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Germany office markets - Q4 2014

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Take-up in the top six office markets totalled 2.7 million sq m in 2014, which represents a decline of 3% on the previous year and the lowest figure for five years. The total was almost 6% short of the 10-year average (2.9 million sq m).

The individual markets showed a mixed picture. While Hamburg and Berlin registered increased take-up of 20% and 12% respectively, Munich (-4%), Frankfurt (-16%), Cologne (-17%) and Düsseldorf (-31%) posted some significant declines in take-up.
When searching for existing space, larger companies are often forced to look to the periphery of the CBD since appropriate accommodation cannot be found on their rental budget in the CBD or there is a fundamental lack of such space. Indeed, these peripheral CBD locations are the winners in the current market environment.

The average prime rent across all six markets rose by 1.1% to €27.67 per sq m/month, while the average rent gained 4.5% to reach €14.60 per sq m/month. The latter is primarily attributable to rental growth in the peripheral CBD locations.

That rents rose despite weak demand for space is explained by the further decrease in vacancies. The average vacancy rate across all six office markets at the end of 2014 stood at 7.7% (-30 basis points year on year).

While office take-up is likely to stagnate this year for lack of positive economic impetus, vacancies will continue to decline in 2015 – for the fifth year in succession. The completion volume is likely to reach 0.9 million sq m (2014: 1.2 million sq m), of which more than half is already pre-let.

Source : Savills

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