Rockspring buys Coca Cola Headquarters in Berlin

Rockspring Property Investment Managers has acquired the Coca Cola headquarters in Berlin for its PanEuropean fund from Deka Fonds for just over €59m.

The 100,000 sqm building has a Gold LEED certification and is located directly on the River Spree in the Media Spree district of Berlin. It has been wholly occupied by Coca Cola since its completion in 2013. Since then, the Media Spree district has become one of the major TMT hubs in Berlin with significant office and commercial development around the Mercedes Benz arena and along the river frontage.

‘The Coca Cola deal is our biggest one in Germany so far this year. The property is significantly under-rented and being 100% leased to Coca Cola, it offers a very secure income,’ said Stuart Reid, Partner at Rockspring in Berlin. ‘We have a further €250m for further value-add office investments in the city to invest, so we’d like to invest between €150m and €200m in value-add assets in Berlin this year and next year. There’s been a huge shift in the fundamentals in the city in the past 2-3 years with excellent tenant demand driven by strong population and job growth,’ he added.

Berlin’s office vacancy rates have dropped dramatically over the past five years to 3% - half what they used to be, according to Reid. In addition, there are around 60,000-70,000 sqm in the speculative development pipeline each year over the next three years. Between 25% and 35% of demand is coming from the TMT sector.

Office availability will remain scarce in 2017 and excess demand will persist, according to Savills’ ‘Market Report Germany Offices’ published last month (February).The current high demand for office space was reflected in the highest take-up last year since 2007 at 3.46 million sqm, according to the report. Availability is so scarce that vacancy rates in many cities are at their lowest levels for many years, including Berlin (2.7%), Munich (4.0%) and Hamburg (5.1%). Consequently, even offices of lesser fit-out quality or those in poorer locations are currently finding tenants and this confluence of factors has driven rents to multi-year highs. The average prime rent across the top six cities rose by 3.2% last year to €29.28 per sq m/ month while the average rent increased by 3.4% to €15.82 per sq m/month, according to Savills.

Rockspring currently holds a €2b portfolio in Germany, of which around €500m is in and around Berlin, including €120m in three office properties. ‘In 2004, Berlin’s Mayor at the time, Klaus Wowereit, described the city as ‘poor but sexy’,’ Reid said. ‘There’s been a long period of infrastructure investment since then which has created the beginning of a snowball effect which is gathering pace.’

Including this deal, Rockspring has transacted on over €750m of real estate in the first three months of 2017, making it one of the biggest quarters on record for the investment manager. The Coca Cola deal is expected to close in June. CBRE acted on behalf of Deka.

Rockspring acquired the Coca Cola property for its PanEuropean fund, which has €500m of AUM, with 55% invested in the retail sector and 45% in offices and logistics. Established in 1973, PanEuropean is one of Europe’s longest standing open-ended funds, specialising in the acquisition and management of commercial property located in major cities and large conurbations in Western Europe and Scandinavia.