GPP Commercial Property Market Germany´s top7 cities 2017/Q1-4

LOCAL EXPERTISE – ACROSS GERMANY
MARKET SURVEY INVESTMENT/OFFICE LETTING 2017/Q1-4
OFFICE LETTING
BERLIN
INVESTMENT
BERLIN
The volume of investment transactions in commercial
properties rose by 45 % year on year to a total for 2017
of €7.3bn. This was the second highest total ever seen,
topped only by the €7.8bn posted in 2015.
INVESTMENT PROPERTIES
In 2017 more than 130 sales of commercial properties
were reported in Berlin. The three biggest sales were the
“Sony Center”, sold in the 3rd quarter by the National pensions
Service for around €1.1bn to a consortium led by
Oxford Properties (offices, Potsdamer Platz, Potsdamer/
Leipziger Platz sub-market), and the two Axel-Springer
buildings. One was the new build “Axel-Springer Mediencampus”
sold in the 3rd quarter by Axel Springer for
around €425m to the Norwegian Government Pension
Fund Global (offices, Axel-Springer Strasse, Mitte 1a submarket)
and the “Axel-Springer-Passage” (offices, Zimmerstrasse,
Mitte 1a sub-market) that changed hands for
€330m in the 3rd quarter and is now owned by Blackstone.
INVESTORS AND VENDORS
Due to the sale of the “Sony Center” to a pension fund,
buyers belonging to this sector accounted for the lion’s
share of the traded volume, equivalent to 27 %. The selling
side of the market was dominated by project developers/
builders who accounted for 18 %, and pension funds which
comprised 17% - likewise a result of the “Sony Center”
transaction. The proportion of international investors rose
slightly from 64 % to 73 %.
OUTLOOK
The volume of transactions forecast for 2018 is around
€5.0bn, because no-one expects to see the same level of
big-ticket trades as 2017.
Transaction volume Berlin
Year on year take-up of space in Berlin offices rose by
10 % thanks to a high number of agreements to rent large
amounts of space and construction starts for owner-occupiers;
the total of 900,000 m² set another new record.
The three biggest rental or owner-occupier transactions
alone accounted for take-up of 129,000 m².
TAKE-UP OF SPACE
By the end of the year 32 agreements involving more
than 5,000 m² had been recorded, and eleven for more
than 10,000 m² of space, including the purchase of
the former Vattenfall headquarters (about 47,000 m²,
Puschkinallee 52, Periphery South) which the new
owner, the Federal real estate corporation Bundesanstalt
für Immobilienaufgaben, will use itself, and the two
large premises let to Zalando (about 45,000 m² at Tamara-Danz-Strasse
7, Friedrichshain, and about 42,000 m²
at Koppenstrasse 8, Friedrichshain). The most popular
sub-market was Friedrichshain with a share of some
14.9 %, followed by Periphery South (about 12.4 %) and
Kreuzberg (about 11.9 %). For the first time ever, the top 3
sub-markets included neither Mitte nor Mitte 1a, thus underlining
the shift in take-up locations. Public administration/federations/social
facilities accounted for 23 % of
the total take-up of space, dislodging the information and
communications sector from the top slot it held in the year
before.
RENTS
Within the space of a year the average rent rose by 21 %
to the new record level of € 19.50/m²/month. The premium
rent was 9 % higher and its new level of € 30.00/m²/month
was last seen in 2000.
Take-up of space Berlin
AVAILABLE AND VACANT SPACE
Empty space stood at a record low of 2.2 % or 430,000 m²,
which was 39 % below the level noted in the prior year.
Berlin therefore has almost no space left to rent, which
makes life difficult for companies that wish to move
premises or expand their offices. Many firms that need
larger amounts of space are turning to new build developments.
This trend is leading to a further rise in new space
being built, but the effects will not be very noticeable until
2019. In 2018 some 294,000 m² of office space will be
completed, in 2019 the scheduled volume is 417,000 m².
OUTLOOK
In the medium to long term more space on the market will
ease the situation for tenants and keep rents reasonable.
In 2018 take-up is expected to total some 750,000 m² because
so little space is available on the market.
TOP 3 SUB-MARKETS (take-up of space / average rent)
FRIEDRICHSHAIN / 134,100 m² / €25.50/m²/month
PERIPHERY SOUTH / 111,600 m² / €13.20/m²/month
KREUZBERG / 107,100 m² / €20.20/m²/month
TOP 3 CONTRACTS
1. FEDERAL INSTITUTE FOR REAL ESTATE MANAGEMENT
Puschkinallee 52 / ca. 47,000 m²
2. ZALANDO
Tamara-Danz-Strasse 7 / ca. 45,000 m²
3. ZALANDO
Koppenstrasse 8 / ca. 42,000 m²
Rents Berlin
As in previous years office properties were the dominant
asset class on the market, accounting for a share of 71 %
(about €5.2bn); hotels followed with 11 % of the market
(€780m) and retail with about 8 % (€584m). The proportion
of portfolio sales rose slightly from 29 % to 32 %.
The prime net yield on office properties fell year on year by
0.3 percentage points to an all-time low of a mere 3.0 %.
In the case of commercial buildings a decline of 0.2 percentage
points brought the yield down to 2.9 %.
(in €bn)
5-year average (2013-2017):
ca. €4.8bn
(in 000s m 2 , incl. owner-occupiers) (net in €/m 2 /mth)
5-year average (2013-2017):
ca. 736,200 m 2
22.00 22.00
22.50
24.00
14.90
premium rent
30.00
27.50
average rent
19.50
16.10
3.4 4.0 7.8 5.0 7.3 5.0
521 630 810 820 900 750
13.20
12.30
13.20
2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018
2012
2013
2014 2015 2016 2017
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