STUTTGART A REVITALISED MARKET THE 2014/2015 STUTTGART OFFICE MARKET REPORT

Transcription

1 STUTTGART A REVITALISED MARKET THE 2014/2015 STUTTGART OFFICE MARKET REPORT

2 AN OVERVIEW OF THE STUTTGART OFFICE MARKET Year Volume in sq.m Representative prime rents per sq.m Average central business district rents per sq.m Vacancies in sq.m Vacancies in % Total space in million sq.m Completion volume in sq.m Pre-let volume in sq.m , , , , , , , , , , ,000 80, , , ,000 93, , , ,500 51, , , * 52,500 20, , , ,600 23, , , , , , , ,000 22, , , ,400 22, , , ,900 41, , , ,000 36, , , ,200 62, , , ,500 91,500 * Data from a survey by BulwienGesa AG + Baasner, Möller & Langwald GmbH Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of:

3 CONTENTS. Foreword 6 Stuttgart is investing in the future 8 Urban flair in the Europaviertel district 9 The Stuttgart office market is experiencing high demand 10 Strong demand from industry, IT and telecommunications 12 Owner-occupiers dominate contract signings 13 Rent levels are increasing 14 The vacancy rate is continuing to fall 16 Stuttgart: Nationwide the best price development 18 Stuttgart central business district / city centre: New attractive locations 20 Northern Stuttgart: Record take-up 21 Eastern Stuttgart: Further new construction sites planned 22 Southern Stuttgart: Experiencing a boom 23 Overview of the Stuttgart office market 25 Continued high demand expected in Your contacts 28 ELLWANGER & GEIGER Real Estate 29

4 MILANEO Office (10% take-up) Retail + residential Completion Q Q PARISER HÖFE 100% take-up Completed 2013 IHK Jägerstr. 30 Office (100%), own use Completed in 2014 CITYGATE Kriegsbergstr. 11 Office + retail (40% take-up) Completion in Q BÜLOW CARRÉ Lautenschlagerstr. 21 Office + retail (95% take-up) Completed in Q LAUTENSCHLAGER AREAL Friedrichstr. Project, 8,100 sq.m Completion in Q HOSPITALHOF Hospitalplatz/Gymnasiumstr. Office (100%), own use Completed in 2013 PAULINE Paulinenstr. 21 Office (100% take-up) Completed in 2013

5 4 5 City Gate IHK LOOK21 Project, 25,000 sq.m Completion in 2018 Milaneo Construction Area 5 Project, 17,000 sq.m Construction Area 4 Project, 68,000 sq.m Sparkassenakademie 100% own use Completion Q Europe Plaza Project, 17,000 sq.m Completion n.a. DOROTHEEN QUARTIER Dorotheenstr./Holzstr. Office (95% take-up) Retail + residential Completion in Q DAS GERBER Marien-/Tübinger-/Paulinenstr. Office (20% take-up) Retail + residential Completion in Q Q CALEIDO Tübinger Str Office (95% take-up) Retail + residential Completed in 2013 BANKHAUS ELLWANGER & GEIGER KG

6 FOREWORD. Stuttgart: An industrial and services city in a green setting. Fantastic topography combined with the canny Swabian character make Stuttgart one of Germany s most attractive cities. Although a major German industrial centre it is also one of the country s greenest cities. Half of the entire urban area consists of vineyards, woods, parks and orchards. This coexistence is based on a tradition going back centuries. The will to preserve such green spaces has always been pronounced. Despite the fact that there have been frequent struggles with local industry over this, in the final instance everyone has always agreed that expansion of the city must take environmental-economic factors into consideration. As a result Stuttgart is today a pioneer in many fields, such as knowledge-based business services or environmental technologies. A brief survey of the local business landscape shows that the number of knowledge-based business service providers is increasing steadily. This report underlines this fact the most recently completed modern office properties, all DGNB-certified and in some cases with their own mobility concepts, are all fully let. There is sustained demand for such modern office space, particularly since medium- sized companies in the service sector are growing quickly. One of the tasks of municipal politicians is to develop good concepts to promote the transformation of old commercial areas into innovative industrial sites. Industrial sites need to meet business increasing demand for faster data links, and the desire of people working in these districts is to be in pleasant surroundings. The successful relaunch of the Weilimpark commercial district shows that the strategy jointly chosen by the municipal council and local companies is the right one. The goal of municipal politicians and business must be to develop ideas about what, seen from the environmental-economic perspective, is desirable and to define the corresponding concepts and strategies. Fritz Kuhn Lord Mayor of Stuttgart Ines Aufrecht Director of Business Development, Stuttgart

7 6 7 Stuttgart is growing beyond its limits was a peak year for Stuttgart s office space market. Not only because the second-best take-up rate of all time was achieved but also because the increased price level for both prime and average rents speaks for itself and because the vacancy rate has continued to decrease. One thing in particular was clear virtually all of the state capital s submarkets experienced movement and regeneration, or put succinctly a boom. Both real estate and infrastructure saw many new projects take shape and existing properties were continuously optimised. And it is already clear now that the trend will continue during this year. The stimulus for this new upswing was, once again, the region s strong automotive industry. Numerous companies in the sector have carefully evaluated their manufacturing and administrative sites and have made a clear commitment to Stuttgart as a location. Expansion will also take place in the city in the future. The development of city centre areas to the rear of the main train station is ongoing; the lively heart of the city is expanding northwards. A completely new district is being generated through infrastructure which has now stabilised. The only bad news is that the floor space available in the city is already limited; large contiguous areas will be in short supply in future, particularly in the central business district. In addition to ongoing city centre development projects there will, as a consequence, also be demand for properties requiring refurbishment. The following pages present detailed facts and figures on developments in Stuttgart s office market. We hope that you will find the report informative and will be glad to respond to any questions you may have, to provide more detailed explanations or simply to hear your feedback. Mario Caroli Björn Holzwarth

