office market munich - BNP PARIBAS Real Estate Deutschland

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1ST HALF STRONG AFTER ALL With take-up of 328,000 m², the Munich office premises market has turned in a very pleasing performance, even though the total fell nearly 17 % short of last year’s top result. Overall, the 10-year average was exceeded by 5 %. So the Bavarian capital has defended its leading position among Germany’s key office locations by finishing well ahead of Berlin (250,000 m²) and Frankfurt (242,000 m²). Whereas turnover in the equivalent period last year was substantially influenced by several large deals upwards of 10,000 m², take-up this year was fuelled by gratifyingly buoyant market activity in the small and mid-range size categories. Particularly in the 2nd quarter, the scale of demand really speeded up, and the result, at almost 200,000 m², was 54 % higher than in the first three months. Turnover has focused relatively strongly on the municipal area, which accounted for 79 % of the total. The bestperforming office market zone was the city centre, with 53,000 m², in front of centre fringe South, with 48,000 m². The peripheral areas posted a total of 70,000 m² (-31 %). HEADQUARTERS OF INDUSTRIAL COMPANIES GENERATE STRONG DEMAND The distribution of take-up according to business sectors reveals only minor changes compared with last year. As before, the ranking was led by the headquarters of industrial companies, with almost 24 % of the total, after benefiting from some of the largest deals. These included, for instance, the lease for premises of 15,500 m² concluded by BMW Peugeot Citroën Electrification in Region North. In second place, with a share of 22 %, came information and communications technology firms. In a year-on-year change, consultancies moved up from fifth to third place thanks to a considerable number of deals (12 %). Other services slipped one place to finish fourth, with just under 12 %. Other sectors with sizeable shares were healthcare (8 %), and public administration and retail firms, each with 5 %. STABLE BASIS OF DEMAND In the 1st half of 2012, take-up was again spread pleasingly uniformly across the different size classes, with the mid-range brackets in particular forming a solid basis of demand. The strong contributions made by the size categories from 200 m² to 5,000 m², all of which achieved shares of between 15 % and 23 %, highlight the liveliness of market activity. The only category to register a sharper year-on-year fall was the largest, that of 10,000 m² and above, which achieved only 8 % of all turnover (-9 percentage points). The biggest take-up volumes were generated by the size brackets 2,000 – 5,000 m² (23 %) and 1,000 – 2,000 m² (20 %). But the second-smallest category also achieved a share of 18 %. OFFICE MARKET MUNICH 1st HALF 2012 CITY REPORT Development of take-up and top rents in Munich 1st half in m² 2nd half in m² Top rent in €/m² 1,000,000 m² 800,000 m² 600,000 m² 400,000 m² 200,000 m² 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Take-up according to sectors in Munich in % Industrial HQs ICT firms Consultancies Other services 15.3 150 € 120 € Healthcare 7.8 2012 Public administration 5.1 30, June Wholesale/retail 5.0 GmbH, Banks, financial services 4.7 Estate Real Media and advertising 4.3 Paribas BNP Others 3.8 © 0 4 8 12 16 20 24 Take-up according to size categories in Munich 25 % 20 % 15 % 10 % 5 % 1st half 2011 in % 1st half 2012 in % 3.2 2.9 17.0 18.0 m² < 201 201–500 18.8 13.2 20.1 17.5 22.9 13.4 12.4 16.9 90 € 60 € 30 € 23.7 22.2 11.8 11.6 8.4 501–1,000 1,001–2,000 2,001–5,000 5,001–10,000 > 10,000 © BNP Paribas Real Estate GmbH, June 30, 2012 © BNP Paribas Real Estate GmbH, June 30, 2012
SUBSTANTIAL FALL IN VACANCY The strong demand exhibited in recent quarters is reflected by the way in which vacancy has developed. Within the course of a year, this has been reduced by nearly 15 % to 1.4 million m². Exceptionally marked declines were posted in Arnulfpark (-63 %), Parkstadt Schwabing (-59 %) and centre fringe North (-44 %), but the volume of ready-to-rent space also fell considerably in the city centre (-21 %). There is a clear-cut focus of demand on vacant modern premises. These currently represent a total volume of 382,000 m², which is 43 % less than at the same time last year, and they now account for only a very small proportion (26 %) of aggregate vacancy. The vacancy rate has accordingly fallen by a considerable margin. In the municipal area it is 6.0 %, and in the market area as a whole 7.1 %. MORE SPACE UNDER CONSTRUCTION – BUT LESS AVAILABLE Following the commencement of several projects, the volume of space under construction, at 274,000 m², is well up on the prior-year figure (+24 %). However, the still-available proportion of this space – 119,000 m² – is some 22 % lower than before, since most of the projects concerned already have high preletting rates or are destined for owner- occupation. This development also impacts on the overall available supply of office space (vacancy plus available premises under construction), which has fallen year-onyear by 15 % to produce a total at present of 1.56 million m². PRIME RENT STABLE, AVERAGE RENTS RISING The prime rent in the Munich market area, obtained in the city centre, has remained steady at 33 €/m² for over a year now. In many other submarkets, though, the pressure of demand for modern office units has made itself apparent in the form of higher top rents. These submarkets include Parkstadt Schwabing (+14 % to 20 €/m²), Arnulfpark (+10 % to 22 €/m²), centre fringe North (+9 % to 24 €/m²) and Bogenhausen (+8 % to 20 €/m²). Average rents have also been climbing in almost all the office market zones. OUTLOOK The perceptible market upswing that began in the 2nd quarter looks set to continue during the remaining months of this year, although of course the still unresolved state debt crisis does raise question marks. Nonetheless, it seems not unrealistic to expect the year as a whole to produce a very good result, in the region of around 700,000 m². The pace of the reduction in vacancy, however, is likely to be much more restrained than up to now, since upcoming business relocations will leave premises standing empty. Where the prime rent is concerned, the most probable scenario is stabilisation at the present level. OFFICE MARKET MUNICH 1st HALF 2012 CITY REPORT Development of vacant space in Munich Unrefurbished in m² Normal in m² Modern in m² 2,000,000 1,500,000 1,000,000 500,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1st half Development of space under construction in Munich 640,000 480,000 320,000 160,000 Space under construction in m² Available in m² 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1st half Trends in important market indicators in Munich 1st half 2011 1st half 2012 Trend 2012 Take-up 393,000 m² 328,000 m² Vacant space 1,692,000 m² 1,442,000 m² Space under construction (total) 221,000 m² 274,000 m² Space under construction (available) 153,000 m² 119,000 m² Top rent 33.00 €/m² 33.00 €/m² Major contracts in Munich © BNP Paribas Real Estate GmbH, June 30, 2012 OMZ Company m² 4.1 BMW Peugeot Citroën Electrification 15,500 2.2 Rohde & Schwarz GmbH 12,000 3.1 Strabag AG 9,900 3.1 BMW AG 9,400 3.1 NTT Data Deutschland GmbH 9,000 2.1 1&1 Mail & Media GmbH 6,500 3.5 Migros Freizeit Deutschland GmbH 5,600 3.5 Epping Herrmann Fischer 4,800 2.4 DWP Servicebank AG 4,700 © BNP Paribas Real Estate GmbH, June 30, 2012 © BNP Paribas Real Estate GmbH, June 30, 2012 © BNP Paribas Real Estate GmbH, June 30, 2012
Page 1: RESEARCH CITY REPORT OFFICE MARKET
Page 5 and 6: Key indicators Munich in the 1st ha

office market munich - BNP PARIBAS Real Estate Deutschland

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