Office | Markets
31.10.2023
Source: DIP Deutsche Immobilien-Partner, Aengevelt Research
DIP analyzes lower dynamics in the German office markets Q1-Q3 2023.
DIP – Deutsche Immobilien-Partner enables the continuous and comparative analysis of 14 German office markets (Berlin, Dresden, Düsseldorf, Essen, Frankfurt a. M., Freiburg, Hamburg, Karlsruhe, Cologne, Leipzig, Magdeburg, Munich, Nuremberg and Stuttgart) informative cross-sectional comparisons between the markets in northern and southern or western and eastern Germany and between cities of different market sizes.
The analyzes by DIP – Deutsche Immobilien-Partner show that the take-up of space at the individual office locations has developed predominantly negatively. Overall, a decrease can be observed in 2022 compared to the same period last year:
* The total take-up of space (including owner-occupiers) amounted to around 2.31 million m² in the first three quarters of 2023. This result corresponds to a decrease of around 25% compared to the same period last year (Q1-Q3 2022 around 3.07 million m²). The long-term average (Ø Q1-Q3 2013-2022: 2.80 million m²) was missed by around 18%.
* The supply reserve in the DIP markets increased within one year by around 493,300 m² or around 9.5% to currently around 5.68 million m² (Q1-Q3 2022: 5.19 million m²). The vacancy rate rose from 4.6% in the third quarter of 2022 to now 5.1%.
* Regardless of the economic challenges, the average prime rent in the DIP office markets increased by around €3.90/m² (+11%) to around €39.00/m² within one year.
DIP office markets: sales momentum is decreasing
Even if the 14 German DIP office markets with an office space take-up of around 2.31 million m² overall saw a decline of around 25% compared to the same period last year (Q1-Q3 2022: around 3.07 million m²), The development was not negative in all DIP office markets.
• Both the eastern locations of Leipzig (+1.1%), Essen (+2.4%) and Freiburg (+2.5%) recorded a slightly positive development – regardless of the current difficult situation. All three markets are B or C locations.
• However, all of the “Big Seven” locations have lost momentum: Stuttgart recorded the largest decline of all DIP markets with a decline of around 51% compared to the previous year. DIP also carried out partial analyzes in Cologne (-46%), Berlin (-31%), Hamburg (-28%), Düsseldorf (-23%), Munich (-15%) and Frankfurt am Main (-6.6%) Significantly lower sales than in the comparable period of the previous year.
• For the remaining four DIP markets, declines in sales can also be observed – albeit less markedly: While in Magdeburg the take-up of space fell by around 43%, the percentage decrease fell in Dresden (-6.3%), Nuremberg (- 5.7%) and Karlsruhe (-5.1%) lower.
“Big Seven” with low sales
• The “Big Seven” (Berlin, Düsseldorf, Frankfurt/M., Hamburg, Cologne, Munich, Stuttgart) accounted for office space take-up totaling around 1.99 million m². This means a decrease of around 27% compared to the same period last year (Q1-Q3 2022: 2.73 million m²). The share of total DIP office space sales is therefore around 86% (2022: 89%).
• Munich is the winner in terms of sales for the first time in several years with around 493,800 m² (Q1-Q3 2022: 580,000 m²) ahead of Berlin. The federal capital was unable to maintain its previous top position with office space take-up of around 430,000 m² (Q1-Q3 2022: 625,000 m²). Third and fourth place is occupied by Hamburg with around 325,000 m² (Q1-Q3 2022: 453,000 m²) and Frankfurt am Main with around 275,000 m² (Q1-Q3 2022: 294,300 m²).
• The other places are followed by Düsseldorf with around 189,000 m² (Q1-Q3 2022: 244,700 m²), Cologne with around 159,000 m² (Q1-Q3 2022: 292,000 m²) and Stuttgart with around 120,000 m² (Q1-Q3 2022: 245,000 m²).
Differentiated results in the other DIP office locations
• The remaining seven DIP office centers (Dresden, Essen, Freiburg, Leipzig, Magdeburg, Nuremberg and Karlsruhe) achieved total take-up of 322,270 m² in the first three quarters of 2023. Compared to the previous year, office space take-up fell significantly less than in the Big Seven by only around 3.5% (Q1-Q3 2022: 333,800 m²). This increases their share of the total sales recorded by DIP to around 14% (2022: 11%).
• The results in the cities surveyed were very heterogeneous: On the one hand, in Freiburg with around 20,500 m² (Q1-Q3 2022: 20,000 m²), in Essen with around 86,000 m² (Q1-Q3 2022: 84,000 m² ) and moderate increases in sales were recorded in Leipzig with around 91,000 m² (Q1-Q3 2022: 90,000 m²). On the other hand, market activity in Nuremberg lost around 50,000 m² (Q1-Q3 2022: 53,000 m²), in Dresden with around 34,200 m² (Q1-Q3 2022: 36,500 m²), in Karlsruhe with around 29,900 m² and in Magdeburg is dynamic with 10,670 m² (Q1-Q3 2022: 18,800 m²).
Significantly increasing office space vacancies
• Within one year, the total amount of office space available at short notice in the 14 DIP locations increased by 493,300 m² (+9.5%) from around 5.19 million m² to currently around 5.68 million m² . Accordingly, the average vacancy rate in the DIP office markets rose from around 4.6% to around 5.1%.
• There are different developments in the individual markets: The “Big Seven” recorded a significant expansion of the supply reserve over the course of the year. The other seven DIP office centers show a more differentiated picture: While the supply reserve continued to decline moderately in Freiburg, Karlsruhe and Magdeburg, it rose significantly in Dresden, Leipzig, Essen and Nuremberg.
Rental prices are rising
• Regardless of the increase in available office space, the average weighted prime rent increased within one year in the 14 German DIP office markets analyzed by 11% or €3.90/m² to now €39.00/m². Above all, the increased prime rents in Düsseldorf (€39.00/m² = +34%), Freiburg (€21.50/m² = +26%), Cologne (€32.50/m² = +20%) and Munich (49.75 €/m² = +18%) should be mentioned. For the first time in years, Munich has taken over the rental price leader from Frankfurt with 46.00 €/m², followed by Berlin with 45.00 €/m².
• The average rent level for office space in city locations also rose, albeit much more moderately, by around 1.3% or €0.30/m² from around €22.60/m² to now around €22.90/m² .
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