8 STUTTGART IS INVESTING IN THE FUTURE. Stuttgart is actively engaged in various fields to ensure the city remains an attractive location in the future and to retain highly skilled workers. Approaches include the expansion of cutting-edge technologies, the further development of the transportation infrastructure and the creation of affordable housing. INDUSTRIAL AND TECHNOLOGY COMPANIES ARE FULLY COMMITTED TO STUTTGART AS A LOCATION Industry and in particular the automotive sector is currently subjecting its manufacturing sites to careful evaluation with regard to their future viability. Many companies have made a clear commitment to Stuttgart as a location. Robert Bosch GmbH has been investing in the state capital and the surrounding area for many years. In addition to this, the technology and services company is currently building a new research and development centre in Renningen. Daimler AG is expanding its sites in Untertürkheim and Sindelfingen. And in the last three years Porsche AG has almost doubled the size of its site in Zuffenhausen thus keeping the option of building a new assembly line open now that the new paint line has been completed. EXPANSION OF THE TRANSPORTATION INFRA- STRUCTURE One of the key issues with regard to equipping the city for the future is the handling of an increasing volume of traffic. An approximately 20 per cent reduction in traffic is planned for the Stuttgart Basin area. Rapid transit railway links, the region s backbone, will be further improved to facilitate this goal. The objective is to introduce longer trains travelling more frequently. In addition to this, socalled tangential lines making it possible to bypass the city centre and shorten journey times are planned in order to make public transport more attractive. Stuttgart also wishes to expand car-sharing offerings, which have already been successfully established. The introduction of express buses is also being considered to improve links between the state capital and the surrounding region. The new Rosenstein Tunnel is a further factor which will contribute to improving traffic flows. Overall, the idea of a cross-transportation mode, the integrated traffic guidance system, so-called intermodality, will become increasingly important in the future. Such considerations should not, however, overlook the fact that commercial traffic must continue to be allowed, as it ensures the delivery of supplies to the city. Initial corresponding strategies in the form of the development of a truck guidance network are already being implemented to ensure that the flow of commercial traffic can be improved in the future. DEVELOPMENT OF AFFORDABLE HOUSING The preservation and further expansion of Stuttgart s attractiveness is dependent on the availability of affordable housing for young families. An initial programme has been developed to provide an increased number of modern residential units in line with demand over the coming years. All of these measures are intended to enable Stuttgart and the region to continue to take advantage of their good preconditions in the future. An unemployment rate of four per cent and a per capita BIP of 36,000 euros are figures which are significantly over the German average, demonstrating the achievement potential of the city and the region.

9 8 9 URBAN FLAIR IN THE EUROPAVIERTEL DISTRICT. The Europaviertel district is gaining an urban character. The opening of the Milaneo building underlines that the district has been invigorated. Achievement of the next milestone is already imminent. HIGH FREQUENCY THANKS TO MILANEO The new Europaviertel district first truly became invigorated when the library opened its doors in October The opening of the Milaneo building in October 2014 has resulted in a sharp rise in the district s frequency rates. At the end of last autumn the area was thus already able to present itself as a lively urban quarter. The 450 apartments incorporated into Milaneo and the Cloud 7 hotel and apartment high-rise are scheduled for completion in 2015 and in early 2016, respectively. The district s development will be rounded off by the opening of a 4-star Aloft hotel and an A&O hostel in the former Südmilch head office building in the Rosenstein district, scheduled for the second half of The Sparkassenakademie training centre opened its new building in 2014, offering course participants a total of 12,600 square metres of space and 148 apartments. Further urban flair in the Rosensteinstrasse area will be created by the building of new student accommodation, scheduled for completion in is primarily required for the association s own use. A further 25,000 square metres are planned in a second building located along Heilbronner Strasse and will be placed on the open office space market. Approximately 100 apartments will be built at the rear of the site in a prime residential location. Completion of the overall project cannot be expected until 2018 at the earliest. In addition to the existing Stadtbibliothek underground station, work is currently under way to connect the Europaviertel district to the U12 light rail transit system. This will allow the entire district to be accessed via an additional centrally located underground station from With the exception of Construction Areas 4, 5 and 15, the entire area within the Europaviertel district has thus been converted to new use since building work commenced in Construction Areas 4 and 5 still offer reserves totalling some 85,000 square metres of office space in an extremely central location. MORE PROJECTS SET TO BE REALISED SOON A further centrally located office space project is planned in the heart of the Europaviertel district the Europe Plaza, sited directly adjacent to the library. It has already been granted planning permission and, as the project located closest to the central business district, could get underway directly following signing of a letting contract. The Look21 development project, located on the former Türlenstrasse site, is being driven forward. Realisation looks set to begin in The Südwestmetall (Baden-Württemberg s metal industry association) is having a total of some 10,000 square metres of office space built on the site. The space PER CAPITA PURCHASING POWER IN 2014, IN : LARGE CITIES OF 500,000 OR MORE RESIDENTS Munich Düsseldorf Frankfurt Stuttgart Hamburg Cologne Berlin 19,649 Source: GfK GeoMarketing, current as of: January ,763 24,939 24,297 23,664 23,380 29,085

