Cushman & Wakefield, one of the world’s largest real estate consultancies, has recorded office take-up of around 1.07 million m² in the five most important office locations in Germany for the first half of 2024. This is 8 per cent above the previous year’s figure, but 15 per cent below the 5-year average.
Pierre Nolte, Head of Offices & Leasing at Cushman & Wakefield Germany, comments: “The market presents an ambivalent picture. On the one hand, demand for very high-quality buildings in prime locations continues to outstrip supply, leading to rising prime rents and reduced incentives. On the other hand, the overall significant fall in demand and the increasing supply of space is putting pressure on a large part of the market. A look at the market as a whole is currently only of limited value. Owners and users are therefore required to look at their situation individually in order to make the right decision with regard to letting or renting.”
Helge Zahrnt, Head of Research & Insight Germany at Cushman & Wakefield, adds: “We see the resulting uncertainty not only in the reluctance of large occupiers that has been evident for some time and the associated lower letting figures, but also in the significant fall in the average size of lettings. While this was still over 1,000 m² at the end of the 2010s, it has now shrunk to 730 m².”
Take-up: corridor of -14 per cent and +21 per cent compared to the same period of the previous year
- Compared to the first half of 2023, most of the top 5 office markets recorded an increase in take-up (Munich and Düsseldorf with +21 per cent and Berlin with +15 per cent). Frankfurt remained stable. Only Hamburg recorded a decline of 14 per cent.
- With take-up of 560,000 m², the 2nd quarter was the strongest of the past six quarters. Take-up of 2.2 million m² is expected for 2024 as a whole – a slight increase of 4 per cent compared to 2023.
- Berlin and Munich lead the market ranking in H1/2024 with around 290,000 m² each – this also applies to the number of deals.
- In the first half of the year, there were twelve deals in the 10,000 m² and above size category, five of which were in Berlin. This means that there have already been as many transactions as in the whole of 2023. The largest transaction in the 2nd quarter was the start of owner-occupier construction by Bayerische Versorgungskammer in Munich, which will occupy around 25,000 m² itself in the “Tridea” project.
- In the sector statistics, industrial companies (159,000 m²) are ahead of public administration (124,000 m²). The ICT sector, which regularly led the ranking until 2022, was in third place in the first half of the year.
Rents: Prime rents rise – average rents fall
- In the 2nd quarter, prime rents in Munich rose to EUR 51/m² per month (EUR +1.00/m²) and in Hamburg to EUR 34.50/m² per month (EUR +0.50/m²).
- Compared to the same quarter of the previous year (Q2/2023), prime rents in all five markets rose most significantly in Munich (+15 per cent). It was followed by Düsseldorf (+11 per cent) and Hamburg (+5 per cent).
- The average growth in prime rents in the top five markets was 0.7 per cent compared to the previous quarter and 6.2 per cent compared to the previous year.
- The picture for average rents shows a quarter-on-quarter decline in all five markets – between 5 cents in Düsseldorf and EUR 1.35/m² in Munich.
- The average decline in average rents in the top five markets was 2.5 per cent compared to the previous quarter and also compared to the previous year.
- It is clear that the relatively small prime segment continues to enjoy high demand, while rents are coming under pressure in the market as a whole, particularly in decentralized locations.
- The rent-free periods in prime inner-city locations, based on a 5-year contract, are at 7.5 per cent across all top 5 markets.
Vacancies: Vacancies continue to rise
- The office space vacancy rate in the top 5 markets stood at 5.86 million m² at the end of Q2 2024. This corresponds to a vacancy rate of 7.5 per cent and is 1.1 percentage points higher than twelve months ago.
- Among the top 5 markets, Hamburg continues to have the lowest vacancy rate at 5.0 per cent, while Düsseldorf and Frankfurt have the highest at 10.1 per cent each.
- Berlin has the highest vacancy rate in absolute terms (1.68 million m²), followed by Munich (1.38 million m²).
- The supply of sublets fell in the 2nd quarter compared to the end of March. It amounted to 611,000 m², but is 17 per cent above the previous year's figure.
- The traditional vacancy rate (excluding sublet space) has risen by 19 per cent.
- Cushman & Wakefield expects the vacancy rate to rise further to around 8.0 per cent by the end of 2024. This is due to the unlet space in the numerous completions and the reduction in space as many users relocate.
Completions: Highest completions for 22 years
- 617,000 m² of office space was completed in the 1st half of the year. 69 per cent of this was let or occupied by owner-occupiers at the time of completion. Berlin accounted for by far the largest volume of completions (301,000 m²), with Munich in second place (140,000 m²).
- Around 1.57 million m² of new space is expected to be made available to the market in 2024 as a whole. This would be the highest figure since 2003 with 2.2 million m².
- The construction volume at the end of the 2nd quarter was 3.3 million m² – 55 per cent of which is still available.
