Office the star performer as German project development grows

Market research group BulwienGesa's authoritative annual survey of the German project development industry shows the first significant rise of commercial office developments – either planned or already under construction – in Germany's Big 7 cities since 2009.

The number of project developments for offices rose by 8.3%, compared to residential projects which rose by only 4%. Nonetheless, residential remains the biggest segment, albeit slowing, after growth last year of nearly 20%. By 2021 in the Big 7, about 27m sqm of project developments are scheduled to hit the market, in the so-called Trading Development market i.e. developments scheduled for sale to third parties.

New planned developments in the big cities, rather than those currently being built, showed the biggest leap forward in ten years, according to BulwienGesa director Andreas Schulten. Not all of those will be built, he said, but a large number will – and not before time, he added, with 600,000 sqm of office space disappearing last year in the Big 7, with a further 1.5m sqm leaving the market this year.

According to Schulten, residential construction in the bigger German cities is being hampered by excessive regulation by the authorities, long delays in issuing planning permission, and additional costs due to the requirement for including a percentage for social housing and restrictive energy-saving compliance. This has led to a swing back towards favouring office projects, with less strict regulation, low levels of construction, and renewed investor appetite for the sector.

Berlin remains the top market for developments in Germany, with an increase of 622,000 sqm across all developments in BulwienGes's analysed rolling time frame of 2014-2021. This makes it double as active as next-placed Hamburg and Munich. This year, Munich is stagnant, while Stuttgart, Frankfurt and Cologne are all showing lowered development figures. Hamburg and Düsseldorf, by contrast, are adding lots of new projects.

The study also shows that Germany's top ten developers currently are the Zech Group from Bremen, retaining last year's Nr. 1 spot, followed by CG Gruppe, Bonava, format and BPD.