Savills World Research Germany offices Market in Minutes Germany office markets 21 The facts at a glance rises by 2 - vacancy falls to 1-year low The top six office markets witnessed take-up totalling approximately 3.3 million in 21, representing an increase of almost 2 compared to the previous year. The 12-month take-up to the end of the -1 rose by compared with the corresponding figure to the end of - 1. All six markets registered higher office take-up than in the previous year. Accordingly, the vacancy rate in all six markets fell significantly over the course of the year. Office vacancies across all six markets stood at an average of 6., representing a decline of 9 basis points. Besides the high demand, this significant decrease was attributable to reductions in office stock via demolitions and particularly changes of use, primarily to residential use. While the vacancy rate fell to its lowest level since 21, the completion volume remained in line with the previous year at almost 1 million. We also do not expect any noteworthy increase in the completion volume this year and two thirds of the projected volume for 216 is already pre-let. The increasing supply shortage is also reflected in rental growth. The prime rent across all six markets rose by an average of 2. compared with the previous year to 28.38 per / month. The average rent rose even more sharply, increasing by 9.% year on year to 1.29 per /month. Overall, the trends of falling vacancy rates and rising rents are expected to continue in the current year, particularly since demand remains high and takeup is likely to remain in line with 21 levels. savills.de/research 1
21 Top six office markets at a glance +++ Prime rent +. Average rent +1.% Vacancy rate -3bps +++ TABLE 1 Key office market figures () Vacancy rate (%) Prime rent () Average rent () - 21 against - against - 21 21 q-o-q change 21 q-o-q change 21 q-o-q change Berlin 94,8 +2.3% +7.1% 3.6 +/-bps 24.3 +1.3% 14.8 +.7% Düsseldorf 414,6 +74.7% +19.7% 9.9-3bps 26. +/-.% 14.2 +1. Frankfurt 392,266 +6.% -7.3% 1.2-11bps 39. +1.3% 19. +2.7% Hamburg 26,92 +3.1% +2.1%. -4bps. +/-.% 14. +/-.% Cologne 291,624 +29. +9.% 6. -1bps 22. +3.% 13.1 +2.7% Munich 7,16 +26. +9.3% 4.7-1bps 34. +/-.% 16.1 +1.3% Top 6 3,316,78 +21. +6. 6.8-3bps 28.38 +. 1.29 +1.% GRAPH 1 in the top 6 1.. GRAPH 2 3 Prime rent - Ø Top 6 (left axis) Average rent - Ø Top 6 (left axis) Vacancy rate - Ø Top 6 (right axis) 1.8 4. 3 million.6.4.2 3. 2. 1. million 2 1 1 1%..61.77.71.69.7.64.61.77.79 21.79 21.77 21.97 21 216*. 26 27 28 29 21 211 212 21 216* % Top six market in minutes B locations are also enjoying high demand Office take-up across the top six markets totalled 3.3 million, representing an increase of 2 compared to the previous year. over the last 12 months rose by compared with the corresponding figure to the end of 1. The prime rent rose by 2. year on year to 28.38 per /month while the vacancy rate fell by 9 basis points year on year to 6.. The final quarter of 21 made a significant contribution to the annual figure with take-up of almost 1 million. The year-end total was also the highest since 27 (almost 3. million ). Company formations and expansions were instrumental in driving the considerable take-up growth in the market. The combination of surplus demand in the preferred office locations and low (new-build) supply has created an opportunity for those submarkets that have only benefited modestly from the market dynamics to date. Düsseldorf Seestern and Cologne Porz/Airport even registered higher take-up last year. savills.de/research 2
21 Top six office markets at a glance +++ 216: 1. million Increase in employment: +1.% +++ GRAPH 3 Prime rent by location 4 Berlin Düsseldorf Frankfurt Hamburg Cologne Munich GRAPH 4 Average rent by location Berlin Düsseldorf Frankfurt Hamburg Cologne Munich 4 3 3 2 1 1 2 1 1 26 27 28 29 21 211 212 21 216* 26 27 28 29 21 211 212 21 216* GRAPH Employment trend 1 Berlin Düsseldorf Frankfurt Hamburg Cologne Munich GRAPH 6 1,4, 12 1,2, = 1 11 11 1 1 9 1,, 8, 6, 4, 9 8 26 27 28 29 21 211 212 21 216* 2, 769, 1,273,6 1,29,3 914,1 689,6 88,7 1,3,6 886,8 931,2 1,11,8 28 29 21 211 212 21 216 217 Source: Oxford Economics / * forecast TABLE 2 The largest letting transactions in 21 at a glance* Location Tenant Office space () Berlin Allianz approx. 47, Berlin Zalando SE approx. 42,7 Hamburg Euler Hermes Kreditversicherungs-AG approx. 39, Düsseldorf Uniper AG approx. 3,7 Hamburg Commerzbank approx. 18, / * only published transactions are shown savills.de/research 3
