Manuel Debus
Lateral Towers, the former Deutsche Börse headquarters, prior to rezoning
A former Deutsche Börse headquarters in Frankfurt now accommodates 3,200 students under a 30-year lease to the City of Frankfurt. Completed in just two and a half years after its conversion from office use, the project offers perhaps the clearest demonstration yet of why educational real estate is beginning to attract serious institutional capital in Germany.
The project featured prominently in an online press conference on 17th June, where representatives of CapMan, NEXT Generation Invest and CELLS argued that educational infrastructure is evolving from a specialist niche into a distinct asset class. The timing is significant. Germany faces an estimated €68bn school infrastructure backlog, while the number of pupils is expected to rise by a further 430,000 by 2035. Municipalities increasingly face a simple problem: demand is growing faster than their ability to deliver new capacity.
From investment thesis to proof of concept
For institutional investors, the attraction is becoming increasingly familiar. Long-term leases backed by public or publicly funded tenants, inflation-linked income streams and relatively low default risk create a cashflow profile that compares favourably with many traditional real estate sectors. CapMan and NEXT Generation Invest cite yields of between 3.8% and 5.9% for school properties, depending on location and tenant mix.
"Educational real estate combines social impact with economic stability," said Tanja Volksheimer, Managing Director and CIO of NEXT Generation Invest. "Long-term leases, inflation-protected income, and the high creditworthiness of many tenants create a risk-return profile that institutional investors are increasingly seeking, especially during volatile market phases."
Germany remains some distance behind the Nordic countries, where educational and social infrastructure has been an established institutional asset class for years. CapMan Investment Director Robert Feldt, also speaking at the event, noted that social infrastructure has at times ranked among the largest investment segments in Scandinavian real estate markets. "The Nordic countries have been consistently investing in education for decades and have one of the most stable public finances in the world. This makes educational real estate an extremely reliable asset class," he said.
The Nordic model is no longer purely theoretical in Germany. As REFIRE reported last month, Swedish social infrastructure specialist Hemsö has already begun applying a similar approach. The company launched educational property projects worth more than €210m in 2024, including a school conversion in Cologne and a new-build project in Rangsdorf near Berlin, creating approximately 1,400 school places. At the time, Hemsö Deutschland's managing director Jens Nagel described the Cologne scheme as a potential blueprint for wider adoption. The latest discussion suggests that view is gaining broader industry support.
CELLS
Jan Trenn, CEO, CELLS
Repurposing as the speed advantage
The Frankfurt campus illustrates why. According to CELLS chief executive Jan Trenn, the former office complex now provides more than 40,000 square metres of educational space and was delivered in just two and a half years. In its final configuration, the site accommodates 3,200 pupils and 290 teachers.
That timeline directly addresses one of the principal obstacles highlighted in REFIRE's earlier coverage of the sector. New school developments frequently require lengthy planning and procurement processes. "When a municipality develops a new school site on a greenfield location, it often takes ten years or more to complete the project due to the zoning plan process," Trenn said. "By repurposing existing buildings, urgently needed school spaces can be created much more quickly."
The project also points towards a potentially important convergence of two separate market trends. While municipalities struggle to expand educational capacity, many office properties outside prime locations face an uncertain future as occupiers consolidate space requirements. Educational uses may offer one of the more compelling long-term alternatives for suitable secondary office stock, combining social need with long-duration income.
Trenn also emphasised the environmental benefits of reuse over demolition and new construction, while the broader educational property sector continues to benefit from increasing investor familiarity. The ICG has similarly argued that flexible, adaptable building concepts improve financing prospects and reduce regulatory hurdles.
None of this resolves the broader tensions that continue to hold the market back. Municipal resistance to long-term rental structures, federal fragmentation across sixteen states and limited market transparency remain significant obstacles. Yet the discussion has shifted noticeably. A year ago, educational real estate was largely an investment thesis. Today, investors can point to completed projects, operating schools and long-term leases.
The investment case no longer lacks proof of concept. The question is whether Germany can replicate it fast enough to make a meaningful dent in a school infrastructure backlog that still runs into tens of billions of euros.