Office space in Germany: Preleasing rates rise

26. June 2019
Posted in What's New
26. June 2019 admin

Office space in Germany: Preleasing rates rise

The trend continues. More and more occupiers are snapping up space during the planning and construction phase. “In 2019, every 5th square meter of office space in Germany’s Big 7, Hamburg, Berlin, Düsseldorf, Cologne, Frankfurt, Stuttgart and Munich, will be leased before building completion,” predicts Helge Scheunemann, Head of Research JLL Germany. He adds, “This trend can be attributed to the growing scarcity of modern office space with high fitout standards in Germany’s real estate hubs that we have been seeing for several years now. In response to this supply bottleneck, an increasing number of companies are signing leases for buildings that are still under construction. In many cases it’s the only option for companies looking to relocate or expand.

The amount of pre-let space is expected to total at 750,000 sqm this year, accounting for 20% of total anticipated take-up for the year at 3.25 million sqm. Although this result is 5% shy of the current preleasing record of 850,000 sqm set in 2018, it comes in considerably above the 10-year average (2008-2017: 463,000 sqm). Only 16% was preleased in 2017 and even less in 2016 (14%). “That will make 2019 the second-best year for preleasing rates in Germany,” notes Helge Scheunemann.

He continues, “A number of companies are looking for space and making their decisions in early project phases. On average over the past 3 years, 60% of all preleasing agreements were signed between 1 and 3 years prior to building completion. The remaining 40% only had to wait up to 12 months after signing the lease for the building to be completed.”

“Our analysis shows that the growing number of property developments over the past several years is being well received by occupiers. Companies are willing to snap up attractive space during early project phases, giving property developers additional planning security and positioning them favorably in their negotiations with banks and investors,” Helge Scheunemann concludes.