Savills World Research
Germany
Market in Minutes
Germany office markets
Q3 2014
The facts at a glance
Take-up declines as rising rents and falling vacancies continue
■Take-up in the top six office markets
totalled some 1.9 million sq m in
the first three quarters of the year,
representing a decrease of more than
8% compared with the corresponding
period last year.
■With a take-up of 614,000 sq m,
the third quarter was not only the
weakest of the current year, it was also
the weakest third quarter in terms of
take-up since 2009. Take-up declined
in all markets with the exception
of Hamburg (+14%). The sharpest
declines were registered in Düsseldorf
(-32%), Frankfurt and Cologne (both
-21%).
■In contrast, however, vacancy
rates continued to decline across all
markets. The average vacancy rate
across the top six markets stood at
7.7% at the end of the third quarter;
50 basis points lower than last year’s
figure.
■Rental growth was also largely
positive. The average prime rent across
the top six markets rose by 1.3%
to €27.72 per sq m/month. Modest
declines were registered in Düsseldorf
(-3.6%) and Cologne (-2.7%). The
average rent across all six markets
rose by 4.2% to €14.55 per sq m/
month.
■Owing to the scarce supply, rents
are expected to continue their upward
trend, particularly since vacancies are
expected to decline somewhat further
before the end of the year.
■In terms of take-up, the markets
are performing significantly below
projected levels. In view of current
developments, the projected take-up
must be revised downwards once
again. With a strong final quarter, it is
still possible that take-up will reach
2.7 million sq m. However, it is more
realistic that the final figure will fall
slightly short of this.
savills.de/research
01
Market in Minutes | Germany Office Markets
Q3 2014
Top six office markets at a glance
Q1-Q3 2014
TABLE 1
Key office market figures
Take-up
(sq m)
Vacancy rate
(%)
Stock
(million m²)
Prime rent
(€ per sq m/month)
Average rent
(€ per sq m/month)
Q3
2014
y-o-y
change
Q3
2014
y-o-y
change
Q3
2014
y-o-y
change
Q3
2014
y-o-y
change
Q3
2014
y-o-y
change
Berlin
528,200
-1.0%
4.6
-70bps.
18.9
+0.6%
21.90
+3.3%
12.70
+6.1%
Düsseldorf
182,000
-31.8%
10.8
-10bps.
7.7
+0.7%
26.50
-3.6%
14.70
+/-0.0%
Frankfurt
248,000
-21.3%
11.6
-50bps.
12.0
+0.2%
38.00
+/-0.0%
17.50
-1.4%
Hamburg
359,200
+14.4%
6.6
-60bps.
13.1
+/-0.0%
24.00
+2.1%
13.80
+9.9%
Cologne
158,700
-21.0%
6.8
-70bps.
7.8
-0.3%
21.40
-2.7%
12.80
+7.6%
Munich
437,000
-4.1%
6.0
-20bps.
22.7
+2.0%
34.50
+7.8%
15.81
+5.8%
Top 6
1,913,100
-8.3%
7.7
-50bps.
82.1
+0.7%
27.72
+1.3%
14.55
+4.2%
Source: Savills
GRAPH 1
GRAPH 2
Take-up and vacancy rate
Rental levels
Vacancy rate
6%
1.0
4%
0.5
2%
0.0
0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Prime rent - Ø Top 6
Average rent - Ø Top 6
30
25
€ per sq m/month
1.5
2.69
8%
1.91
2.0
2.77
10%
3.02
2.5
3.21
12%
2.91
3.0
2.30
14%
3.19
3.5
3.49
16%
3.00
4.0
2.49
million sq m
Take-up
20
15
10
5
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Q3
2014*
Source: Savills / * forecast
Top six market in minutes
Numerous large requirements but few completions
•
Office take-up in the top six markets totalled 1.9 million sq m, representing a decrease of 8.3% compared with the
corresponding period last year. The prime rent rose by 1.3% to €27.72 per sq m/month while the vacancy rate fell by
50 basis points to 7.7%.
•
Two developments in particular have contributed to the dearth of lettings. Firstly, although there are many (large)
requirements in the market, these are not being converted into deals owing to a lack of suitable supply. Secondly, the
increasing trend towards lease extensions already reported in previous months has continued since many tenants,
and particularly large occupiers, are faced with a lack of supply in their preferred central locations.
•
With a strong final quarter, it is still possible that take-up will reach 2.7 million sq m. Owing to the scarce supply, rents
are expected to continue their upward trend.
savills.de/research
02
Market in Minutes | Germany Office Markets
Q3 2014
Top six office markets at a glance
Q1-Q3 2014
GRAPH 3
GRAPH 4
Prime rent by location
Berlin
Düsseldorf
Average rent by location
Frankfurt
Hamburg
Cologne
Munich
Berlin
45
Düsseldorf
Frankfurt
Hamburg
Cologne
Munich
25
40
20
35
€ per sq m/month
€ per sq m/month
30
25
20
15
10
15
10
5
5
0
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Q3
2014*
2005
2006
2007
2008
2009
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 5
GRAPH 6
Office employment
Development pipeline
Berlin
Düsseldorf
Frankfurt
Hamburg
Cologne
2011
2012
2013
2014
Q3
2014*
Munich
120
1,400,000
115
1,200,000
1,000,000
110
800,000
105
sq m
2005 = 100
2010
600,000
100
400,000
95
200,000
90
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
0
2014
Source: Oxford Economics / * forecast
2015
2016
Source: Savills
TABLE 2
The largest letting transactions in Q1-Q3 2014 at a glance*
Location
Tenant
Office space (sq m)
Frankfurt
Deutsche Bank
approx. 32,000
Hamburg
Deutsche Telekom AG
approx. 30,000
Munich
Brainlab
approx. 22,000
Munich
BayWa AG
approx. 21,000
Düsseldorf (Ratingen)
Mitsubishi
approx. 20,100
Source: Savills / * only published transactions are shown
savills.de/research
03
Market in Minutes | Germany Office Markets
Q3 2014
Berlin
Q1-Q3 2014
GRAPH 7
GRAPH 8
Take-up and vacancy rate
Rental levels
Take-up
Vacancy rate
200,000
2%
0
€ per sq m/month
3%
700,000
300,000
528,200
4%
680,500
5%
400,000
834,800
500,000
778,900
6%
754,700
7%
600,000
606,300
700,000
696,400
8%
768,300
9%
800,000
776,000
900,000
100,000
y-o-y change prime rent
10%
657,800
sq m
1,000,000
Prime rent
Average rent
30
15%
25
10%
20
5%
15
0%
10
-5%
5
-10%
1%
0
0%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 9
GRAPH 10
Take-up by submarket
Development pipeline
Potsdamer
Platz / Leipziger
Platz
5%
300,000
250,000
City West
9%
sq m
City East
21%
200,000
City outskirts
42%
150,000
100,000
50,000
East/North/
South/West
24%
Source: Savills
0
2014
2015
2016
Source: Savills
Berlin market in minutes
Take-up subdued in third quarter despite high demand
•
Office take-up in the first three quarters totalled 528,200 sq m, representing a decline of 1.0% compared with the
corresponding period last year. The prime rent rose by 3.3% to €21.90 per sq m/month while the vacancy rate fell by
70 basis points to 4.6%.
•
Besides the traditional strong demand from the public sector, there was also a noticeable impetus from companies
in the IT and communications sector. There was also significant interest from owner occupiers seeking to use the
current financing environment for purchases, albeit rarely finding appropriate supply.
•
This surplus demand resulted in the average rent rising 6.1% year on year to reach €12.70 per sq m/month.
savills.de/research
04
Market in Minutes | Germany Office Markets
Q3 2014
Düsseldorf
Q1-Q3 2014
GRAPH 11
GRAPH 12
Take-up and vacancy rate
Rental levels
100,000
2%
0
275,000
4%
182,000
200,000
342,400
6%
310,000
300,000
312,000
8%
373,000
400,000
202,000
10%
424,100
500,000
520,700
12%
322,400
600,000
267,142
sq m
700,000
Vacancy rate
14%
y-o-y change prime rent
€ per sq m/month
Take-up
Prime rent
Average rent
30
15%
25
10%
20
5%
15
0%
10
-5%
5
-10%
0
0%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 13
GRAPH 14
Take-up by submarket
Development pipeline
180,000
City centre
12%
160,000
140,000
Ratingen East
12%
sq m
other
submarkets
47%
120,000
Kennedydamm
12%
100,000
80,000
60,000
40,000
20,000
Grafenberger
Allee
8%
Source: Savills
Düsseldorf North
/ Airport
9%
0
2014
2015
2016
Source: Savills
Düsseldorf market in minutes
Prime rent declines - from an extremely high level
•
Office take-up in the first three quarters totalled 182,000 sq m, representing a decline of 31.8% compared with the
corresponding period last year. The prime rent declined by 3.6% to €26.50 per sq m/month while the vacancy rate
fell by 10 basis points to 10.8%.
•
Lettings in high-value prime properties, such as the Kö-Bogen and Dreischeibenhaus, pushed the prime rent to
a record high of €27.50 per sq m/month in previous months. Since these lettings pre-dated the reporting period,
the prime rent fell during the third quarter, declining by 3.6% year on year to stand at €26.50 per sq m/month. The
average rent remained stable at €14.70 per sq m/month.
