deciding against relocation in the course of ‘stay-versus-go’ processes.”
Take-up: High level of letting activity in the small space segment – major deals rare
- In Q1 2024, 137 deals were noted. This is 6 percent more than in the equivalent period last year.
- For the first time since Q3 2020, which was marked by the Covid-19 pandemic, the majority of office take-up is accounted for by lettings of less than 1,000 sq m (58 percent; 120 deals; 46,400 sq m) – this proportion has never exceeded 55 percent since C&W began keeping records. In addition, the average size of spaces let in the quarter is less than 600 sq m for the first time.
- While in the first three months of 2023 four lettings of more than 5,000 sq m contributed around 25,100 sq m, only one major deal was registered in Q1 2024: 5,600 sq m in the new Lee construction project in HafenCity leased by a consulting firm.
- Consulting firms were the sector with the highest take-up in the 1st quarter: 32 deals contributed for 18,000 sq m. Companies from the industrial, transport and traffic sector, which were the strongest take-up driver in the Q1 5-year average, are in second place in the sector ranking (22 deals; 17,100 sq m).
- As with the long-term average, letting activity in Q1 2024 was concentrated in the CBD and in central locations (city centre, HafenCity, Hafenrand and City South). 71 deals totalled around 42,600 sq m, which corresponds to 53 percent of total take-up.
- In view of changing occupier needs, ongoing economic uncertainties, lower activity in the large-scale segment and generally more prolonged decision-making processes, C&W expects a total take-up of around 400,000 sq m in 2024. This would be 15 percent below the 5-year average.
Rental prices: Prime rents stable, average rents up slightly
- As in the previous quarter, the prime rent was EUR 34.00/sq m per month. This corresponds to an increase of 3 percent in over a 12-month period. The high demand for high-quality space in prime locations is expected to cause prime rents to rise further in 2024.
- At EUR 21.35/sq m per month, the weighted average rent of all leases concluded in the past twelve months is the second-highest level ever calculated. This is EUR 0.10 less than a year ago, but EUR 0.15 higher than at the end of 2023.
Vacancy: Supply of space continues to rise - Compared to the previous year, the vacancy rate increased by 0.2 percentage points to stand at 4.8 percent at the end of the 1st quarter. Absolute vacancy grew by 35,300 sq m to around 736,100 sq m.
- The supply of subletting space available for immediate occupancy increased compared to a year ago to around 46,000 sq m at the end of Q1, 8 percent higher than at the end of March 2023.
- Space which becomes vacant in existing buildings, space released for subletting, and the reduction in space requirement by many companies when concluding new leases will cause the vacancy rate to continue to rise moderately in the coming years.
Completions: 90 percent already pre-let – declining construction volume
- In the 1st quarter of 2024, around 42,000 sq m of new and refurbished office space was completed in Hamburg. 90 percent of this was already let or assigned to owner-occupiers on completion. The largest completion is that of EDGE ElbSide in the city centre which provides around 22,000 sq m of office space, most of which is let to Vattenfall.
- At the end of the 1st quarter, construction volume was around 482,000 sq m, 18 percent below the figure of a year previously – around 37 percent of this space is still available.
- The decline in construction volume is attributable to a combination of the continuing high level of completions, the reluctance to engage in speculative projects and the temporary suspension of construction work on the Signa’s Elbtower and FlüggerHöfe development projects.