21 Berlin +++ Prime rent +1.3% Average rent +.7% Vacancy rate +/-bps +++ GRAPH 7 GRAPH 8 3 1,2 3 1, 1% 2 8 2 1, 1 1 6 4 1, 1 1 2 174 19 172 144 2 17 16 222 221 21 228 21 27 21 28 21 216* 26 27 28 29 21 211 212 21 216* % GRAPH 9 Potsdamer Platz / Leipziger Platz City West GRAPH 1 3, 3, East/North/ South/West 21% City outskirts, 2, 1, 1, City East 1 / * past 12 months, 123, 18, 14, 176,3 13,1 189,7 174,6 293,2 22, 216,2 28 29 21 211 212 21 216 217 Berlin market in minutes Very strong demand drives take-up and rental levels to record highs Office take-up in 21 totalled 94,8 (+ year on year). over the last 12 months rose by 7% compared to the corresponding figure to the end of 1. The prime rent rose by year on year to 24.3 per sq m/month while the vacancy rate fell by 9 basis points year on year to 3.. The information, communication and technology sector was particularly active, accounting for 3 of take-up. Both established companies in the sector and young start-ups are seeking space in Berlin, preferably in Mitte, Tiergarten, Prenzlauer Berg and Mediaspree submarkets. Development activity and the associated supply of space remain significantly too low to satisfy future demand even partially. Some 22, of new office space will come to the market in 216, which is significantly below the average figure over the last five years of approximately 166,. savills.de/research 4
21 Düsseldorf +++ Prime rent +/-.% Average rent +1. Vacancy rate -3bps +++ GRAPH 11 GRAPH 12 18 4 3 16 14 4 3 1% 12 3 2 1, 1 8 6 2 1 1, 1 1 4 2 73 77 117 7 68 3 61 69 21 11 21 121 21 124 21 216* 1 26 27 28 29 21 211 212 21 216* % GRAPH 13 GRAPH 14 Harbour 21% 2, 18, other submarkets 33% 16, 14, 12, 1, Seestern 1% 8, 6, 4, Düsseldorf North / Airport Kennedydamm 1% City centre 2, 1,8 16,3 18, 7, 114, 12,6 12,4 69,1 86,8 16,4 28 29 21 211 212 21 216 217 / * past 12 months Düsseldorf market in minutes Large deals behind the highest take-up since 28 Office take-up in 21 totalled 414,6 (+7% year on year). over the last 12 months rose by compared to the corresponding figure to the end of 1. The prime rent remained unchanged year on year at 26. per /month while the vacancy rate fell by 1 basis points year on year to 9.. The substantial total take-up was primarily attributable to seven transactions above 1,. In the previous year, there was only a solitary deal in this size category. The Medienhafen and Seestern districts led the submarket rankings last year, accounting for 21% and 1% of overall take-up respectively. Seestern is currently enjoying increasing popularity since the area offers modern space at attractive rents. Medienhafen has provided two large occupiers with extraordinary new-build potential, which has re-invigorated the submarket. savills.de/research
21 Frankfurt +++ Prime rent +1.3% Average rent +2.7% Vacancy rate -11bps +++ GRAPH 1 GRAPH 16 1 6 1 4 4 1 1 1, 1 7 4 3 2 1, 3 3 2 1 1 1% 1 1 6 14 116 124 89 7 8 122 113 21 12 21 86 21 91 21 216* 26 27 28 29 21 211 212 21 216* % GRAPH 17 other submarkets 2 GRAPH 18 4, 3, Banking district / City 3,, Westend 2, 1, 1, Frankfurt East Eschborn 1% Frankfurt West 1%, 37, 232,7 347, 241,8 82, 164, 293, 119,2 11, 278,6 28 29 21 211 212 21 216 217 / * past 12 months Frankfurt market in minutes Vacancy rate falls to 1., the lowest level since 22 Office take-up in 21 totalled 392,3 (+ year on year). over the last 12 months declined by 7% compared to the corresponding figure to the end of 1. The prime rent rose by 2. year on year to 39. per /month while the vacancy rate fell by 14 basis points year on year to 1.. Despite there being a number of larger requirements in the market, there was only a single deal above 1, last year. With the financial sector, a crucial pillar for Frankfurt, having largely completed its period of consolidation, there is now a lack of significant demand from the sector. Although the vacancy rate has fallen significantly, there is more than 2, of existing space available in Frankfurt s financial district in the triangle formed by Neue Mainzer Straße, Taunusanlage and Junghofstraße. When new developments are added, this figure will double to some 4, by the end of 217. savills.de/research 6
21 Hamburg +++ Prime rent +/-.% Average rent +/-.% Vacancy rate -4bps +++ GRAPH 19 GRAPH 2 2 6 3 1% 1 4 2 1, 1 3 1 1, 1 1 13 113 98 113 14 11 14 12 13 21 132 21 13 21 163 21 216* 26 27 28 29 21 211 212 21 216* % GRAPH 21 GRAPH 22 other submarkets 2 City 3% 3, 3,, 2, 1, Outer Alsterlage 1, Altona 1% Bahrenfeld City South 13%, 189, 262,2 3, 196, 1, 171, 16, 12, 17, 13, 28 29 21 211 212 21 216 217 / * past 12 months Hamburg market in minutes Rising take-up and prime rents Office take-up in 21 totalled 27,7 (+3% year on year). over the last 12 months rose by compared to the corresponding figure to the end of 1. The prime rent rose by 4. year on year to. per sq m/month while the vacancy rate fell by 1 basis points year on year to.%. Demand for high-quality office space remained at the previous year s high level, driven by a broad mix of sectors. There was an impressive number of particularly large deals in 21, with five leases for at least 1, of office space completed. Available space, particularly in the city centre, is becoming a rare commodity. Accordingly, rents also rose, which is making non-city-centre locations more attractive even to larger companies. Submarkets close to the city centre, such as City South and Altona, represent interesting alternatives. savills.de/research 7