•
Vacancies are likely to decline significantly further by the end of the year driven by conversions of vacant office
properties, in the Seestern district for example, to residential use.
savills.de/research
05
Market in Minutes | Germany Office Markets
Q3 2014
Frankfurt
Q1-Q3 2014
GRAPH 15
GRAPH 16
Take-up and vacancy rate
Rental levels
Take-up
Vacancy rate
y-o-y change prime rent
Prime rent
Average rent
20%
900,000
18%
40
15%
800,000
16%
35
10%
700,000
14%
30
5%
600,000
12%
25
0%
500,000
10%
400,000
8%
20
-5%
15
-10%
10
-15%
2%
5
-20%
0%
0
385,000
248,000
439,000
509,900
415,000
475,000
355,000
500,000
0
600,000
4%
520,000
6%
200,000
330,000
300,000
100,000
€ per sq m/month
20%
sq m
1,000,000
45
-25%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 17
GRAPH 18
Take-up by submarket
Development pipeline
350,000
other
submarkets
19%
300,000
250,000
200,000
sq m
Bankenviertel /
City
44%
Frankfurt West
8%
150,000
100,000
Eschborn
9%
50,000
City West
9%
Westend
11%
Source: Savills
0
2014
2015
2016
Source: Savills
Frankfurt market in minutes
Low demand produces significant decline in take-up
•
Office take-up in the first three quarters totalled 248,000 sq m, representing a decline of 21.3% compared with the
corresponding period last year. The prime rent remained stable at €38.00 per sq m/month while the vacancy rate fell
by 50 basis points to 11.6%.
•
The weak take-up can be largely explained by low demand from financial and law firms; two important sectors
for the Frankfurt market. While a number of companies, particularly in the IT and telecommunications sector,
strengthened personnel numbers, this did not immediately result in requirements for additional space. This personnel
growth has been initially absorbed by the implementation of modern workplace concepts, such as a shared desk
policy.
•
Rents were unchanged from the previous quarter. The prime rent remained at €38.00 per sq m/month while the
average rent held at €17.50 per sq m/month.
savills.de/research
06
Market in Minutes | Germany Office Markets
Q3 2014
Hamburg
Q1-Q3 2014
GRAPH 19
GRAPH 20
Take-up and vacancy rate
Rental levels
Vacancy rate
y-o-y change prime rent
Prime rent
Average rent
5%
300,000
6%
15
0%
200,000
4%
10
-5%
100,000
2%
5
0%
0
0
€ per sq m/month
20
460,000
8%
359,200
400,000
427,000
10%
430,000
25
533,000
10%
483,000
500,000
372,900
15%
504,432
30
570,000
12%
460,000
600,000
417,000
sq m
Take-up
-10%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 21
GRAPH 22
Take-up by submarket
Development pipeline
300,000
City
27%
other
submarkets
27%
250,000
sq m
200,000
100,000
HafenCity
7%
City South
15%
City North
10%
50,000
0
Altona
14%
Source: Savills
150,000
2014
2015
2016
Source: Savills
Hamburg market in minutes
Highest quarterly take-up for three years
•
Office take-up in the first three quarters totalled 359,200 sq m, representing an increase of 14.4% compared with the
corresponding period last year. The prime rent rose by 2.1% to €24.00 per sq m/month while the vacancy rate fell by
60 basis points to 6.6%.
•
One reason for the rise in take-up was the high letting activity in the medium-sized segment between 1,000 sq m and
3,000 sq m in the third quarter. Take-up in this size category was highest in the City South submarket with a 21%
share, followed by Outer Alsterlage and Altona, each with 14%.
•
The high activity outside the City submarket demonstrates that other office market locations have established
themselves as attractive alternatives.
savills.de/research
07
Market in Minutes | Germany Office Markets
Q3 2014
Cologne
Q1-Q3 2014
GRAPH 23
GRAPH 24
Take-up and vacancy rate
Rental levels
Take-up
Vacancy rate
y-o-y change prime rent
150,000
3%
100,000
2%
50,000
0
270,000
4%
158,700
200,000
270,000
5%
235,000
250,000
319,000
6%
240,000
7%
300,000
250,000
350,000
300,000
8%
285,000
9%
400,000
300,000
450,000
€ per sq m/month
10%
235,000
sq m
500,000
Prime rent
Average rent
30
15%
25
10%
20
5%
15
0%
10
-5%
5
-10%
1%
0
0%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 25
GRAPH 26
Take-up by submarket
Development pipeline
other
submarkets
12%
180,000
160,000
Bayenthal /
Marienburg
5%
140,000
City
50%
sq m
120,000
Ehrenfeld /
Braunsfeld
8%
100,000
80,000
60,000
Ossendorf /
Nippes
10%
40,000
20,000
Deutz
15%
Source: Savills
0
2014
2015
2016
Source: Savills
Cologne market in minutes
Office take-up down by one fifth year on year - numerous deals < 500 sq m
•
Office take-up in the first three quarters totalled 158,700 sq m, representing a decline of 21.0% compared with the
corresponding period last year. The prime rent declined by 2.7% to €21.40 per sq m/month while the vacancy rate
fell by 70 basis points to 6.8%.
