- Frankfurt’s high-rise office buildings provide a total of 1.77 million sq m of rental space
- A further five properties with heights of over 45 metres will be completed by 2028
- Banks dominate as tenants
- Older buildings threatened by vacancy
- High-rise development plan sets course for the future
At the end of the first quarter of 2024, 52 office high-rise buildings with a height of over 45 metres were in operation in Frankfurt am Main. Their combined office space of 1.77 million sq m corresponds to 15 percent of Frankfurt’s office stock, according to one of the findings of the High Rise Study Frankfurt analysis by Cushman & Wakefield (C&W), one of the world’s largest real estate consultancy firms. In addition to the existing city-centre high-rise buildings of this size, the study included a further five properties that are already under construction for completion by 2028 which will add an additional 182,000 sq m. More than 500 leases recorded by C&W were evaluated for the study.
19 percent of the total take-up in the Frankfurt market was in high-rise buildings of over 45 metres
“High-rise buildings traditionally play an important role in Frankfurt’s office market. They not only symbolise Frankfurt's function as a financial centre, they are also highly sought after by numerous occupiers as prestige locations. The market’s absolute prime rents of over EUR 50/sq m per month are achieved here, and in recent years the skyline has been densified by numerous development projects,” emphasizes Tina Reuter, Head of Germany at C&W.
The average take-up in high-rise buildings from 2019 to 2023 was around 78,000 sq m per year, corresponding to 19 percent of the total take-up on the Frankfurt office market. “This means that high-rise buildings combine slightly above-average take-up in relation to the proportion of the total stock they represent. They form a microcosm of their own, which is a significant difference to the other large office markets in Germany, whose dynamism results from having a significantly larger number of office buildings,” Tina Reuter continues.
A substantial proportion of take-up is generated by relocations, with expansions and new arrivals being the exceptions in Frankfurt. At 7.4 percent, the proportion of office space in high-rise buildings available for occupancy within three months is 2.2 percentage points below the vacancy rate of the market as a whole. The highest density of high-rise buildings is located in Frankfurt's banking district and in the Central Business District (CBD).
Banks predominant tenants of high-rise buildings
Around 51 percent or 875,000 sq m, or more than half of the office space in high-rise buildings, is occupied by banks and financial services providers. With the headquarters of the European Central Bank (ECB), the city has further strengthened its position as a financial and banking centre. The largest occupiers from this sector are the European Central Bank (ECB), DZ Bank, Deutsche Bundesbank and Deutsche Bank. Lawyers and notaries follow at a considerable distance in second place, occupying around 212,000 sq m or 12 percent of the high-rise office stock.
The number of tenants in high-rise buildings totals around 500. The five largest of these are banks. Overall, there is a considerable concentration of a few major occupiers in the high-rise segment of the market in Frankfurt. The ten largest users occupy a total of 44 percent of the office space, and the 20 largest users 55 percent.
Top floors are reserved for an exclusive clientele
If the distribution of sectors within the high-rises by storey is considered, it becomes clear that from the 45th floor upwards, only banks and financial service providers, lawyers and consulting firms are occupants. When looking at all floors, banks and financial service providers are always the dominant sector. Only Deutsche Bahn in the "Silver Tower" also carries the flag for the transport, traffic and logistics sector up to the 39th floor. "In general, the lower the floor, the more diversified the sector distribution," explains Tina Reuter.
“Flight-to-Quality” determines market activity, older buildings are left behind
The high-rise market is very dynamic and characterised by many moves. An important topic for office users at the moment is the “flight-to-quality”. Tina Reuter explains: “Office tenants are specifically looking for top space in the best locations and are willing to pay corresponding prime rents for this space. A prominent example is the FOUR development project in the banking district, where numerous leases have been concluded with renowned tenants. Occupiers such as DekaBank and law firms Freshfields and Allen & Overy have secured space there and will vacate their previous high-rise space in turn.” It is striking that users usually accept higher monthly rents per square metre while significantly reducing the space leased.
An evaluation of rents and move-outs by building age confirms this trend. For example, the proportion of office space take-up in high-rise space dating from 2021 onwards was 64 percent for the moves scheduled between 2024 and 2028 . “In contrast, 88 percent of the move-outs over the same period are from buildings constructed prior to 2011. These older, vacant properties then offer potential for sustainable portfolio renovations. If this does not happen, there is a risk of vacancy,” adds Helge Zahrnt, Head of Research & Insight Germany at C&W.
Legal basis created for many further high-rise developments
The city of Frankfurt published a new high-rise development plan (HEP) in March 2024. It sets-out two spatial clusters, the Banking District and the East End submarket around the ECB, with a total of 14 locations. Of these locations, 13 are permitted for office use, resulting in a considerable long-term potential of more than 500,000 sq m of additional space for the Frankfurt office market. Together with other sites for which building permits have already been issued , this results in a total high-rise space potential of over 800,000 sq m.
“However, C&W does not expect all high-rise buildings in the new HEP to be built in the near future. Due to structural and cyclical declines in demand, the market as a whole is limited. In addition, there is the currently challenging financing environment for property developers and investors and, in the case of some potential developments, longer-term leases in existing buildings,” Tina Reuter concludes.
