The Covid-19 pandemic continues to impact the office market. Stagnating rents, rapid growth in vacancy rates and a steep drop in take-up are among the findings of a recent meta-analysis prepared by realxdata, one of the leading data specialists in the field of real estate market analyses. The study looks at prime and average rents, vacancy and take-up in Germany’s top 7 office hubs of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart. realxdata based the study on data taken from office market reports and other reports published by leading real estate firms. The analysis focus on the second quarters of each year from 2016 to 2021.
Average prime rents stagnate, average rents expected to drop after 2021
Although average prime office rents were up 5.75% yoy in 2020, the trend dropped to an increase of 0.21% yoy in 2021. The difference between the levels recorded prior to the pandemic and during the crisis itself is even more pronounced when looking at average rents. 2020 saw a 8.44% yoy increase in average rents followed by a drop in prices of -0.56% between 2020 and 2021.
“Office rents are sluggish at the moment, marking a clear trend reversal compared to the years prior to the pandemic,” explains project head Annika Schmidt, geodata expert at realxdata.
Office vacancy in Berlin and Munich up by over 50%
The study shows that the downward trend in vacancy rates stabilized somewhat in 2020 compared to the previous year with an average of -1.46%, while vacancy recorded a significant yoy increase of 22.59% in 2021. Berlin and Munich set themselves apart from the other top cities here with sharp increases of over 50% each.
Change in average take-up stabilizes at -1.14%
While average take-up was down significantly in 2020 compared to the previous year, posting a drop of -33.96%, it stabilized in 2021 with a decrease of -1.14% yoy. When looking at take-up, the average tends to deviatesignificantly from the trends recorded in individual cities. Take-up rose in Frankfurt, Hamburg and Cologne, while the negative trend seen in 2019/2020 continued in Düsseldorf, Munich and Stuttgart. Berlin is the only city to post sluggish take-up results compared to the previous year.
“The increase in take-up combined with rising vacancy rates can be attributed to a number of factors, including vacancy at larger properties that were recently sold and differences in the feasibility of working from home in sectors with varying representation in the cities,” Annika Schmidt concludes.