10 THE STUTTGART OFFICE MARKET IS EXPERIENCING HIGH DEMAND. As of 31 December 2014 take-up on Stuttgart s office market was some 278,000 square metres. Owneroccupiers accounted for 84,000 square metres of this floor space. Not only was the extremely high demand from the previous year continued, but the office market also achieved the second-best results of all time. EASTERN STUTTGART AND CENTRAL BUSINESS DISTRICT ACHIEVE TOP FIGURES Thanks to a car manufacturer s plans to construct some 40,000 square metres of new real estate on its production site in Untertürkheim, Stuttgart s eastern submarket Bad Cannstatt/Hedelfingen/Wangen was able to record the highest take-up rate of some 54,900 square metres in total. Rental take-up in Stuttgart s central business district totalled 53,100 square metres, representing an increase in excess of 53 per cent over the previous year. The largest letting contract, for some 5,800 square metres, was concluded with the City of Stuttgart for premises at the Zeppelin Carré. Approximately 5,000 square metres at the Caleido office and commercial building, completed in 2013, were let to Elo Digital Office GmbH. Demand in both the small and large-area sectors was excellent in the central business district, whereby new premises were in particular demand. Rental take-up in Stuttgart s city centre was some 44,200 square metres, below the level for The main reason was a lack of major transactions. Sixty-eight letting contracts were however concluded in the segment up to 500 square metres. The new building project for a foundation in eastern Stuttgart achieved the largest take-up, at around 4,500 square metres. The northern submarkets benefited from several large owner-occupier lettings such as the decision to build the new Porsche training centre in Zuffenhausen some 7,500 square metres and the expansion of IT company Vector Informatik s site in Weilimdorf approximately 21,000 square metres which was the second largest take-up on the Stuttgart market. The largest letting contract, for around 10,000 square metres, was concluded by Mercedes-Benz Bank AG in Pragsattel. TAKE-UP LEVELS IN THE SOUTHERN AREAS AVERAGE Southern Stuttgart proved itself to still be a popular area. In comparison to the previous year, however, significantly fewer large contracts were concluded, meaning that takeup reverted back to an average level. Construction of the Baden-Württemberg Centre for Solar Energy and Hydrogen Research (ZSW) commenced at Stuttgart Engineering Park. The owner-occupier contract, covering around 10,000 square metres, was the largest transaction concluded in Vaihingen. In addition to this, almost 100% letting of the STEP 7.2 office building, still under construction, was achieved.

11 10 11 RENTAL TAKE-UP OF OFFICE SPACE IN STUTTGART IN SQ.M 127, , , , , , , , , , , , , Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of: RENTAL TAKE-UP IN STUTTGART AND SUBMARKETS IN SQ.M Central business district 55,100 33,300 43,000 61,500 44,400 38,200 32,800 63,000 61,500 34,600 53,100 City centre 21,700 43,200 31,300 46,600 41,700 83,800 66,600 97,500 58,400 51,000 44,200 Vaihingen/Möhringen 30,800 10,400 32,600 13,700 18,500 20,200 26,200 56,300 18,200 62,200 34,700 Fasanenhof 4,000 3,700 3,500 2,300 10,600 2,700 5,300 12,500 7,400 5,700 9,100 Feuerbach/Zuffenhausen 20,600 9,800 2,000 6,800 12,300 3,300 28,500 24,800 18,700 27,200 34,700 Degerloch 6,000 3,400 4,500 7,200 9,200 4,900 2,100 4,000 4,800 1,900 1,500 Weilimdorf 3,000 6,600 6,000 5,100 12,800 5,900 11,400 5,500 5,300 7,700 30,900 Bad Cannstatt/Wangen 7,700 24,600 13,500 15,400 12,500 8,100 8,300 13,400 12,000 19,800 54,900 Leinfelden-Echterdingen 3,100 10,000 3,600 10,400 18,000 3,900 12,800 8,000 5,200 47,900 14,900 Total 152, , , , , , , , , , ,000 Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of:

12 STRONG DEMAND FROM INDUSTRY AND IT/ TELECOMMU- NICATIONS. The greatest demand for office space came from the industry and IT/telecommunications sectors, making a decisive contribution to the strong rental take-up in A total of 353 contracts were concluded, whereby the largest letting contracts were with owner-occupiers. AUTOMOTIVE INDUSTRY DRIVES DEMAND The highest demand in 2014 came from industry, accounting for a total of some 78,000 square metres of take-up. The automotive industry alone accounted for approximately 69,000 square metres of this take-up, with Daimler AG s new building at its production site in Untertürkheim the largest transaction. The significant increase in demand from the IT/telecommunications sector must be seen in relation to the boom in the automotive industry and the resulting new technological developments. At 60,300 square metres rental take-up in this sector almost trebled in comparison with the previous year. The consultants sector in comparison accounted for only eight per cent of the total volume, or 23,500 square metres, since transactions in this sector were primarily in the up to 500 square metres category. Only five letting contracts with consultants were for areas in excess of 1,000 and 2,000 square metres. Demand in the education / health care segment in 2014 amounted to some 17,000 square metres. Stuttgart experienced particular growth and relocations of training companies in the vocational training sector as well as an expansion of areas by institutions offering academic degree courses and by the Duale Hochschule Baden-Württemberg university, already located in the city. Following above- average demand from the public sector in the previous year, demand in 2014 was for only 16,500 square metres, representing just under six per cent of office space take-up. TAKE-UP BY SECTOR IN % Financial services Education/ health care Consultants Public sector 6.47% 8.45% Other 6.12% 21.29% 5.94% 1.98% Media/communication 28.06% 21.69% Industry IT/ telecommunications INCREASED DEMAND FROM FINANCIAL SERVICES Demand from the financial services sector increased over Although their share of total take-up was only some 17,000 square metres, or 6.12 per cent, this was still up on the previous year s new lettings of just 7,100 square metres. Central to the increase in 2014 was the letting contract concluded by Mercedes Benz Bank AG for 10,000 square metres in the new Skyline office building. Companies in the media/communication segment required some 5,500 square metres. Letting contracts by other office users, which includes various service providers such as architects, engineers and trading companies, accounted for a total of 59,200 square metres of space. Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of:

