According to analyses by Cushman & Wakefield, one of the world’s largest real estate consultancies, office space take-up from lettings and owner-occupation on the Frankfurt real estate market totalled around 182,000 m² in the first half of 2024, which is on a par with the same period of the previous year.
Hanjo Theiss, Head of Office Agency Frankfurt at Cushman & Wakefield, explains: “The take-up of office space in Frankfurt in the first half of the year is in line with the 5-year average. It is settling at a new market level, now that the boom years before the coronavirus pandemic are slowly falling out of the long-term observation period. The full-year result is also not expected to exceed the 400,000 m² mark and will therefore be on a par with the previous year.”
Take-up of space: increasing shift within the size segments
- The quarterly result of 88,300 m² is around 9 per cent below the 5-year average and falls short of the 10-year average by around 7 per cent.
- At around 38,000 m², the largest letting in the year to date remains the new letting by the banking supervisory authority of the European Central Bank in the “Gallileo” high-rise building in Frankfurt’s banking district from the 1st quarter. The second-largest deal of 7,200 m² was concluded by Frankfurter Sparkasse in the “Hauptwache Eins” project development, which the company acquired as an owner-occupier purchase from the insolvent project developer Signa in the second quarter.
- Three lettings above 5,000 m² account for around 28 per cent of take-up. In the first half of 2023, five deals (21 per cent) were recorded in this size category. In 2019, there were eight lettings (41 per cent) in the same period.
- As in the same period of the previous year, lettings in the 1,000 m² to 5,000 m² size segment accounted for around 36 per cent of total take-up at the end of the first half of 2024. In 2019, this figure was 27 per cent after the first two quarters. These figures clearly reflect the ongoing trend towards a reduction in space in favor of high-quality office space in central locations.
- Central locations such as Frankfurt’s Central Business District (CBD), the city center submarket and other submarkets close to the city center are the strongest areas, accounting for 62 per cent of take-up. In the previous year, this share amounted to 54 per cent. In 2019, lettings within these two classes accounted for around 34 per cent.
Rental prices: Prime rents stable quarter-on-quarter
- The prime rent in Frankfurt remained unchanged at EUR 48.50/m² per month in the current reporting quarter. Compared to Q2 2023, this represents an increase of EUR 0.50/m² or 1.1 per cent.
- The weighted average rent across all new lettings over the past twelve months is EUR 25.00/m² per month. Compared to the previous quarter, this corresponds to a decrease of EUR 0.80/m² or 3.1 per cent. Compared to the same quarter of the previous year, there was also a slight decrease of EUR 0.10/m² or 2.3 per cent.
Vacancy rate in Frankfurt exceeds the 10 per cent mark
- Around 1.16 million m² of office space was available for short-term lettings at the end of June. This corresponds to a vacancy rate of 10.1 per cent and an increase of 1.2 percentage points compared to the previous year. Compared to the previous quarter, the vacancy rate increased by 0.5 percentage points. This means that the vacancy rate in Frankfurt has exceeded the 10 per cent mark for the first time since 2015.
- At around 134,000 m², the supply of sublet space has increased by around 30,000 m² compared to the previous year and currently accounts for around 12 per cent of the vacancy rate.
Completions: High pre-letting rate of 88 per cent for completions in the 2nd quarter
- Around 66,000 m² of office space was completed in the Frankfurt market area in the first half of 2024, including around 51,000 m² in the second quarter. These include the new-build developments “Eschborn Gate – Hochhaus” and “Eschborn Gate - The Hub” with a combined total of around 22,000 m² as well as the “Atreeum” (14,700 m²) in Frankfurt's Ostend and the “Timber Pioneer” (14,100 m²) in the Europaviertel. Only 12 per cent of the office space was available for rent at the time of completion.
- C&W expects a completion volume of around 179,000 m² for 2024 as a whole. At the time of completion, 80 per cent of this space has already been pre-let.
- Around 405,000 m² of office space was under construction at the end of June 2024. Compared to June 2023, this corresponds to a 35 per cent decrease in construction volume (Q2 2023: 621,600 m²). Around 41 per cent of the space under construction is still available for rent.
