Activity on Germany’s top 7 office leasing markets remained lively going into 2019. According to current figures published by German Property Partners (GPP), Hamburg, Berlin, Dusseldorf, Cologne, Frankfurt, Stuttgart and Munich recorded total Q1 office take-up of around 858,000 sqm. This almost matches previous year results (+1%), event though office take-up increased significantly in Cologne (+45%), Hamburg (+29%) and Dusseldorf (+28%) in particular. Frankfurt recorded the biggest drop in take-up (-37%). The vacancy rate was down 0.7% compared to Q1 2018 to 3.2% on average.
Coworking providers and business centers accounted for 49,334 sqm in take-up, only 6% less than in the previous year, with city CBDs again claiming around one-third of the total result. Frankfurt led the pack in Q1 in terms of prime rent at €43.40 per sqm/month, followed by Munich (€35.00 per sqm/month) and Berlin (€34.00 per sqm/month). The German capital recorded the largest increase of 10%. Cologne (+16%) and Berlin (+15%) saw the steepest increases in average rent, with Frankfurt being the only Big 7 city to record a drop (-3%). GPP estimates a completion volume of around 2.90 million sqm in 2019 and 2020, spread across 257 property developments.
“Falling vacancy rates and rising rents – last year’s trends continued through Q1 2019. We do not expect prime and average rents to drop anytime soon due to increasingly limited supply in the Big 7. The shortage of suitable space had a limiting effect on take-up with demand still high,” comments GPP spokesperson Guido Nabben.
“According to the Ifo business climate index, business confidence in Germany has recently started a surprising recovery. The employment rate is also expected to rise despite the current economic slowdown. As such, we are optimistic about the future of the commercial real estate leasing market. Although the completion rate is likely to increase in 2019 and 2020 compared to previous years, most of that space has already been pre-let,” concludes Guido Nabben.