clsholdings.com
"The Yellow", 9,600 sqm leased to the City of Dortmund
UK-listed CLS Holdings has reported a record year for leasing activity in Germany, securing over 50,500 square metres of new or renewed leases in 2024. The company attributes this success to its active asset management strategy, focusing on high-quality, energy-efficient office space in secondary locations. Demand has been particularly strong from mid-sized firms and public sector tenants, with the latter accounting for some of the largest lease agreements of the year.
Rolf Mensing, Head of Germany, CLS Holdings
Rolf Mensing, Head of Germany at CLS Holdings, noted that "despite the lettings market remaining subdued in a long-term comparison, CLS is reaping the rewards of highly active, first-class asset management, a clear customer focus, and a best-in-class strategy." He highlighted that high-quality, energy-efficient office spaces are still in demand even in secondary markets, with mid-sized tenants and the public sector driving much of this demand.
A standout deal was the 20-year lease for 9,600 square metres with the City of Dortmund at 'The Yellow' property, consolidating four municipal offices into a single location. Similarly, a long-term agreement with the Hamburg-Harburg district authority secured 4,390 square metres in a prime suburban location. The company has also intensified its sustainability initiatives, including a partnership with digital heat specialist vilisto to cut heating energy consumption across its German portfolio by up to 32% annually.
Hybridisation of properties with mixed-use spaces gaining in importance
Einar Osterhage, Head of German Asset Management at CLS Holdings, pointed to evolving office requirements: "Tenants are increasingly looking for flexible solutions, a significantly higher proportion of space for communication and events, and strong energy efficiency. The hybridisation of commercial real estate, particularly through mixed-use spaces, is becoming an important factor in long-term asset performance."
Despite ongoing challenges in the office market, CLS maintains that tenant demand for modern, flexible, and sustainable workspaces remains intact. The company expects positive momentum in lease signings to continue into 2025, with rents rising selectively for well-positioned assets.
CLS's strong performance in securing public sector leases aligns with a broader trend across Germany. The public sector accounted for 18% of total office take-up in 2024, emerging as a stabilising force amid subdued corporate demand. Key deals, such as the City of Hamburg’s acquisition of 26,000 square metres at Gerhart-Hauptmann-Platz, primarily as an owner-occupier move, illustrate how municipalities are playing a crucial role in maintaining office market activity. Analysts expect this trend to continue into 2025, providing landlords with a steady source of demand even as corporate tenants reassess their space requirements.
On the broader financial front, parent company CLS Holdings plc has been actively managing its portfolio through strategic disposals and refinancing. A preferred bidder has been secured for its Spring Mews student property in London, while two German assets valued at £50.5 million have been placed on the market. The firm’s loan-to-value ratio has marginally decreased, and further asset sales could see this drop to 44.6%.
While macroeconomic uncertainty continues to impact office markets, CLS’s focus on high-quality assets in secondary cities, along with assets in non-prime locations in the top cities, its ability to secure long-term leases with stable public sector tenants, and its ongoing investment in energy efficiency and flexible workspaces demonstrate a pragmatic approach in an evolving market. The company's leasing successes highlight the resilience of well-positioned office properties, even as broader economic and market uncertainties persist.