Market Report 2011 GerMany - Europe Real Estate

Berlin: strong annual take-up
thanks to major transactions at the end of 2010
Thanks to a very dynamic fourth quarter (with a take-up of 218,000 m²), total lettings
of 512,000 m² in the Berlin office market last year represented the second highest
take-up in its history. The fourth quarter saw several spectacular major transactions
come to fruition, including the letting of 40,300 m² by the Federal Ministry of the Interior,
29,500 m² by the Federal Office for Building and Regional Planning and 17,500
m² by the “evangelische Diakonie”. Major transactions above 5,000 m² accounted for
over half of take-up last year, with 31% alone made up of transactions greater than
10,000 m². Those entities that were most active in seeking space in 2010 included
public administration institutions (25% of take-up), providers of miscellaneous services
(17%) and industrial companies (16%). In geographical terms, almost 70% of the
take-up was concentrated in the central city locations of Berlin East and Berlin West.
Low speculative new construction activity coupled with rising demand for space
resulted in a stable trend in vacancies during the last year. The vacancy rate during
the year remained at 8.9%. The major transactions during the second half of the year
resulted in a shortage of supply particularly in the large modern building segment in
Berlin’s inner city. Against this background, the prime rent last year not only stabilised,
but actually increased during the fourth quarter by as much as 5% to €21/m² per
month. The prospects of a further recovery in the market are good, not least due to
the fact that speculative completion volumes will also be low in 2011.
Düsseldorf:
prime rents in the financial district on the up
Last year’s take-up of 386,000 m² in Dusseldorf was a good 18% above the average
of the past ten years. In contrast to Germany’s other six real estate strongholds,
Dusseldorf experienced a surge in demand for lettings not at the end but at the start
of 2010, when Vodafone signed a pre-letting agreement for 90,000 m² in a building
complex yet to be constructed in the immediate vicinity of the Seestern district. A total
of eight major transactions above 5,000 m² were completed during 2010 with a total
volume of 145,000 m². The Vodafone deal meant that the IT and telecommunication
sector (38% share of take-up) still ranked ahead of the consultancy firms (24%) last
year as the most active seeker of office space in Dusseldorf. Decisions by Vodafone,
AXA and Ericsson to locate in the Seestern area proved significant in making the left
bank of the Rhine in Dusseldorf the most successful submarket of the past year in
terms of take-up volume. Lettings in the north of Dusseldorf, in Medienhafen and in
the city centre also performed well, while virtually no transactions took place in the
south or on Grafenberger Allee.
Since take-up was significantly characterised by pre-lettings, the vacancy rate rose in
the interim from 11.3% to 12.1% before falling back to 11.5% in the fourth quarter of
2010. Modern office space is in short supply particularly in central locations such as
the financial district. For this reason, prime monthly rents here had already risen 2.2%
to €23/m² by the middle of the year. By contrast, rents in some peripheral office locations
such as Grafenberger Allee came under further downward pressure. In view of
moderate volume of construction completions of just 80,000 m² anticipated for 2011,
the prospects of further reductions in vacancies and a renewed increase in rents are
good.
in 1,000 m 2
Office market Berlin
1750
1500
1250
1000
750
500
250
0
'0 0 '02 '0 4 '06 '0 8 '10 '1 2e
Take-up
Vacancy Rent
Source: CW/JLL et. al., forecast by IVG Research
in 1,000 m 2
Office market Dusseldorf
1250
1000
750
500
250
0
'0 0 '02 '0 4 '06 '0 8 '10 '1 2e
Take-up
Vacancy Rent
Source: BNP Paribas RE et. al., forecast by IVG Research
30
28
26
24
22
20
18
25
24
23
22
21
20
in €/m² monthly
in €/m² monthly
11