TOP 7 OFFICE MARKETS 1Q2024: Rather ‘new and central’ than ‘old and non-central’

With a rise of 9 % on Germany’s top 7 markets for office properties, the series of negative growth posted in the past four quarters has been halted.

“However, year on year, last year’s first-quarter result was well below the long-term average recorded for Germany’s top 7 cities,” remarks Björn Holzwarth, spokesperson for German Property Partners (GPP). “This growth is therefore to be seen as the market stabilizing at a lower level than was usual prior to 2022.”

  • Between January and March take-up of space in the top 7 cities reached 612,400 m².  But from city to city big differences in market activity were noted.
  • As had been expected, the amount of empty office space in each of the top 7 cities increased, growing by 27 % year on year. Despite this, the vacancy rate remained well within the single-digit range at 6.5 %, up from 5.2 % a year before. 
  • Year on year the proportion of owner-occupiers in the top 7 rose from 7 % to 18 %. At 48,000 m², the new-build extension to the Federal Chancellery was the largest transaction of the 1st quarter of 2024, accounting for almost half of the volume.

Holzwarth: “To an increasing degree the market is breaking apart: empty space is concentrated in non-central locations and real estate that does not meet modern requirements, whereas hardly any space is available in good quality, centrally-located buildings. This is reflected in the way rental rates have changed: premium rents are trending upwards, average rents are tending to fall back.” GPP expects market players to remain cautious during 2024, leading to a result that will be similar to that seen in 2023. “If, as various recent surveys and indices suggest, Germany’s business executives continue in somewhat brighter mood, the result could be a little higher.”

German Property Partners consists of Grossmann & Berger, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Real Estate.

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