13 12 13 OWNER- OCCUPIERS DOMINATE CONTRACT SIGNINGS. COMPARISON OF NEW CONTRACTS BY SIZE 54,258 65,754 Total space 2013: 258,000 sq.m 37,183 34,157 24,733 < 500 m² 501 1,000 m² 1,001 2,000 m² 2,001 5,000 m² > 5,000 m² 34,298 Total space 2014: 278,000 sq.m 22,141 31, , ,489 In 2014, the contracts with the largest volumes were concluded with owner-occupiers. Daimler AG s new building project at its production site in Untertürkheim, for some 40,000 square metres of space, thus represented the largest take-up on the Stuttgart office market. The expansion of IT company Vector Informatik s head office in Weilimdorf approximately 21,000 square metres was the second largest letting contract concluded by an owner- occupier. TAKE-UP BY SIZE Overall 353 contracts were concluded last year. In the segment up to 500 square metres there were 261 transactions with a total rental volume of some 64,800 square metres. This represented 64 contracts more than in the previous year and a plus of some 9,280 square metres. Of these, 145 contacts were in the central business district and city centre alone, for a total area of approximately 36,600 square metres. For premises in the range from 501 to 1,000 square metres there were 51 transactions. Trans actions in the segment from 1,001 to 2,000 square metres totalled 23 contracts for 34,297 square metres. COMPARISON OF NEW CONTRACTS BY NUMBER Total number 2013: Total number 2014: 353 < 500 m² 501 1,000 m² 1,001 2,000 m² 2,001 5,000 m² > 5,000 m² While the number of contracts concluded for the segment 2,001 to 5,000 square metres declined from 14 in the previous year to nine, the number of transactions achieved in the segment above 5,000 square metres increased from four to nine, with the total area let increasing to a total of 112,489 square metres. The largest share of transactions, 40.5 per cent, was thus achieved in the segment above 5,000 square metres. This figure was achieved with just four lettings for premises from 10,000 to 40,000 square metres. Source for both charts: Research BANKHAUS ELLWANGER & GEIGER KG, current as of:

14 RENT LEVELS ARE INCREASING. Numerous lettings in newly built and refurbished properties in 2014 resulted in an increase in prime rents. As of 31 December 2014 the prime rent was euros per square metre. The average rent has also increased over the previous year by 0.50 euros per square metre to euros per square metre. TAKE-UP BY PRICE SEGMENTS In 2014 a total of 128 contracts were signed in the price segment up to euros per square metre in the Stuttgart urban area (including Leinfelden-Echterdingen). In the range from to euros per square metre 122 contracts were concluded. This segment thus accounted for 32.2 per cent of office space take-up, making it the largest segment. Fourty-four contracts were signed in the to euros per square metre segment. There was a significant increase over the previous year in the segment to euros per square metre while in 2013 only 16 contracts were signed, in 2014 this figure almost doubled to 30. In the over euros per square metre segment 20 letting contracts were concluded, all for premises located in Stuttgart s central business district and, in most cases, in new-build properties. PRIME RENTS IN THE CBD AND CITY CENTRE After prime rents in the last two years remained at the euros per square metre mark, in 2014 this figure increased by 1.50 euros to euros per square metre. The average rent in Stuttgart s central business district also increased significantly due to the fact that around half of the contracts concluded were in the segment above euros per square metre. At euros per square metre the average rent achieved the highest figure for 13 years. At euros per square metre the average rent for Stuttgart s city centre increased only slightly over the previous year. Due to a number of lettings in new buildings the prime rent for this area, however, increased to euros per square metre.

15 14 15 CENTRAL BUSINESS DISTRICT PRIME AND AVERAGE RENTS, IN /SQ.M Prime rents PRIME AND AVERAGE RENTS IN 2014 IN /SQ.M Average rents Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of: Prime rents Average rents Central City centre Outlying districts Outlying districts Outlying districts business district to the north to the east to the south Source: Research BANKHAUS ELLWANGER & GEIGER KG, current as of: EXCEPTIONAL PERFORMANCE IN THE OUTLYING DISTRICTS TO THE NORTH In the northern outlying districts of Feuerbach/Zuffenhausen/Weilimdorf the prime rent was euros per square metre, significantly higher than the figure for the previous year. This was largely on account of two large transactions for new-build projects in the Feuerbach district, making 2014 an exceptional year. As a result the average rent also increased to the unusually high level of euros per square metre. In the eastern submarkets, the figure of euros per square metre was also significantly higher than for the previous year. In contrast, the average rent decreased from euros per square metre in 2013 to 9.70 euros. This can be attributed to the fact that the majority of contracts were concluded for premises in the under euros per square metre segment. The prime rent for the southern fringe areas was euros per square metre. It was thus lower than the previous year s figure of euros per square metre. Since, however, a large transaction had a key influence on the prime rent for 2013, the current figure is more in line with the market and at a level which can be sustained in future. A large number of contracts concluded in 2014 led to an average rent of euros per square metre, also below the previous year s figure of euros per square metre.

16 THE VACANCY RATE IS CONTINUING TO FALL. The supply of vacant office space for the Stuttgart market is continuing to decline. On 31 December 2014 it totalled only around 325,000 square metres, approximately 12.3 per cent less than in the previous year. This equates to a vacancy rate of 4.3 per cent. Only around 5,200 square metres of this space are available for sub-letting. COMPLETION VOLUME IN SQ.M 312,000 Completion of building Pre-let 145,000 80, , ,500 68,500 51,400 81,200 62,700 72,500 33,600 49,000 28,500 32,600 23, , ,900 40,000 22,000 42,400 23,200 45,900 41,200 37,000 36, ,000 91, , In Stuttgart s city centre the vacant space available was approximately 9,100 square metres less than in the previous year. Despite the completion of a number of new construction projects such as City Gate, Gerber or Milaneo, the amount of office space available in the central business district decreased by 3,200 square metres. High demand for premium office space in these areas means that vacant premises should not remain unlet for any significant period of time. There will only be a small number of new construction projects in the central business district in the next two years. Genuine shortages in the medium-price segment and the small-area segment are already apparent today. A number of large unit lettings in the first half of the year resulted in a significant decrease in the vacancy rate in Weilimdorf, which has been above average for some years. The northern submarkets of Feuerbach and Zuffenhausen have, in contrast, remained stable since a large percentage of new premises had already been pre-let.

17 16 17 VACANT OFFICE SPACE AS OF 31 DECEMBER 2014 AND PERCENTAGE CHANGE OVER 2013 Feuerbach, Zuffenhausen 13,500 sq.m Degerloch 10,600 sq.m Fasanenhof 16,500 sq.m -4.26% 3.92% Stuttgart City 67,000 sq.m Bad Cannstatt, Wangen etc. 24,400 sq.m % -4.56% 5.17% Weilimdorf 25,000 sq.m % 25.53% % Stuttgart central business district 61,900 sq.m Vaihingen 29,500 sq.m -5.26% -8.91% Möhringen 30,600 sq.m Leinfelden-Echterdingen 46,000 sq.m Source for both charts: Research BANKHAUS ELLWANGER & GEIGER KG, current as of: Two contradictory developments took place in southern Stuttgart: while the high vacancy rate in Leinfelden- Echterdingen decreased by ten per cent, the supply of vacant office space in Vaihingen increased, primarily due to the release of a number of large units in older existing buildings. The submarkets of Möhringen and Fasanenhof saw the space available decline overall in comparison to the previous year. The letting of large units in Fasanenhof s commercial district, for example, reduced the amount of vacant space by 31 per cent over The supply of office space in the eastern submarkets of Bad Cannstatt/Wangen/Hedelfingen remained by and large the same as in the previous year. Although this market produced a surprise in 2014 with an unusually high level of take-up, this was primarily due to a project being constructed for an owner-occupier; the space was not placed on the open market. AT A GLANCE: The most recent developments in Stuttgart s office market

18 STUTTGART: NATIONWIDE THE BEST PRICE DEVELOPMENT. At the close of 2014 office space take-up in Germany s Top 7 locations (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart) totalled some 2.88 million square metres and, with a slight decrease of approximately 0.7 per cent, had remained almost at the previous year s level. After deducting the owner-occupier share of 10.4 per cent the Big Seven had a take-up of some 2.58 million square metres. After experiencing a downturn in 2013, Berlin recorded the highest growth in 2014 some 21 per cent. Hamburg and Stuttgart experienced significant gains in take-up of approximately 19 per cent and eight per cent, respectively. The percentage of owner-occupiers was, however, high the two largest contracts in Stuttgart and the second-largest contract in Hamburg were signed by owner-occupiers. Düsseldorf experienced above-average losses of 31.4 per cent, as did Frankfurt at 18 per cent. The lack of large transactions meant that Düsseldorf was some 60,000 square metres under the five-year mean average; in Frankfurt this figure was approximately 82,000 square metres. Munich also experienced a slight decline in takeup of four per cent. Cologne recorded the second-lowest performance in a comparison of the Top 7 locations. The prime rent of euros per square metre in Frankfurt remained the highest nationwide. The second-highest figure of euros per square metre was again recorded in Munich. With an increase of 1.50 euros per square metre Stuttgart achieved the highest growth in prime rent to euros per square metre. The prime rent in Düsseldorf stabilised at euros per square metre, the same level as in The highest growth in average rents was in Frankfurt and Berlin, which experienced growth of 1.00 euro over the previous year. Vacancy rates in all Top 7 locations decreased. This was particularly noticeable in Hamburg and Stuttgart, at around 14.3 per cent and 11 per cent, respectively. The highest volume of vacant space available at short notice was in Frankfurt and Munich, namely 1.5 million and 1.3 million square metres. In 2014 construction of a total of some 1.01 million square metres of office space was completed. Of this, 295,000 square metres was in Frankfurt and 220,000 square metres in Munich.

19 18 19 COMPARISON OF VACANCY RATES IN GERMANY IN % Frankfurt Düsseldorf Cologne Munich Berlin Hamburg Stuttgart Source*: GPP German Property Partners, current as of: BIG SEVEN TAKE-UP IN SQ.M 149, , , , , , , , , , , , , , , , , , , , , , , ,000 Berlin Munich Hamburg Frankfurt Stuttgart Cologne Düsseldorf Source*: GPP German Property Partners, current as of: STUTTGART COMPARED TO OTHER GERMAN CITIES Take-up in sq.m Prime rent in Average rent in the CBD in Vacancy rate in % Berlin 521, , Düsseldorf 347, , Frankfurt 449, , Hamburg 440, , Cologne 280, , Munich 608, , Stuttgart 258, , Source*: GPP German Property Partners, current as of: Note: Source for Cologne figures: Greif & Contzen, Source for Frankfurt figures: Colliers International

