savills-office market germany q1 2018

Publication

Market in Minutes - Germany office markets Q4 2017

Despite the increasingly scarce supply, record take-up for 2017 ahead

  • The top six German office lettings markets enjoyed a record year in terms of take-up in 2017. The total of 3.85 million sq m was 11% higher than in the strong previous year (Graph 4).
  • Prime and average rents rose significantly further by 1.6% compared with the previous quarter (Table 1). There is currently no end in sight to the increase in rents. We expect the prime rent across the top six markets to rise by an average of 3.8% in 2018 (2017: 3.4%)
  • Operators of co-working spaces and serviced offices made a not insignificant contribution to both the increasing supply shortage and rental increases. Across the top six markets, national and international operators leased more than 160,000 sq m, which was six times more than in the previous year. Such occupiers accounted for more than 4% of overall take-up in 2017. These were particularly active in Berlin, Hamburg and Munich. The average rent on such space averaged €19.50.
  • Vacancy rates of 2.0% in Berlin, 3.3% in Munich and 4.8% in Cologne are a reflection of the supply shortage (Tab. 1). In absolute terms, there is between 370,000 sq m and 1 million sq m of vacant space in the top six markets (Graph 5).
  • Availability will contract in 2018 and rents will continue to rise. At least in Berlin, Cologne and Munich, development activity is set to increase (Graph 9). In Frankfurt and Hamburg, however, occupiers will have to wait until 2020.