Germany office achieves two-digit growth rates

Several real estate broker groups presented their quarterly figures at the start of the Expo Real trade fair, showing that sales in top locations have achieved two-digit growth, and the rental market is likewise doing well. The studies from the real estate service providers differ in detail but reveal the same trend: the office market remains in a phase of growth.

According to German Property Partners (GPP) some 2.67m sqm of office space was turned over in the German top 7 cities - Hamburg, Berlin, Düsseldorf, Cologne, Frankfurt, Stuttgart and Munich, in the first nine months of 2016, a rise of 17% over last year.

In six of the seven locations the growth rate achieved two-digit figures. First and foremost was Cologne (+40 percent), followed by Frankfurt (+21), Hamburg (+17), Munich (+11) and Berlin (+10). Only in Düsseldorf (-19) did the market grow at a less notable rate than last year The initial yields for commercial real estate in the top 7 German locations continue to slide, as shown by the Real Estate Investor Survey Germany from consultants PwC. Not only GPP but also JLL recorded a sharp decline in the market in Düsseldorf (-23 percent).

According to JLL, the turnover volume of the German Big 7 in the first three quarters came to 2.86m sqm, up 12.5% on last year. The greatest increase in sales on a year-to-year basis was shown in Stuttgart (+30 percent) and in Cologne (+33), both of them fuelled by very big deals. Berlin with +19% and Frankfurt with +17% were similar in terms of sales, but the volume in the capital was twice as great as in the banking metropolis. According to BNPPR, Berlin remains the undisputed leader.

BNP Paribas Real Estate has achieved a turnover of 2.7 million sqm of office space in the first three quarters of 2016 in Berlin, Düsseldorf, Essen, Frankfurt, Hamburg, Cologne, Leipzig and Munich, which are its eight main locations. This amounts to 12% more than in the previous, very good year.

In Berlin the office market is breaking record after record. With 643,000 square metres converted, the record of the previous year has been raised by 20 percent. Munich was in second place (+7 percent), followed by Hamburg (+11) and Frankfurt (+18 percent). According to BNP Paribas, the market in Düsseldorf slipped by 6 percent.

The rental market too has been growing

According to German Property Partners the rental volume amounted to 972,400 square metres, little less than a million. ‘At six of the seven locations the turnover increased by two-digit figures compared to last year,’ said GPP's Björn Holzwarth.

The highest average rental figures were recorded in Frankfurt (€17.7 euros per sqm) and in Munich (€16.0 euros per sqm). The greatest increase was in Cologne, due largely to the big volume involved in the conclusion of a new building project by Zurich Versicherung. Frankfurt and Munich also had the greatest peak rents with €38.00 and €35.70 per sqm/month respectively. In Munich and Berlin rents rose by 13%

According to JLL the top rents in six of the seven main real estate centres have increased over the past year. Only in Cologne have they remained about the same. The rates of growth ranged from 2% in Düsseldorf and Hamburg to 15% in Berlin. The top rental price index thereby reached the highest level since the second quarter of 2002 and rose by 4.8% year-on-year. According to an earlier study by JLL, users are increasingly asking for certified office properties.

Maximum rental rates rose in Berlin by 17 percent.

According to the analysis by Corpus Sireo, the office rents in the first half of 2016 remained stable at a high level. In regional cities the rents on offer amounted on average to €8.27 per sqm and rose in this period by only 0.4%. The increase in the top 7 locations over the same period was 2.9%, an average of €13.64.

In five of the cities which it reviewed, BNP Paribas registered higher peak rents, especially in Berlin, where the peak rent rose by 17%to €28 per metre.