20 STUTTGART CENTRAL BUSINESS DISTRICT / CITY CENTRE: NEW ATTRACTIVE LOCATIONS. Demand for new, efficient office space in the central business district and city centre remained as strong as ever. Despite all doubts, the majority of space in the new projects completed in 2014 was let. Both large contiguous areas as well as small areas of differing qualities have become very scarce. The only spaces available are at City Gate, Rosenberghöfe, Milaneo and the almost completed Gerber. Strong demand has, for example, seen the amount of office space available at Gerber decline to only approximately 5,600 square metres. The opening of the Gerber shopping centre at the end of September and the relocation of outdoor specialist Globetrotter s flagship store to the Tübinger Carré has seen the area around Tübinger Strasse / Obere Marienstrasse transformed into a lively, popular city centre location. There is very little prospect of further possible sites for projects since most of the properties requiring refurbishment have already been demolished to make way for a development or have been fully renovated. The LöwenTor-Center project, which will bring approximately 6,000 square metres of office space, some 2,600 square metres of residential apartments and a childcare centre covering around 1,000 square metres onto the market in 2016, is currently being speculatively developed at Heilbronner Strasse in the vicinity of the Bülowturm high-rise. The opening of the Milaneo building and the resulting improvement in local facilities at this location will see Heilbronner Strasse developing into an extension of the city centre once and for all. Thirty-three per cent of take-up in the central business district was in the segment under 500 square metres and 17 per cent in the range from 501 to 1,000 square metres. A surprising 30 per cent was in the segment from 1,001 to 3,000 square metres. Two contracts were concluded for premises over 4,000 square metres in size. The majority of letting contracts in 2014 were signed by companies in the services sector. Twenty-six per cent of the premises were let for prices between and euros per square metre. A further 42 per cent went for between and euros. Twenty per cent of premises achieved prices over euros per square metre. In the city centre four premises with a total of 6,500 square metres were occupied by owner-occupiers. Premises in the segment under 500 square metres 71 contracts and 50 per cent of total take-up were in particular demand. Thirty-four per cent was in the range from 501 to 2,000 square metres. Contracts for premises between 2,001 and 3,000 square metres played only a minor role, accounting for only 16 per cent of total take-up. Some 29 per cent of premises achieved prices between 9.01 and euros, while a further 42 per cent was let for between and euros per square metre. The price level in the central business district and city centre increased overall due to lettings in new premises or refurbished properties.

21 20 21 NORTHERN STUTTGART: RECORD TAKE-UP. FEUERBACH/ZUFFENHAUSEN Demand in the Feuerbach/Zuffenhausen district in 2014 was healthy, with over 15 contracts concluded. Thanks to take-up of 34,700 square metres it was possible to top the previous year s figures by 27 per cent. Successful lettings were thus significantly above the ten-year average at approximately 15,400 square metres. The segment over 5,000 square metres accounted for three contracts or 80 per cent of the total volume. Some 31 per cent of the rented space was let for rents between and euros per square metre. Rents between and euros per square metre were achieved for 60 per cent of the rented space. The majority of these contracts were concluded for new buildings. In addition to Mercedes-Benz Bank AG, which rented premises in the new Skyline building, this good rate of take-up was again due to the automotive suppliers, who play a key role in the area. Robert Bosch GmbH alone rented a further 13,000 square metres of office space at three locations in Feuerbach. Porsche AG will be moving into its new training centre at Porscheplatz some 7,500 square metres in Full occupation of the Oasis II project at Heilbronner Strasse upon completion in the first quarter of 2015 is guaranteed. The main tenants will also be companies in the automotive industry. There is currently almost no modern office space ready for occupation; only small areas of a basic quality are available. A project including 25,000 square metres of space is being planned at Borsigstrasse and realisation will begin as soon as 40 per cent of this space has been pre-let. Only ten contracts or 11 per cent of the space let was in the under 500 square metres segment. One contract was concluded for premises in the range 1,001 to 2,000 square metres. WEILIMDORF First visual changes and improvements in local facilities are now raising the profile of the WEILIMPARK initiative, launched in Work to find alternatives to existing building heating systems is continuing. The goal is to install a communal combined heat and power plant for Weilimdorf and the office buildings located there. A further focus is on the improvement of the transportation infrastructure and the availability of parking. In 2014 the district also benefited from the development of the company Vector Informatik, which constructed a further 21,000 square metres of office space for its own use. Total take-up including the owner-occupier was some 30,900 square metres, thus significantly higher than the ten-year average of 7,400 square metres. The range of space available is good; from 2016 large contiguous areas will become available again. In contrast to other districts this space will also be available in the mid-price segment. Fifteen per cent of the rented premises were under 1,000 square metres. Thirteen per cent was in the range between 3,001 and 4,000 square metres. Rents for 88 per cent of all space were between 9.00 and euros per square metre.

22 EASTERN STUTTGART: FURTHER NEW CONSTRUCTION SITES PLANNED. A key factor in the overall development of eastern Stuttgart is the Neckarpark. The project will, for the first time, include the realisation of the concept of Working and Living in one and the same place. Following further development of the land-use plan the first results were presented in Building permits have thus now been granted for two office building projects with a total area of 15,000 square metres at Daimlerstrasse which were not previously included in the main land-use planning procedure. Assuming the corresponding preletting these projects could be realised from 2015 onwards. A large residential development project by SWSG, including 65 subsidised apartments, has already begun. The construction of adjacent office buildings will serve to deflect noise coming from the corresponding main traffic arteries. Completion is scheduled for 2018/2019. The development of high-quality, large, contiguous office spaces is highly relevant to the development of Stuttgart s easterly districts since reserves of vacant space are almost completely exhausted. Simple, small areas of office space are, however, still available on existing premises in Bad Cannstatt and Wangen/Hedelfingen. The Bad Cannstatt/Wangen/Hedelfingen market is traditionally characterised by the automotive industry and Daimler AG is currently constructing a new office building with a total area of 40,000 square metres at its production site. Due to the fact that these premises will be used by the owner this space will not, however, be taken into consideration when discussing the market in this location. Forty-nine per cent and thus almost half of all contracts concluded for the Bad Cannstatt/Wangen/Hedelfingen market were for premises in the segment under 500 square metres. Some per cent of transactions were for spaces ranging from 501 to 1,000 square metres. New leases for premises between 2,000 and 4,000 square metres were taken out by companies in the automotive supplier sector in particular, accounting for 26 per cent of take-up. Rents for three quarters of the space let were in the segment 8.00 to euros per square metre. Small modern spaces in the Cannstatter Carré building achieved prices in excess of 11 euros per square metre.

