Office letting market Hamburg 2Q2023: Post-pandemic backlog demand lower than in 2022

The 1st half of 2023 closed with office lettings in Hamburg below the strong result seen in the same period of 2022. Take-up fell from 305,000 m² to 230,000 m². Office lettings were thus down by around a quarter. No substantial construction starts for owner-occupiers were noted. These figures emerge from the latest survey by Grossmann & Berger, member of German Property Partners (GPP). “Last year’s catch-up phase at the end of the pandemic is now petering out. Year on year the volume of transactions involving space of more than 5,000 square metres has halved. Instead, we observe that business on the market for 1,000 square metres or less of space is brisker, rising by about 10 per cent. At the moment, the most active players on the market are mid-sized or ‘Mittelstand’ firms”, says Andreas Rehberg, spokesperson for the managing board of Grossmann & Berger.

Market details:

• Owner-occupiers played only a minor role, accounting for a share of 5 % in the 1st half of 2023, down from 12 % in the prior year.
• At €34.50/m²/month the sustainable premium rent remained unchanged against the previous quarter, whereas the weighted average rent slipped back by 10 cents/m²/month to €20.90/m²/month.
• The vacancy rate including sub-let space remained as it was at the start of the year, at 4.0 %. “Developments on the Hamburg market are very different from the trend observed in the USA. In cities such as San Francisco more than a quarter of the space now stands empty, partly because for a great variety of reasons employees continue to work from home rather than going to the office. Here in Hamburg, the office remains the centre of business activity, even if people work from home or elsewhere on some days,” remarks Rehberg.  
• There is a well-filled pipeline of new-builds. The forecast completion volume for 2024 is about 218,000 m² in 20 projects, and the pre-let ratio is 72 %. In 2025, the construction volume is projected to rise to 266,000 m². Around half of this space is likely to be speculative.
• As in the same period last year, the information and telecommunications industry accounted for the largest sector of the market with about one-fifth of the total. City, with some 30 % of office take-up, was once again the most popular sub-market.

“Currently, the market includes some tenants requiring larger amounts of space who will probably sign rental contracts by the end of the year. However, the numbers seeking more than 5,000 square metres are relatively limited. There is a question mark about whether the announced construction starts for owner-occupiers totalling more than 40,000 square metres will actually happen in 2023. In view of this, take-up for the year will in all likelihood be lower than 500,000 square metres,” forecasts Rehberg.