Prime Rents Increase in German Office Market

Posted on 2 May, 2013 by Jodee Redmond

Prime rents in the top six German office markets increased by an average of 3.8 per cent in the first three months of 2013. According to the latest research released by Savills, the year-on-year rate was €26.98 sq m.

The international real estate advisor is forecasting that prime rental rates will continue to grow in Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich for the rest of the year. Demand for quality space is expected to remain high, while development activity will be low.

Marcus Mornhart, the Managing Director and Head of Office Agency at Savills Germany stated recently that rents in the wider market are likely to remain stable for the remainder of the year. He pointed out that secondary markets will probably have high vacancy rates and occupiers are likely to be very price-conscious.

Vacancy rates were down slightly across the six major markets. On average, the vacancy rate was 8.6 per cent at the end of the first quarter, down from 8.7 per cent in the fourth quarter of 2012.

In some markets, there is a shortage of prime space in city centre locations. Frankfurt is experiencing a lack of Class A space below 1,000 sq m and in Cologne there is a lack of space in the mid-price range.

Savills points out that this trend of falling vacancy rates and higher demand is due to a slowdown in office space coming onto the market. About 940,000 sq m of office space is due for completion in 2013 in the six major markets surveyed, which is slightly higher than the level completed a decade ago in Frankfurt alone.

Matthias Pink, the associate director of research at Savills Germany, said this is unlikely to change in the medium term.

He went on to say, “Financing of speculative developments continues to be scarce and the requested pre-letting rate of 30 per cent to 50 per cent is too high, particularly for small-sized developments.”

Take-up is expected to improve throughout the second half of the year and an annual total of 2.9 million sq m is anticipated.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants