Market Report 2011 GerMany - Europe Real Estate

Office markets: Most recent developments
and projected trend
A-locations: Recovery in prime locations, stabilisation
in secondary locations
Significant rise in office take-up …
The strong economic recovery has resulted in significantly higher rental activities
over the past year in the seven largest German office markets of Berlin, Dusseldorf,
Frankfurt, Hamburg, Cologne, Munich and Stuttgart. Take-up in the seven cities during
2010 as a whole increased by a fifth to around 2.8 million m² compared to the weak
previous year.
In particular, providers of corporate services, players from the information and communication
technology sector as well as financial service providers but also companies
from the industrial and construction sectors were more active in the office rental
market than in 2009. In contrast, there was no major change in the take-up by the
public sector and by companies from the retail and transport sectors compared with
the previous year.
… especially in office locations in city suburbs and in the periphery
The increase in take-up was supported not least by a range of spectacular single
transactions, such as the pre-letting of 90,000 m² to Vodafone in the western part of
Dusseldorf, the start of construction of an office block with over 104,000 m² of floor
space in Frankfurt’s Ostend borough for the European Central Bank as owner-occupier
as well as the leasing of 40,000 m² to the City of Hamburg in HafenCity. Many of
these major transactions took place on city centre perimeters. For this reason, the
highest increases in take-up compared to the previous year were in city suburban
areas, where they rose almost a third. New and efficient office space is most likely
to be located on sites outside city centres. Against this background, even peripheral
office locations experienced stronger take-up (+17%) compared with 2009 than the
central inner city locations (+12.5%).
So far no heavy demand for additional office space
However, it must be mentioned critically that the increase in take-up across the seven
major markets was just 3% when compared with the average during the period 2001-
2010. If one considers that rentals in an expanding economy should increase over
the long term, then the take-up achieved thus far only reflects the economic upturn
to a limited extent. In reality, rental activities only improved in any dynamic fashion
during the second half of the year. During the first half of 2010, take-up remained
significantly below the long-term average.
In addition, cost savings from office rationalisation and relocation during the last year
remained the primary motivation for those people seeking office space. Demand by
companies for additional office space was relatively moderate up to the first quarter
of 2011. Nevertheless, net absorption crossed over into the positive range during the
second half year and helped stabilise the trend in vacancies.
in million m 2
TOP 7: Take-up by sector
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
'0 3 '04 '0 5 '06 '0 7 '08 '0 9 '10
Public sector
Information/comm.
Business service
Retail/transport
Financial sector
Industry/construction
Source: Calculation by IVG Research based on data
from BNP Paribas RE
in million m 2
TOP 7: Take-up by location
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
'0 3 '04 '0 5 '06 '0 7 '08 '0 9 '10
Centre City limit Periphery
Source: Calculation by IVG Research based on data
from BNP Paribas RE
in million m 2
TOP 7: Quarterly take-up
1.4
1.2
1
0.8
0.6
0.4
0.2
0
'0 0 '02 '0 4 '06 '0 8 '10
Take-up Long-term average
Source: IVG Research
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