21 Cologne +++ Prime rent +3.% Average rent +2.7% Vacancy rate -1bps +++ GRAPH 23 GRAPH 24 14 3 3 12 3 1% 1 2 1, 8 6 4 2 1 1 1, 1 1 2 47 68 86 69 8 7 44 66 69 21 78 21 3 21 91 21 216* 26 27 28 29 21 211 212 21 216* % GRAPH other submarkets 1 GRAPH 26, Porz / Airport 7% 2, Ossendorf / Nippes City 4 1, 1, Kalk / Mülheim 11% Ehrenfeld / Braunsfeld 13% / * past 12 months, 98,2 216,6 74,3 49, 83, 63,4 79,1 79,3 8, 12, 28 29 21 211 212 21 216 217 Cologne market in minutes Prime and average rents rise significantly Office take-up in 21 totalled 291,6 (+3% year on year). over the last 12 months rose by 1% compared to the corresponding figure to the end of 1. The prime rent rose by 4. year on year to 22. per /month while the vacancy rate fell by 3 basis points year on year to 6.%. Four of the six largest lettings last year were attributable to the public sector. The sector accounted for a total of more than 4,, making a significant contribution to the increase in take-up. In view of the number of requirements in the market, some of them very large and many of them once again from the public sector, take-up in 216 is expected to show a further increase on last year s figure. Likewise, the vacancy rate is expected to fall further. savills.de/research 8
21 Munich +++ Prime rent +/-.% Average rent +1.3% Vacancy rate -1bps +++ GRAPH 27 GRAPH 28 1, 1% 4 2 8 4 3 7% 1, 1 1 6 4 1, 3 2 1 % 3% 2 1 1 183 122 161 16 162 119 16 187 21 147 21 196 21 22 21 216* 26 27 28 29 21 211 212 21 216* 1% % GRAPH 29 GRAPH 3 City 17% 3, other submarkets 3%, 2, City West 1 1, 1, Region North Outskirts North 13% City East 1%, 221, 216,3 28, 17, 13, 1, 18, 26, 223,4 164,6 28 29 21 211 212 21 216 217 / * past 12 months Munich market in minutes Deals in the medium size category drive take-up to five-year high Office take-up in 21 totalled 7, (+27% year on year). over the last 12 months rose by compared to the corresponding figure to the end of 1. The prime rent fell by 1. year on year to 34. per sq m/month while the vacancy rate fell by 13 basis points year on year to 4.7%. The 1, to 1, size category produced around 18 deals last year, which was a third more than in the previous year. There were also numerous extensions of companies, particularly from companies in the software and IT sector - a net increase in leased space. Demand is also likely to remain high in the current year, resulting in similarly high take-up in 216. The limiting factor is on the supply side. Consequently, there is likely to be a modest decline in incentives in the prime segment and a moderate increase in rents. savills.de/research 9
21 Savills Germany Savills is present in Germany with around 2 employees with seven offices in the most important estate sites Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart. Today Savills provides expertise and market transparency to its clients in the following areas of activity: D HH B Our services»» Purchase and sale of single assets and portfolios»» Corporate Finance - Valuation»» Leasing of office and retail buildings»» Leasing and sale of industrial and warehouse properties»» Landlord and Occupier Services C F S M www.savills.de Savills Germany Please contact us for further information Marcus Mornhart Office Agency Germany +49 () 69 273 7 mmornhart@savills.de Christian Leska Office Agency Berlin +49 () 3 726 16 186 cleska@savills.de Panajotis Aspiotis Office Agency Düsseldorf +49 () 211 22 962 22 paspiotis@savills.de Benjamin Remy Office Agency Frankfurt +49 () 69 273 34 bremy@savills.de Ken Hoppe Office Agency Hamburg +49 () 4 39 977 132 khoppe@savills.de Simon Löseke Office Agency Cologne +49 () 221 933 313 32 sloeseke@savills.de Nico Jungnickel Office Agency Munich +49 () 89 427 292 114 njungnickel@savills.de Matthias Pink Research +49 () 3 726 16 134 mpink@savills.de Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 18, has a rich heritage with unrivalled growth. It is a company that leads rather than follows and now has over 6 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East with more than 3, employees worldwide. Savills is present in Germany with around 2 employees with seven offices in the most important estate sites Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart. This bulletin is for general informative purposes only. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The bulletin is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research. Savills January 216 savills.de/research 1