CLS Holdings
When CLS Holdings announced the €60 million sale of The Brix office complex in Essen last week, the deal attracted attention for reasons that go beyond the transaction itself. In a market where deals of that magnitude in Germany's secondary cities remain, as CLS's own Head of Germany Rolf Mensing put it, "far from a given," the successful exit from a comprehensively repositioned asset tells a broader story about where Germany's office investment market is actually recovering — and where it is not.
The Brix transaction is a textbook illustration of what CLS calls its ABBA strategy: buying B-locations in A-cities and A-locations in B-cities. The property at Kruppstraße 16, around 500 metres from Essen's main railway station, fits the second half of that formula precisely. CLS acquired it in April 2021 with a vacancy rate of around 28%. Following the conclusion of a new 30-year lease with the City of Essen, the company carried out a comprehensive modernisation, improving energy efficiency and the quality of the working environment. The result: a fully let, sustainable office asset with long-term secure cash flows — and a buyer willing to pay €60 million for it.
"This transaction sends a strong signal to the office investment market," said Fredrik Widlund, CLS's Chief Executive. "It underlines our team's ability to successfully realise value even in a challenging market environment." The deal is expected to complete in Q2 2026, with Colliers and BNP Paribas advising CLS on the sale.
Where the recovery is actually happening
The Essen deal did not emerge from nowhere. It reflects a broader shift in German commercial property that the Q1 2026 transaction data has confirmed: the recovery in investment volumes is taking place largely outside the top-7 cities. Between €6.5 billion and €6.9 billion was transacted in commercial property in the first quarter, representing an increase of between 16% and 25% on the same period last year. But the growth was concentrated in the rest of the country. Berlin, Munich, Frankfurt, Hamburg, Cologne, Düsseldorf and Stuttgart saw transaction volumes decline. B-cities and regional centres picked up the slack.
The largest deals of the quarter were not trophy office towers in prime CBDs but a portfolio of 59 German care homes, a hospital portfolio and the sale of a new state finance administration building in Kaarst, North Rhine-Westphalia — a mixed-use office and data centre that fetched over €300 million and was, according to Savills, the largest single transaction of the quarter. The office sector held up nonetheless: BNP Paribas RE puts office turnover at €1.8 billion, up 5% year-on-year.
For the full year 2025, B-cities of supra-regional significance accounted for €763 million in office and retail investment outside the top 7, representing a 40% market share. Dortmund led with just under €150 million, followed by Freiburg and Darmstadt. North Rhine-Westphalia accounted for over a quarter of the total — with Bonn, alongside Dortmund and Essen, among the most favoured locations, partly due to its high proportion of public and state-affiliated tenants providing stable, long-term cash flows.
Selective, disciplined, equity-driven
The profile of buyers active in B-city office markets has shifted markedly. Foreign investors have largely retreated: CBRE data showed their share of B-city office transaction volume falling from 19% in 2024 to just 6% in the first three quarters of 2025. In their place, domestic private investors, family offices and regional players with strong equity positions have emerged as the dominant force. The public sector has also been an active net buyer.
Manuel Backfisch, Head of Capital Markets B&C Cities at Colliers, described the dynamic precisely: "The early recovery in the commercial property investment market is beginning selectively and in a disciplined manner. Investors are returning to office and retail properties — outside the top 7, however, only where location, use and cash flow are convincing in the long term." Prime yields in B-cities have stabilised at around 5.5%, with secondary locations at 6.3%, offering a meaningful spread over top-7 prime yields of around 4.76%.
Cushman & Wakefield's Simon Jeschioro observed investor interest beginning to extend beyond pure prime locations into B-locations that border on the prime sub-markets — exactly the territory where the ABBA strategy operates. C&W is forecasting prime rent growth of an average 6.1% across the five major German office markets by end-2028, with the scarcity of modern, ESG-compliant space in central locations the primary driver.
Clouds on the horizon
The recovery narrative comes with significant caveats. The war in Iran is pushing energy prices higher, feeding eurozone inflation and raising expectations of renewed ECB rate increases. Colliers' chief researcher Francesca Boucard noted that "financing costs have risen significantly, and the planning certainty that had been achieved in the meantime is being offset by a renewed increase in volatility." BNP Paribas RE has warned of possible repricing in individual sub-markets. Savills' Karsten Nemecek identified two scenarios: a moderate continuation of recovery at a lower price level, or a wave of bank and owner-driven disposals creating new but unwanted momentum.
For now, the B-city office market is operating in a narrow window of opportunity — disciplined buyers, stabilising yields, cash-flow-focused strategies and a gradual return of competitive tension in selected processes. The CLS exit from The Brix is a reminder of what patient, active asset management can deliver in that environment. As Widlund put it, the proceeds will be used to reduce debt and strengthen CLS's capital structure — positioning the company for the next ABBA move, wherever that may be.