Cushman & Wakefield, one of the world's largest property consultancies, recorded office space take-up of around 1.59 million m² in Germany's five most important office locations (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich) in the first three quarters of 2024. This is 4 per cent more than in the same period last year, but 18 per cent less than the 5-year average.
Pierre Nolte, Head of Offices & Leasing at Cushman & Wakefield Germany, comments: ‘We are noticing a significant increase in activity on the occupier side, which is not yet reflected in the market figures. However, the market remains segmented in terms of the strong user focus on prime locations and high quality. This increases the pressure in city centres, while secondary locations do not benefit from the supply shortage. In these locations, we are mainly seeing lease extensions on improved terms or the frequently described flight to quality, which continues to dominate the market and is leading to rising vacancy rates overall.’
Helge Zahrnt, Head of Research & Insight Germany at Cushman & Wakefield, adds: ‘The economic situation has deteriorated further over the summer and the outlook is subdued. These are not good signs for an upturn in the office lettings market. Impetus, if any, will come from the need for changes among users. This could, for example, be new lettings to improve the quality of the location and property or long-term security in the context of owner-occupier purchases.’
Take-up: slightly above the same period of the previous year
- Compared to the same period of the previous year (Q1-3 2023), there was a strong increase in take-up in Munich (+36%), stability in Frankfurt, a slight decline in Berlin (-3%) and significant declines in Hamburg and Düsseldorf (-9% each).
- Take-up in the 3rd quarter totalled around 523,000 m², which is in line with the average for individual quarters since the beginning of 2023. This shows a certain stability at a low level. Take-up of 2.2 million m² is expected for 2024 as a whole - a slight increase of 4 per cent compared to 2023.
- In the Q1-3 2024 reporting period, there were 16 deals in the 10,000 m² and above size category, six of which were in Berlin and five in Munich. There were twelve in 2023 as a whole. The largest letting in Q3 2024 is that of the City of Hamburg for around 21,000 m² in the ‘Dancing Towers’.
- In the sector statistics, industrial companies (225,000 m²) lead ahead of public administration (205,000 m²).
Rental prices: Rents continue to rise
- In the 3rd quarter, prime rents in Munich rose to 52 euros/m² per month (+1.00 euros/m²) and in Düsseldorf to 43.50 euros/m² (+1.50 euros/m²). In the other markets, prime rents remained stable. Compared to the same quarter of the previous year, prime rents rose in all markets, in some cases significantly.
- The average growth in prime rents in the top 5 markets was 0.8% compared to the previous quarter and 5.2% compared to the same period last year.
- Average rents continue to show a mixed picture of growth, stability and decline. The average increase in average rents in the top 5 markets was 1.8% compared to the previous quarter.
- The rent-free periods in prime inner-city locations amounted to 8% across all top 5 markets, based on a 5-year lease.
Vacancies: Vacancies continue to rise
- The office space vacancy rate in the top 5 markets stood at 5.99 million m² at the end of the 3rd quarter of 2024. This corresponds to a vacancy rate of 7.7% and is 1.1 percentage points higher than twelve months ago.
- Among the top 5 markets, Hamburg still has the lowest vacancy rate at 5.2%, while Düsseldorf has the highest at 10.1%.
- The supply of sublets fell slightly to 598,000 m² in the 3rd quarter compared to the end of June.
- The vacancy rate is expected to rise further to around 8.0% by the end of 2024 and to 8.6% in the following year. This is due to the unlet space in the numerous completions and the reduction in space as many users relocate.
Completions: Highest volume of completions since 2003
- Around 940,000 m² of office space was completed in the first three quarters of 2024. 64% of this was let or occupied by owner-occupiers at the time of completion. Berlin accounted for by far the largest volume of completions (409,000 m²), with Munich in second place (185,000 m²).
- Around 1.47 million m² of new space is expected to be made available to the market in 2024 as a whole. In the following year, the figure is expected to fall further, but will still exceed the 1 million mark.
