Cushman & Wakefield, one of the world’s largest real estate consultancies, has recorded take-up of 291,900 m² on the Berlin office market for the first half of 2024. This is 15 per cent above the previous year’s level, but 15 per cent below the 5-year average. New lettings accounted for only 226,100 m² in the last six months, the lowest figure in ten years.
Dominic Rausch, Head of Office Agency Berlin at Cushman & Wakefield, comments: “In the second quarter, more space came onto the Berlin office market than could be absorbed by it. As a result, the vacancy rate and pressure on average rents increased, causing them to fall slightly once again.”Take-up of space: public sector dominates the market
- 291,900 m² of office space was let or taken by owner-occupiers in the Berlin office real estate market in the first half of 2024. Take-up amounted to around 226,100 m², with owner-occupiers accounting for 65,800 m².
- Although the number of agreements signed in the 2nd quarter of 2024 was slightly higher than in the previous quarter (146), the 1st half of the year (287 agreements) was still lower than in the same period of the previous year (311).
- In the 1st half of 2024, there were ten transactions in the over 5,000 m² size category. Five of these were owner-occupiers. In the 1st half of 2023, there were only seven transactions, including one owner-occupier.
- The three largest lettings in the first half of the year were concluded by the Federal Ministry of Housing, Urban Development and Building (25,000 m²), BIM Berliner Immobilienmanagement (17,000 m²) and a provider of short-term lettings (13,000 m²). With the laying of the foundation stone for the first construction phase of “Siemensstadt Square”, an owner-occupier contract for over 18,000 m² was added in the second quarter.
- As a result of the numerous large public-sector deals both on the rental market and through own construction projects, the education, social services, administration and lobbyist sector accounted for 46 per cent of half-year take-up. This is the highest proportion recorded by Cushman & Wakefield in Berlin in the last ten years.
Rents: Average rent falls slightly – prime rent remains constant
- In the 2nd quarter, the prime rent remained at 45.00 euros/m² per month compared to the previous quarter and was 0.50 euros higher than twelve months ago.
- The area-weighted average rent is 28.55 euros/m² per month. This takes into account the agreements concluded in the previous twelve months. It has therefore fallen by 45 cents compared to the end of the 1st quarter and by 70 cents since the beginning of the year.
- The rent-free periods are 5.8 percent based on a 5-year contract in Berlin's top inner-city locations. Owners are increasingly relying on incentives to let their space. An increase in rent-free periods is likely towards the end of the year.
Vacancies: Around 7.9 per cent of all office space in Berlin available at short notice
- The office vacancy rate in Berlin is rising for the tenth time in a row and stood at 1.68 million m² at the end of Q2 2024. This corresponds to a vacancy rate of 7.9 per cent. A year ago, it was still at 5.6 per cent.
- 176,000 m² or around 10 per cent of the vacant space is sublet space. Companies in the information and communications sector in particular are offering their space here.
Completions: 300,000 m² of new office space in Berlin in the first half of the year
- In the 2nd quarter, 94,500 m² of office space was completed in new buildings or refurbishments, such as the Bahntower at Potsdamer Platz or the "SPARK" on Storkower Strasse. This brings the total volume of completions to around 300,000 m² in the first half of the year. Of these, 35 per cent were still available at the time of completion.
- The year 2024 will close at the record level of the previous year (669,200 m²) with completed space of around 660,000 m². Of the remaining space planned for this year, only around 38 per cent is currently occupied.
- At the end of the first half of the year, 1.32 million m² of office space was under construction – 21 per cent less than a year ago. Few expected construction starts combined with a high number of completions will lead to a further decline in construction volume in the coming months.
