Munich one of few German cities with positive office rent outlook

The company itself may be on the rocks, fighting for its survival, and in grave danger of being unable to service its debts, but over at the Bonn-based IVG Immobilien AG, the research team under Dr. Thomas Beyerle continue (undisturbed, we hope…) to produce reports and analysis that enable the rest of us to indulge in some blue-skies strategic thinking.

The company has just produced its annual German Office Market Report, highlighting the cities in Germany which offer the best prospects of rent increases in the core office segment. To no great surprise, last year’s winner Munich has defended its position with the highest score in the IVG rankings, “largely due to the low number of completions and the decline in vacancies in the city, which make it one of the few locations where rent increases in the core segment are to be expected” say the IVG research team.

At 4.23 out of a possible score of 5 points, the Bavarian state capital remained ahead of Hamburg (4.16), Frankfurt (3.85), Cologne (3.84), Berlin (3.82), and Stuttgart (3.81). Last among Germany’s “Big Seven” was Düsseldorf with a 3.79 score.

Quite some way behind, the leading Grade B locations followed in ranks 8 and lower, led by Hanover (3.46), Nuremberg (3.20), and Wiesbaden (3.02). The bottom of the list is made up by small, barely developed office locations in economically undeveloped regions. Last among the 74 office locations analyzed, Gera and Halle an der Saale (each scoring 1.59) brought up the rear, slightly behind Cottbus and Salzgitter (each 1.63). “Aside from the small size of the markets, the unfavorable rankings are in most cases explained by a negative growth perspective, a low degree of market transparency, and high office vacancy rates,” elaborated Dr. Thomas Beyerle, head of the research team at IVG.