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Germany office markets - Q1 2014

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Take-up in the top six office markets totalled almost 680,000 sq m, representing an increase of 11.8% compared with the same quarter last year.

However, the positive growth was not limited to take-up. All markets also registered an increase in the prime rent by partially more than 5% year on year with the exception of Hamburg, where the prime rent remained unchanged. The prime rent across all six markets rose on average by 3.3% to €27.90 per sq m/month

The average rent also increased slightly further to €14.44 per sq m/month (+3.6%). Good B locations are benefiting from the rise in rental levels, meaning that high quality office space is becoming increasingly scarce in such markets.

The vacancy rate fell by a further 20 basis points on the previous quarter to 7.8%. This is attributable to both high demand and the fact that speculative completions remain at a relatively low level.

While the planned completion volume for 2014 has risen significantly compared with the previous two years to 1.25 million sq m, the pre-let rate is also high with some two thirds of the space. Consequently, only a small amount of vacant space will come to the market. At the same time, a high volume of space is being withdrawn from the market for refurbishment or conversion.

Against a background of rising economic activity, an increase in take-up to around 2.9 million sq m and a further slight decrease in vacancy to 7.7% is expected for the current year.

Source : Savills