Empira Asset Management GmbH
Professor Dr. Steffen Metzner - Empira Asset Management GmbH
According to Professor Dr. Steffen Metzner, head of research at Empira and the author of the study, “This clear trend is relevant for the real estate industry, since even if employment figures as a whole fall, the number of office workers is consistently and proportionally rising.”
A new study by investment manager Empira highlights how the construction of new office space in Germany’s bigger cities is lagging demand, and will soon lead to noticeable space shortages, despite a rising level of project developments.
The Swiss-based Empira examined the office markets in 15 cities across Germany. The key finding is that the number of office workers has risen by more than 20% to nearly 11 million, and all these people need workspace – while annual new construction has been stagnating. Most of these jobs have arisen through the rise in service industries, particularly in the financial area.
According to Professor Dr. Steffen Metzner, head of research at Empira and the author of the study, “This clear trend is relevant for the real estate industry, since even if employment figures as a whole fall, the number of office workers is consistently and proportionally rising.”
On average, new offices coming on stream are providing only 10 sqm of office space per worker, which is less than the required 15 sqm or more, the study states. Vacancy has been consistently declining since 2010 and is now at 4.1 % nationwide.
The 15 markets examined show vacancy rates ranging from 1.6 % vacancy in Bonn to 7.4 % in Frankfurt. Average rents, meanwhile, have increased substantially – with the most pronounced rise of +67 % to €19.34/sqm recorded in Berlin. Some secondary markets also jumped ahead - Essen (+43 %), Leipzig (+40 %) and Nuremberg (+39 %), for example.
Empira said it believes the whole issue of availability of office space has been overshadowed by the discussion surrounding the residential housing sector. Lahcen Knapp, Empira’s CEO, says: “Many institutional investors, who basically prefer to invest in office properties in A-location in Germany’s bigger cities, simply can’t find any more suitable properties at acceptable prices. A look at the vacancy rates in our study testifies to the increasing shortage of supply.” Investors will have to increasingly look to their own project development, he said.
