Office letting market Hamburg 3Q2023: Greater complexity lengthens letting processes

Figures from Grossmann & Berger show that take-up of office space in Hamburg totals 325,000 m² for the year so far. This is 30 % less than in the same period a year ago. “Companies now face far more complex demands than, for example, five years ago. Work environments and sustainability requirements are some of the challenges. When selecting a location, they must take many more factors into account than hitherto. In view of the political and economic uncertainties, they are now appreciably more cautious than in the past. Nevertheless, because a wide variety of industries are active in Hamburg, agreements are still being signed for large suites of offices,” reports Andreas Rehberg, spokesperson for the management board. Grossmann & Berger, a member of German Property partners (GPP), expects the final total for the year to be 450,000 m² or about 14 % below the 10-year average (2013-2022).

Office letting market Hamburg in detail:

• Year on year the number of large agreements for more than 5,000 m² of space fell from 18 to 8. The biggest increase was seen in the 501 to 1,000 m² size category, up by 10 % to 67,000 m². “Mittelstand” firms thus remained the major players.
• Accounting for 20,000 m², owner-occupiers played a very minor role. Rehberg remarks that, “So far no big building projects have started, but this was expected in view of the difficult market environment.However, developers with deep pockets are going ahead with projects, although these are rarely speculative.”
• Year on year the average rent softened by 50 cents/m²/month. This was due to leases for larger amounts of space in existing buildings outside the CBD. “But average rents in the City and HafenCity central sub-markets paint a different picture. “They rose by 2.3 per cent to 27.10 euros per square metre and month,” comments Rehberg. The premium rent has remained stable since the beginning of the year at €34.50/m²/month and is €1.0/m²/month higher than a year ago.
• Year on year the amount of space standing empty has risen by some 10 % to 595,000 m². By the end of the quarter the vacancy rate was 4.2 % and is likely to pass the 5 %-mark in the next twelve months. As Rehberg explains, “At the moment there is barely any demand for office properties outside the central sub-markets and popular parts of the city, especially if they also have low energy efficiency ratings.” 
• For 2023 and 2024 the volume of building completions is expected to total 365,000 m². Since the pre-let ratio is 80 %, around 72,000 m² of speculative new-build space will come onto the market. In September the new Beiersdorf headquarters opened; with some 45,000 m² of office space it is the biggest construction project completed in 2023. The second-biggest project is the “Deutschlandhaus”, which will house the Haspa bank head office and is scheduled for completion in the 4th quarter.