Savills World Research
Germany offices
Market in Minutes
Germany office markets
Q4 2014
The facts at a glance
Take-up in moderate decline - rental growth primarily in peripheral CBD locations
■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.
savills.de/research
01
Market in Minutes | Germany Office Markets
Q4 2014
Top six office markets at a glance
Q1-Q4 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)
Q4
2014
y-o-y
change
Q4
2014
y-o-y
change
Q4
2014
y-o-y
change
Q4
2014
y-o-y
change
Q4
2014
y-o-y
change
Berlin
773,800
+11.8%
4.5
-50bps.
19.1
+1.3%
22.50
+2.3%
13.20
+7.3%
Düsseldorf
237,300
-30.7%
10.9
+10bps.
7.7
+0.7%
26.00
-5.5%
14.20
-2.4%
Frankfurt
370,000
-15.7%
11.6
-30bps.
12.0
+0.2%
38.00
+/-0.0%
17.50
+/-0.0%
Hamburg
511,100
+19.7%
6.5
-70bps.
13.4
+2.2%
24.00
+/-0.0%
14.00
+6.4%
Cologne
225,000
-16.7%
6.8
-30bps.
7.8
-0.3%
21.00
-6.7%
12.85
+0.4%
Munich
593,000
-3.7%
6.0
-20bps.
22.8
+2.2%
34.50
+7.8%
15.85
+4.3%
Top 6
2,710,200
-2.7%
7.7
-30bps.
82.6
+1.3%
27.67
+1.1%
14.60
+4.5%
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 2015*
Source: Savills / * forecast
Prime rent - Ø Top 6
Average rent - Ø Top 6
30
25
€ per sq m/month
1.5
2.68
8%
2.71
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
2015*
Source: Savills / * forecast
Top six market in minutes
Two trends: lease extensions and increased efficiency of space
•
Office take-up across the top six markets totalled 2.7 million sq m, representing a decrease of 2.7% compared with
the previous year. The prime rent rose by 1.1% to €27.67 per sq m/month while the vacancy rate fell by 30 basis
points to 7.7%.
•
A significant reason for the low take-up is that many companies have opted to extend leases rather than leasing new
office space, whether for lack of alternative accommodation on the market or cost reasons.
•
A further reason is that many companies are seeking to reduce their office costs. At the same time, however, they
have high expectations of fit-out quality. Consequently, office occupiers are seeking to increase their efficiency of
space rather than wishing to reduce their rent per square metre.
savills.de/research
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Market in Minutes | Germany Office Markets
Q4 2014
Top six office markets at a glance
Q1-Q4 2014
GRAPH 3
GRAPH 4
Prime rent by location
Berlin
Düsseldorf
Frankfurt
Average rent by location
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
2015*
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
2015*
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
2015*
0
2014
Source: Oxford Economics / * forecast
2015
2016
Source: Savills
TABLE 2
The largest letting transactions in Q1-Q4 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
Frankfurt
Union Investment
approx. 20,500
Source: Savills / * only published transactions are shown
savills.de/research
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Market in Minutes | Germany Office Markets
Q4 2014
Berlin
Q1-Q4 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
773,800
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 9
GRAPH 10
Take-up by submarket
Development pipeline
Potsdamer Platz
/ Leipziger Platz
3%
300,000
City West
8%
250,000
City outskirts
44%
sq m
200,000
East/North/
South/West
21%
150,000
100,000
50,000
City East
24%
Source: Savills
0
2014
2015
2016
Source: Savills
Berlin market in minutes
Shortage of attractive space drives rental growth
•
Office take-up in 2014 totalled 773,800 sq m, representing an increase of 11.8% compared with the previous year.
The prime rent rose by 2.3% to €22.50 per sq m/month while the vacancy rate fell by 50 basis points to 4.5%.
•
Besides a number of large lettings (including 16 deals above 5,000 sq m), the take-up figures were also buoyed by
several owner-occupier transactions. Such deals accounted for almost 9% of overall take-up last year.
•
The shortage of good, high quality space is also reflected in rental growth. The average rent gained even more
sharply than the prime rent; rising 7.3% to €13.20 per sq m/month. This growth is particularly attributable to the fact
that good locations within the suburban rail ring are benefiting from the high rents in the central business district
(CBD), as price-sensitive occupiers move out to these peripheral CBD locations.
savills.de/research
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Market in Minutes | Germany Office Markets
Q4 2014
Düsseldorf
Q1-Q4 2014
GRAPH 11
GRAPH 12
Take-up and vacancy rate
Rental levels
100,000
2%
0
250,000
4%
237,300
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 13
GRAPH 14
Take-up by submarket
Development pipeline
140,000
Kennedydamm
14%
120,000
100,000
Düsseldorf North
/ Airport
13%
80,000
sq m
other
submarkets
48%
City centre
10%
60,000
40,000
20,000
Ratingen East
9%
Harbour
6%
Source: Savills
0
2014
2015
2016
Source: Savills
Düsseldorf market in minutes
Few large deals - significant fall in take-up
•
Office take-up in 2014 totalled 237,300 sq m, representing a decrease of 30.8% compared with the previous year.
The prime rent declined by 5.5% to €26.00 per sq m/month while the vacancy rate rose by 10 basis points to 10.9%.
•
The primary reason for the low take-up was the scarcity of large deals last year. There were just four transactions
above 5,000 sq m but not a single deal above 10,000 sq m. However, since a number of large requirements were not
satisfied in 2014, this could produce a good start to the year.
