Cushman & Wakefield: Developments in the German top 5 office markets in Q3 2024 at a glance
Frankfurt, 8 October 2024 — Cushman & Wakefield, one of the world's largest real estate consultancies, has examined developments on the office markets in Berlin, Düsseldorf, Hamburg, Frankfurt and Munich in the third quarter and summarised the parameters of take-up, rents and supply below.
BERLIN
Berlin office market with weakest nine-month take-up since 2013 — vacancy rate rises to more than 8%
Dominic Rausch, Head of Office Agency Berlin at Cushman & Wakefield, comments: “The extensive project pipeline currently only has a low pre-letting rate of 39%. At the same time, more and more existing space is being vacated. We therefore expect the pressure on owners of vacant space to increase further.”
Take-up of space: all four deals over 15,000 m² are in the public sector
In the first nine months of the year, 418,600 m² of office space was let or taken by owner-occupiers in Berlin's office real estate market. Take-up amounted to around 346,100 m², with owner-occupiers accounting for 72,500 m².
At 163, the number of agreements signed in Q3 2024 was higher than in the previous quarter (146) and totaled 610 for the year. Although this is significantly higher than the previous year's figure (504), take-up fell by 3% in the same period.
Rents: Average and prime rents remain constant, incentives increase
In the 3rd quarter, the prime rent remained stable compared to the previous quarter at 45.00 euros/m² per month. A year ago, it stood at 44.50 euros/m².
The area-weighted average rent is 28.65 euros/m² per month and changed only slightly compared to the previous quarter (28.55 euros/m²). A year ago, it was still at 29.05 euros/m².
Supply: Around 8.1 percent of all office space
DÜSSELDORF
Düsseldorf office letting market continues to tread water
Martin Höfler, Head of Office Agency Düsseldorf at Cushman & Wakefield, comments: “Despite an increasing number of large-scale searches and a generally high letting dynamic, the Düsseldorf office market continues to lack the major deals that drive take-up. These are not expected until 2025. Many companies are also increasingly focusing on hybrid working models with reduced space, but attach great importance to high-quality properties and prime locations.”
Take-up of space: consulting companies are the largest demand group
Office space take-up of 167,800 m² was achieved on the Düsseldorf office rental market in the first three quarters of 2024. The result is around 9% below the previous year's result.
A total of 296 leases were signed (Q1-Q3 2023: 259). 70% of all lettings were in the small-scale space segment up to 500 m².
Rental prices: Average rent falls slightly - prime rent continues to rise
High-priced contracts concluded in the CBD sub-market led to a further increase in the prime rent to EUR 43.50/m² per month in the 3rd quarter. This trend is expected to continue due to project developments under construction in prime locations.
The weighted average rent is EUR 19.65/m² per month and has fallen by just under 4% compared to the same period last year.Angebot:Va
Vacancy rate at 10 percent mark
The office vacancy rate in Düsseldorf rose by 5.0% year-on-year to 950,300 m². The vacancy rate at the end of the 3rd quarter was 10.1%.
The supply of sublet space has fallen by almost 18% over the past twelve months to currently 125,000 m².
FRANKFURT
Little movement on the Frankfurt office rental market
Hanjo Theiss, Head of Office Agency Frankfurt at Cushman & Wakefield, comments: “Due to the persistently tense economic market environment and the decreasing availability of new space ready for occupancy at short notice, many companies are opting to extend existing leases: By the end of the 3rd quarter of the current year, these amounted to around 130,000 square meters. The take-up of space achieved in the same period through new lettings and owner-occupation is just twice as high. A year ago, it was three times as much, rounded up.”
Take-up: Frankfurt's banking district is the submarket with the highest demand
Office space take-up from new lettings and owner-occupation on the Frankfurt real estate market totaled around 269,000 m² in the first three quarters of 2024, which corresponds to the level of the same period last year (270,700 m²).
Rental agreements for 130,000 m² were also extended between January and September 2024.
The banking district has been the sub-market with both the highest take-up (76,000 m²) and the highest number of lettings (43) so far this year.