•
While take-up for the first half year was in line with last year, the current decline can be explained by a lack of lettings
above 10,000 sq m owing to a supply shortage of contiguous space for large occupiers.
•
More than two thirds of take-up in the third quarter was attributable to the City submarket. However, letting activity
was dominated by rather small deals. Almost two thirds of completed lettings were in the size category below 500 sq
m. The high proportion of lettings in the City submarket also produced an increase in the average rent. This rose by
7.6% year on year and currently stands at €12.80 per sq m/month.
savills.de/research
08
Market in Minutes | Germany Office Markets
Q3 2014
Munich
Q1-Q3 2014
GRAPH 27
GRAPH 28
Take-up and vacancy rate
Rental levels
Vacancy rate
12%
1,000,000
10%
600,000
437,000
0
606,100
2%
705,100
200,000
847,500
4%
586,800
400,000
518,400
6%
770,000
600,000
747,000
8%
625,000
800,000
585,000
sq m
1,200,000
y-o-y change prime rent
€ per sq m/month
Take-up
Average rent
20%
35
15%
30
10%
25
5%
20
0%
15
-5%
10
-10%
5
-15%
0
0%
-20%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014*
Q3
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 29
GRAPH 30
Take-up by submarket
Prime rent
40
Development pipeline
City
14%
300,000
250,000
City East
13%
200,000
sq m
other
submarkets
41%
150,000
100,000
City West
11%
Outskirts North
10%
City South
11%
Source: Savills
50,000
0
2014
2015
2016
Source: Savills
Munich market in minutes
No large transactions during the quarter - rents increase
•
Office take-up in the first three quarters totalled 437,000 sq m, representing a decline of 4.1% compared with the
corresponding period last year. The prime rent rose by 7.8% to €34.50 per sq m/month while the vacancy rate fell by
20 basis points to 6.0%.
•
The modest take-up figure can be explained by a lack of large lettings above 10,000 sq m during the last three
months. Most large requirements have already been satisfied over the last two years. In addition, occupiers have
been somewhat cautious and reticent and are increasingly shunning moves in favour of extending existing leases.
•
Supply and demand are evenly balanced in the Munich market, although availability of attractive space is in decline
towards the city centre. However, letting activity was actually highest in this area during the third quarter, with 18% of
take-up attributable to the central submarket.
savills.de/research
09
Market in Minutes | Germany Office Markets
Q3 2014
Savills Germany
Savills is present in Germany with
around 160 employees with six
offices in the most important estate
sites Berlin, Dusseldorf, Frankfurt,
Hamburg, Cologne and Munich.
Today Savills provides expertise
and market transparency to its
clients in the following areas of
activity:
HH
B
D
Our services
K
»» Purchase and sale of single assets and portfolios
»» Corporate Finance - Valuation
»» Leasing of office and retail buildings
»» Leasing and sale of industrial and warehouse properties
»» Corporate Real Estate Services
F
M
www.savills.de
Savills Germany
Please contact us for further information
Marcus Mornhart
Office Agency Germany
+49 (0) 69 273 000 70
[email protected]
Christian Leska
Office Agency Berlin
+49 (0) 30 726 165 186
[email protected]
Panajotis Aspiotis
Office Agency Düsseldorf
+49 (0) 211 22 962 220
[email protected]
Marco Mallucci
Office Agency Frankfurt
+49 (0) 69 273 000 34
[email protected]
Ken Hoppe
Office Agency Hamburg
+49 (0) 40 309 977 132
[email protected]
Simon Löseke
Office Agency Cologne
+49 (0) 221 933 313 32
[email protected]
Nico Jungnickel
Office Agency Munich
+49 (0) 89 427 292 114
[email protected]
Matthias Pink
Research
+49 (0) 30 726 165 134
[email protected]
Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth. It is a
company that leads rather than follows and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East with more than
27,000 employees worldwide. Savills is present in Germany with around 160 employees with six offices in the most important estate sites Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne
and Munich.
This bulletin is for general informative purposes only. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss
arising from its use. The bulletin is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
© Savills October 2014
Connecting people & property
savills.de/research
10