23 22 23 SOUTHERN STUTTGART: EXPERIENCING A BOOM. DEGERLOCH Degerloch s advantageous location between the city centre and the airport on the edge of the Stuttgart Basin in southern Stuttgart as well as the comprehensive infrastructure around Albplatz make the area an attractive location. Unfortunately, there continues to be a lack of new, modern office space. There is currently no demand for the existing premises with open-plan structures. This is also reflected in the rate of take-up for 2014, which amounted to around 1,500 square metres. This figure is significantly under the ten-year mean average of 4,800 square metres. All the contracts concluded were in the segment below 500 square metres. The premises rented were in the Tränke area and in the vicinity of Albplatz. Ninety-five per cent of the rented space went for prices between 9.01 and euros per square metre. LEINFELDEN-ECHTERDINGEN / AIRPORT CITY The Airport City area of the Leinfelden-Echterdingen district has been growing continuously since The location clearly benefits from its proximity to the motorway and the airport, while the long-distance coach terminal and planned ICE train station further increase its attractiveness. Following completion of the Stuttgart 21 construction project, travel time to Stuttgart Main Train Station will be just ten minutes. Additional development work to expand the exhibition centre and establish it as a conference venue are also contributing to the Airport City s increased attractiveness. The office space under construction for Ernst & Young is scheduled for completion by 2016, as is completion of a further approximately 8,000 square metres of space in the same building complex, which will then be available on the market. The volume of space available at this location will certainly increase in the coming years, since additional projects are already at the planning stage. Following an exceptionally good performance in 2013, 2014 was also a good year, with 14,900 square metres of office space rented 21 per cent more than the ten-year average of 12,290 square metres. Twenty-two per cent of the premises rented were in the segment below 500 square metres. One contract was concluded for office space in the range 1,001 to 2,000 square metres. The segment over 5,001 square metres saw one transaction with a company in the construction industry, representing a proportion of 43 per cent of the total volume. Fifty-six per cent of contracts concluded were for rents between 8.00 and 9.10 euros per square metre, a and a further 25 per cent were in the price range from to 13 euros per square metre. In common with other districts, it was only possible to let older office premises with correspondingly outdated standards and facilities by offering extremely high discounts on the rent, and marketing times to take-up were very long.

24 FASANENHOF The Fasanenhof market is becoming increasingly dynamic. In addition to a significant increase in take-up last year, the sale of several properties which will most probably be refurbished is the most obvious indication of this. The Alphahaus, an office building which has been vacant for years, is also scheduled for total refurbishment. Highquality modern office space will be available to let from January Over and above this, one owner is planning an office project with a total area of 15,000 square metres which will be realised as soon as corresponding pre-letting has been achieved. The area s proximity to the airport and access in both directions to the B27 main road are now already clear advantages. The planned extension of the rapid transit system from Fasanenhof to Stuttgart Airport by 2018 and the construction of the ICE longdistance train station at Stuttgart Airport by 2021 will see the area connected to all forms of public transport. In 2014 take-up increased by 60 per cent to 9,100 square metres and over 20 contracts were concluded in total. With the exception of 2011, this was the district s best year since Forty-two per cent of total take-up was in the segment below 500 square metres. Fifty-seven per cent of the rented space was in the segment from 501 to 2,000 square metres. Two contracts were signed for premises over 1,000 square metres. The market s smallarea segment in particular appears to be in great demand with the IT and software industry. Forty-four per cent of the premises let achieved rents of between 8.01 and 9.00 euros per square metre; a further 48 per cent went for between 9.01 and euros per square metre. Only four per cent of rented space was able to achieve a rent between and euros per square metre. The average rent was approximately 9.10 euros per square metre. VAIHINGEN/MÖHRINGEN AND STEP Although take-up in 2014 declined by 44 per cent over the previous year to 34,700 square metres, this was still significantly above the ten-year average of 28,900 square metres. This figure includes office space for owneroccupier Baden-Württemberg Centre for Solar Energy and Hydrogen Research (ZSW), which is currently constructing a building with some 10,000 square metres for research labs, workshops and offices at Stuttgart Engineering Park (STEP). This contract was not taken into consideration when calculating rents. STEP office buildings 7.1 and 7.2, with a total area of some 11,900 square metres, were completed in Both properties are almost fully let. Demand for premises at STEP is generally high, a reflection of the overall concept which has, for many years, met users requirements for modern office premises. The take-up volume for office premises in 2014 was thus some 7,300 square metres. Including owner-occupier ZSW total take-up was approximately 17,300 square metres. Autumn 2014 saw work to demolish the former KNV site in Vaihingen s industrial park begin. The new construction project for the site, which covers 80,000 square metres, will result in a major change in the industrial park s appearance. The planned office buildings are a continuation of the development of a modern office district around Vaihingen s rapid transit system station. The site will be redeveloped in several phases of construction, beginning at Ruppmannstrasse. Completion of the first buildings is scheduled for mid Within the scope of this development it can be expected that the improvements required at the Synergiepark, as defined by a survey in 2012, such as more pleasant public areas, will be carried out. The location already has good local facilities. The extension of the U12 underground line to Dürrlewang will make the area around Am Wall more attractive. The new line includes two additional stops in the district. In addition to an optimised public transport network the functionality of private transport must, of course, also be ensured. This is the precondition for user acceptance of an industrial park. Thirty-one contracts for 31 per cent of the total area were concluded in the segment below 500 square metres. Half the space was let in the range 501 to 1,000 square metres. Three transactions, or 19 per cent of take-up, were for premises from 1,001 to 2,000 square metres. Thirty-four per cent of leases were in the segment 8.01 to euros per square metre. Fifty-seven per cent of rents were between and euros per square metre. The number of contracts varied only slightly from the figure for the previous year.