•
There is certainly no shortage of supply. Due to the prevailing oversupply, Düsseldorf will remain a tenant’s market in
2015. Major office occupiers in Düsseldorf also have the opportunity to secure pre-lets in developments at moderate
prices, for the most part with additional incentives from the developers. This will mean lower take-up of existing
stock and the relatively high vacancy rate will persist.
savills.de/research
05
Market in Minutes | Germany Office Markets
Q4 2014
Frankfurt
Q1-Q4 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
400,000
370,000
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 17
GRAPH 18
Take-up by submarket
Development pipeline
350,000
other
submarkets
23%
300,000
250,000
Bankenviertel /
City
42%
sq m
200,000
Frankfurt South
8%
150,000
100,000
Westend
9%
Frankfurt West
9%
50,000
Eschborn
9%
Source: Savills
0
2014
2015
2016
Source: Savills
Frankfurt market in minutes
A number of factors cause decline in take-up - rents stable
•
Office take-up in 2014 totalled 370,000 sq m, representing a decrease of 15.7% compared with the previous year.
The prime rent remained unchanged at €38.00 per sq m/month while the vacancy rate fell by 30 basis points to
11.6%.
•
The reasons for the declining take-up in Frankfurt are multi-faceted. These include a shortage of attractive space,
a consequent rising number of lease extensions and a stronger focus on efficiency of space compared with other
German office markets.
•
There were also relatively few lettings above 10,000 sq m in Frankfurt last year. Besides the letting to Deutsche Bank
and the Bundesbank, there was just one other major deal during the remainder of the year. Union Investment leased
more than 20,000 sq m in the WinX in the MainTor area.
savills.de/research
06
Market in Minutes | Germany Office Markets
Q4 2014
Hamburg
Q1-Q4 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
480,000
8%
511,100
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 21
GRAPH 22
Take-up by submarket
Development pipeline
400,000
City
27%
other
submarkets
27%
350,000
300,000
sq m
250,000
200,000
150,000
City North
10%
100,000
City South
14%
Altona
11%
Source: Savills
50,000
0
Outer Alsterlage
11%
2014
2015
2016
Source: Savills
Hamburg market in minutes
Owner-occupier deals drive high take-up growth
•
Office take-up in 2014 totalled 511,100 sq m, representing an increase of 19.7% compared with the previous year.
The prime rent remained unchanged at €24.00 per sq m/month while the vacancy rate fell by 70 basis points to
6.5%.
•
The take-up growth was bolstered by a number of large transactions. There were more than eight deals above
10,000 sq m in 2014, four of which were owner-occupier transactions. Medium-sized companies in particular are
seeking to use the current capital market situation to purchase their own office space rather than leasing. As a result,
owner-occupier deals accounted for more than 15% of overall take-up last year.
•
The City submarket remained the most active in terms of take-up. However, in view of the surplus demand, tenants
also shifted their attention to peripheral CBD locations. City South, the second most active submarket with 14% of
overall take-up, and Altona, the third most active submarket with 11%, are evidence of this shift in focus.
savills.de/research
07
Market in Minutes | Germany Office Markets
Q4 2014
Cologne
Q1-Q4 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
250,000
4%
225,000
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
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
49%
sq m
120,000
Ehrenfeld /
Braunsfeld
10%
100,000
80,000
60,000
Ossendorf /
Nippes
11%
40,000
20,000
Deutz
13%
Source: Savills
0
2014
2015
2016
Source: Savills
Cologne market in minutes
Supply shortage strengthens landlords’ position although take-up is in decline
•
Office take-up in 2014 totalled 225,000 sq m, representing a decrease of 16.7% compared with the previous year.
The prime rent declined by 6.7% to €21.00 per sq m/month while the vacancy rate fell by 30 basis points to 6.8%.
•
Many companies opted to extend their existing leases rather than seeking new office space. One reason for
exercising their options to extend is that the supply of modern space in the mid-price segment and in good locations
is lower than the demand. The supply shortage will not be resolved this year since, in keeping with last year, the
projected completion volume of almost 70,000 sq m is relatively low and more than half of this space is already prelet.
•
Owing to the imbalance in supply and demand, Cologne has become a landlord’s market in certain segments.
savills.de/research
08
Market in Minutes | Germany Office Markets
Q4 2014
Munich
Q1-Q4 2014
GRAPH 27
GRAPH 28
Take-up and vacancy rate
Rental levels
Vacancy rate
12%
1,000,000
10%
600,000
593,000
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
Prime rent
Average rent
40
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 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Source: Savills / * forecast
Source: Savills / * forecast
GRAPH 29
GRAPH 30
Take-up by submarket
Development pipeline
City West
14%
300,000
250,000
200,000
Outskirts North
13%
sq m
other
submarkets
42%
150,000
100,000
City
12%
Region North
9%
City East
10%
Source: Savills
50,000
0
2014
2015
2016
Source: Savills
Munich market in minutes
Take-up slightly lower than last year – prime rent significantly higher
•
Office take-up in 2014 totalled 593,000 sq m, representing a decrease of 3.7% compared with the previous 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%.
•
Since a number of major deals were completed shortly before the start of 2014, the number of large transactions last
year was relatively low. The remaining size categories, however, registered solid take-up buoyed by a healthy sector
mix.
•
In addition, many occupiers in Munich also tended to extend existing leases rather than acquiring new office space.
This is partly attributable to a supply shortage, particularly in the City submarket. With no major developments
scheduled to complete this year, this shortage will persist.
savills.de/research
09
Market in Minutes | Germany Office Markets
Q4 2014
Savills Germany
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