International real estate consultancy firm Cushman & Wakefield (C&W) recorded take-up of around 139,000 sq m in the Munich office letting market area in the first quarter of 2024. This represents a decrease of only 3 percent compared to the previous quarter and an increase of 24 percent compared to the equivalent quarter last year.
Hubert Keyl, Head of Office Agency Munich and Head of the Munich Branch of C&W, commented: “Almost half of the take-up in Q1 came via larger leases, which were already expected in the market last year. This underlines how drawn out lease negotiations currently are. At the same time, the trend of tenants saving up to 30 percent of space while accepting top locations even at top prices continues.”
Take-up: Significantly better first quarter than last year
- The take-up of 138,800 sq m recorded in the 1st quarter is 12 percent below the Q1 5-year average. Nevertheless, the result reflects a positive trend – in the first quarter last year, take-up was only 111,500 sq m.
- At 149, the number of transactions in Q1 2024 was lower than in the previous quarter (170) and roughly the same as in Q1 2023 (155).
- From January to March 2024, there were five deals in the 5,000 sq m or more size category, including two over 10,000 sq m. On the other hand, in the whole of last year, there were only six deals of 5,000 sq m or more and only one of 10,000 sq m.
- Industrial companies as well as companies from the technology, media and telecommunications sectors were the main drivers of take-up in the first three months of the year, as in the previous quarter, accounting for 44 percent.
- Around 65 percent of take-up was accounted for by quality category A buildings. This figure is higher than the average of the past ten quarters, which is 54 percent.
- At around 20 percent, the largest contribution to take-up was that of the City West submarket.
- The leases of Bayerische Allgemeine Versicherung AG (approx. 11,600 sq m) in The Source (Obersendling) and DMG MORI (approx. 10,500 sq m) in GO FOUR IT (Moosach) were the largest deals of the 1st quarter.
- For 2024 as a whole, C&W expects take-up of 550,000 sq m, a good 15 percent more than in 2023.
Rental prices: Prime rent rises to record high of EUR 50.00/sq m per month
- In Q1 the prime rent in Munich exceeded the all-time high of the previous quarter at EUR 50.00/sq m per month, thus setting a new record. Compared to the 4th quarter of 2023, the prime rent increased by EUR 3.00/sq m. Compared to the 1st quarter of 2023, the figure corresponds to an increase of EUR 6.00/sq m (+14 percent).
- The area-weighted average rent across new leases over the past twelve months was EUR 25.15/sq m per month, EUR 1.20/sq m higher than at the end of 2023.
Vacancy: 6.0 percent of all office space available for immediate occupancy
- At the end of the 1st quarter, the office vacancy in Munich stood at 1.3 million sq m. This corresponds to a vacancy rate of 6.0 percent and is 0.7 percentage points higher than 12 months previously. Compared to the previous quarter, this is a slight increase of 0.3 percentage points.
- A total of 144,200 sq m of the vacant space in Q1 2024 is subletting space. This figure represents a slight increase compared to the previous quarter and an increase of 28 percent compared to the equivalent quarter last year.
Completions: Completion volume at the level of the 5-year average
- In the first three months of 2024, around 54,000 sq m of office space was completed (new construction or core refurbishment). 71 percent of this space was already let or assigned to owner-occupiers on completion. Completions include Herzog Max (14,600 sq m) and LUMEN MUNICH (16,200 sq m), both in the Old Town submarket.
- For the remainder of 2024, further completions of 230,000 sq m are expected, of which 38 percent is currently still available, including the Der Bogen project in Prinzregentenstrasse (64,000 sq m).
- Around 696,000 sq m of office space is currently under construction. 42 percent of this space has already been pe-let or assigned to owner-occupiers.
