Office markets: Better new and centralised than outdated and decentralised

2. April 2024
Posted in What's New
2. April 2024 admin

Office markets: Better new and centralised than outdated and decentralised

With an increase of 9% compared to the same period last year, the top 7 office space take-up ended the series of declining developments of the last four quarters.

“However, last year’s result at the start of the year in the top 7 locations was significantly below average in a long-term comparison,” explains Björn Holzwarth, spokesman for German Property Partners (GPP). “This increase should therefore be interpreted as market stabilisation at a lower level than up to 2022.”

  • Between January and March, 612,400 m² was taken up in the top 7 locations. However, the market dynamics varied greatly in the individual locations.
  • As expected, vacancies continued to rise in all top 7 office letting markets, with the top 7 vacancy rate climbing by 27% year-on-year. The top 7 vacancy rate, on the other hand, remained clearly in single figures at 6.5% after 5.2% a year ago.
  • The top 7 owner-occupier rate was 18% after 7% in the same period of the previous year. At 48,000 m², the extension to the Federal Chancellery – the largest volume registered in Q1 2024 – contributed almost half of this figure.

Holzwarth: “The market is becoming increasingly fragmented: Vacancies are concentrated in decentralised locations and outdated existing buildings, while there is hardly any availability in central locations and high-quality space. This can also be seen in the development of rents: Prime rents are trending upwards, while average rents are trending downwards.”

GPP expects market players to be more cautious in 2024 and a similar result to 2023. “If the slightly brighter mood in the German economy recently confirmed in various studies and indices continues, the result could be slightly higher.”

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