25 24 25 OVERVIEW OF THE STUTTGART OFFICE MARKET. Office space take-up in 2014 < 10,000 m 2 10,000 20,000 m 2 20,000 30,000 m 2 30,000 40,000 m 2 A 81 towards Heilbronn above 40,000 m 2 Industrial parks / Office locations Zuffenhausen A 81 towards Singen Weilimdorf Feuerbach Bad Cannstatt Western Stuttgart Southern Stuttgart Northern Stuttgart Central Stuttgart Eastern Stuttgart Vaihingen A 8 towards Karlsruhe Möhringen A 81 Stuttgart motorway intersection A 8 towards Munich BANKHAUS ELLWANGER & GEIGER KG

26 CONTINUED HIGH DEMAND EXPECTED IN After the Stuttgart office market had a fantastic year in 2014, all the signs for the coming year 2015 indicate that there will be further growth. This is due, not least, to the strong economic climate in the region s automotive industry. Provision of the required space will, however, be a challenge, particularly in the central business district. In 2014 the Stuttgart office market achieved the secondbest results since the recording of statistics began. As in the previous year, the automotive industry made a key contribution to this success, acting as a driver of growth. This trend looks set to continue in The positive development of this industrial sector will also have a highly beneficial influence on the demand for office space in Stuttgart and the region in the coming year. This is true not only for industrial companies themselves but also for their service providers in the engineering and IT sectors. In the future, the office market in Stuttgart will be faced with major challenges in terms of provision of premises. Although a number of new projects fulfilling the increasing demands of modern companies with regard to the sustainability, certification and cost-effectiveness of the operation of buildings have been completed in the central business

27 26 27 district in the last two years, there is already a noticeable scarcity of modern, new premises. It goes without saying that a healthy market must, however, also be able to offer basic premises in the lower and medium-price segments. In addition to large contiguous spaces, small areas in the segment below 500 square metres are of particular importance in Stuttgart. Due to Stuttgart s topography i.e. its location in a basin the options for expanding the central business district are limited. Very few sites are available for further new projects; the Europaviertel district is one of the few. For this reason the refurbishment of buildings and the development of both adjacent city centre districts and also outlying districts will become increasingly important. One good example of this trend is the development of a new complex on the former KNV site in Vaihingen. We forecast that take-up in 2015 will total 220,000 to 230,000 square metres.

28 YOUR CONTACTS. ELLWANGER & GEIGER Real Estate is your competent partner for the marketing of your office space. Thanks to our many years of experience and our unique range of services we are in a position to move the market and recognise trends early. For us, a sixth sense is not a supernatural talent but part of the service we offer our clients. Our team in Stuttgart would be happy to receive your call or visit. You can contact us on: Phone +49 (0) or Fax +49 (0) On the Internet: Ulrich Nestel Head of Office Letting and Retail Stuttgart Phone +49 (0) ulrich.nestel@ellwanger-geiger.de Sebastian Degen Office Letting Consultant Phone +49 (0) sebastian.degen@ellwanger-geiger.de Helga Schöner Research and Office Letting Consultant Phone +49 (0) helga.schoener@ellwanger-geiger.de Matthias Hägele Office Letting Consultant Phone +49 (0) matthias.haegele@ellwanger-geiger.de Jessica Naschke Office Letting Consultant Phone +49 (0) jessica.naschke@ellwanger-geiger.de Laura-Teresa Seiler Commercial Property Assistant Phone +49 (0) laurateresa.seiler@ellwanger-geiger.de DISCLAIMER: The compilation of this study was conducted with the greatest of care. We cannot accept any liability for the correctness of the estimates. Your understanding in this matter is appreciated.

29 28 29 ELLWANGER & GEIGER REAL ESTATE. ELLWANGER & GEIGER Real Estate offers you a one-stop shop for a comprehensive range of services relating to the asset class of real estate. With the very highest discretion and integrity, we enable you to keep your bearings in rapidly changing markets. Our success is founded above all on excellent knowledge of the market and decades of experience in the real estate business. COMMERCIAL PROPERTY Systematic research forms the basis for our analyses of locations, portfolios and cost-effectiveness that reflect market conditions. From these, we derive strategies aimed at capitalising on potentials for earnings and efficiencies. In addition to comprehensive leasing services, our core expertise includes project consulting and transaction business. We adopt a holistic approach in consulting on real estate: we partner you all the way from the development of marketing strategies to the preparation of data on properties and the implementation of marketing processes. OUR SERVICES Research Investment analysis and consulting Transactions, renting and leasing of office, retail, industrial and logistics space FUNDS & ASSET MANAGEMENT We develop, plan and manage customised real estate investment products and special funds for institutional and professional private investors. We select different investment vehicles depending on the needs and product preferences of each investor: Domestic special AIFs pursuant to the German Investment Code Closed-ended public AIFs pursuant to the German Investment Code Luxembourg security funds and special funds (SICAV, SIF) Individual schemes for offshore investors We select investment volumes that permit niche investments and individ ual mandates. We also limit the number of investors so that we can provide individualised support throughout the investment period. Our service naturally includes transparent reporting with detailed reports on funds, monthly financial reports and status reports on real estate investments. OUR OFFICES Stuttgart Head Office Börsenplatz Stuttgart Phone +49 (0) Fax +49 (0) Munich Branch Office Herzog-Rudolf-Strasse München Phone +49 (0) Fax +49 (0) STARTING IMMEDIATELY: REPRESENTED THROUG HOUT GERMANY WITH GERMAN PROPERTY PARTNERS. German Property Partners is the new national real estate network of ELLWANGER & GEIGER, Grossmann & Berger and ANTEON. As a member of GPP, we guarantee professional support for real estate customers throughout Germany.

30 BANKHAUS ELLWANGER & GEIGER KG Real Estate Börsenplatz 1, Stuttgart Phone +49 (0) , Fax +49 (0) Stuttgart District Court, HRA 738, Personally liable shareholders: Dr Volker Gerstenmaier, Mario Caroli