Rents: Average rent rises slightly - prime rent constant quarter-on-quarter
In the 3rd quarter, the prime rent amounted to 48.50 euros/m² per month, as in the previous quarter, and was 0.50 euros higher than twelve months ago.
The area-weighted average rent was EUR 25.10/m² per month. Compared to the 3rd quarter of 2023, it rose by 30 cents (1.2%) and has remained consistently above EUR 25.00/m² since the beginning of 2024.
Supply: vacancy rate at 9.7 percent
The vacancy rate settled at 1.15 million m² at the end of Q3 2024. This represents an increase of 0.4 percentage points compared to the previous year. Cushman & Wakefield expects the vacancy rate to rise further to over 10% by the end of the year.
HAMBURG
Hamburg office letting market with lowest nine-month result since 2004
Tobias Scharf, Head of Office Agency and Branch Manager of Cushman & Wakefield in Hamburg, comments: “Despite the continuing fall in demand, particularly from large occupiers, we are seeing strong demand for properties in prime locations. Decision-making processes are still taking longer and rental incentives have stabilized at a high level. City applications and deals continue to dominate the market and are also likely to determine the end of the year.”
Take-up of space: public sector dominates take-up with three major deals
By the end of September 2024, around 296,000 m² of office space had been let or taken by owner-occupiers. With the exception of 2020, which was dominated by Covid-19, this is the lowest nine-month result since 2004.
The number of deals concluded in the reporting period totaled 390. Although this exceeds the previous year's result (385) by 1%, it represents a decline of 4% compared to the five-year average for the first three quarters of each year (408).
Rents: Average and prime rents on course for moderate growth
Compared to the previous quarter, the prime rent remains stable at a high of EUR 34.50/m² per month. This corresponds to a year-on-year increaase of EUR 1.50. Demand for high-quality space in prime locations is likely to push prime rents up further.
The weighted average rent of all agreements concluded in the past twelve months is listed at EUR 21.20/m² per month, which corresponds to a year-on-year increase of 50 cents.
Supply: Vacant office space in Hamburg rises for the tenth quarter in a row
The vacancy rate increased by 0.7 percentage points year-on-year and stood at 5.2% at the end of the 3rd quarter. The absolute vacancy rate rose by a good 100,000 m² to around 731,000 m². The vacancy rate was last at this level in the 1st quarter of 2017.
The supply of sublet space available at short notice increased by 24% compared to the previous year: it amounted to around 61,000 m² at the end of September.
MUNICH
Munich office market has overcome low demand - rents and take-up on the rise
Matthias Hofmann, Acting Head of Office Agency Munich and Head of the Munich office of Cushman & Wakefield, comments: “We continue to see a high and rapidly rising rent level, particularly within the Altstadtring. Many users are looking for space in these locations, but the available supply is very limited. Even the project developments currently being planned will not be able to fully meet demand.”
Take-up of space: take-up up +36 percent compared to the previous year
Take-up totaled around 442,000 m² in the first three quarters of 2024. This is significantly higher than the previous year's figure, but still below the 5-year average. For 2024 as a whole, Cushman & Wakefield expects take-up of 580,000 m², around 23% more than in 2023.
The City Center East (83,000 m²) and West (74,000 m²) submarkets have the highest take-up. Occupiers prefer central locations that are easily accessible by public transport. Industrial companies lead the sector statistics with 104,000 m². Mietpreise: Mietpreisniveau steigt weiter
Both the prime rent and the average rent rose over the course of the quarter — the prime rent by one euro to 52 euros/m² per month, the average rent by 1.40 euros to 25.35 euros. Further increases in prime rents are expected both by the end of the year and in the coming year.
Supply: continuous growth in vacancy rate to 6.7 percent
The vacancy rate has risen to 1.46 million m² due to high completion figures and a reduction in the amount of space rented by companies. This is the highest figure for over ten years — and the trend continues to rise.
In the quarter under review, 46,000 m² were completed. This adds up to 185,000 m² in the past three quarters — around half less than in the same period in 2023.
