TOP 7 OFFICE MARKETS 2Q2024: Investors holding back in first half-year
HAMBURG / 01.07.2024
Take-up of space in Germany’s top 7 office markets totalled around 1.2m m² in the 1st half of 2024. This figure is about 11 % higher than last year, when the result was also poor. “Due to the lack of clear economic perspectives companies are, as a rule, cautious about renting office space. Consequently, many rental processes still tend to be rather protracted. Large-volume agreements are few and far between,” remarks Björn Holzwarth, spokesperson for German Property Partners (GPP). The GPP commercial property network consists of Grossmann & Berger Immobilien, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Immobilien.
- Business developments presented a heterogeneous picture in the top 7 cities. While Stuttgart posted growth of around 54 %, GPP noted that take-up declined by about 20 % in Cologne and by some 11 % in Hamburg. The highest take-up figure was reported in Berlin at about 291,000 m², followed by Munich with some 287,500 m².
- Modest levels of letting activity resulted, as was to be expected, in increased volumes of empty office space in all top 7 cities. Year on year total vacancies in the top 7 cities rose by about 20 %. Accordingly, the top 7 vacancy rate rose by 1 percentage point to 6.6 %.
- The owner-occupier ratio in the top 7 cities grew from 4.3 % a year ago to 11 %. At 18 % the ratio was highest in the national capital, Berlin. In large part, this was due to the new extension building for for Federal Chancellery, started in the 1st quarter.
- In most of the top 7 cities average and premium rents showed practically no change, moving up or down by very small degrees. However, in Düsseldorf the premium rent rose by an impressive 11 %. The highest average rent was paid in Berlin at €30.50/m²/month, the highest premium rent, €51.20/m²/month, was charged in Munich.
“In some cities several rental agreements for large amounts of space are in the pipeline for the second half of the year. Overall, however, we expect the top 7 result for 2024 to be rather modest. It is unlikely that the office-letting markets will respond with any appreciable growth to the anticipated improvements in the economy until next year at the earliest,” says Holzwarth.