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

LOCAL EXPERTISE – ACROSS GERMANY
MARKET SURVEY INVESTMENT/OFFICE LETTING 2017/Q1-4
INVESTMENT
FRANKFURT
The volume of investment transactions in Frankfurt was
€6.7bn in 2017, just 1 % higher than in 2016. 40 % of this
total was traded in the 4th quarter.
INVESTMENT PROPERTIES
The biggest sale of the year was the “Tower 185” (Friedrich-Ebert-Anlage
35-37) which Deka purchased for
three open-ended funds, paying CA Immo, WPI Fund
SCS-Fis, Fagas Asset GmbH and a pensions company
some €775m. Another 4th-quarter sale was the “Japan
Center” (Taunustor 2) for which GEG German Estate Group
paid Commerz Real AG €280m. Finch Properties and a US
fund sold the “MAC” (Unterschweinsstiege 2-14) by the
airport for about €245m to CapitaLand and Lum Chang
Holdings from Singapore. As usual, the most popular
assets were office properties, which accounted for 91 %
of the total investment trade. A disproportionately large
number of plots of land changed hands - but the over 20
transactions made up only 2 % of the total volume. Portfolio
purchases comprised 12 % of the total in 2017, compared
with 26 % the year before. This was largely due
to the big single transactions just described. Twice the
number of value-add properties were sold compared with
2016, - a result of the growing shortage of core properties.
With core properties still in great demand, however, the
prime net yield on office properties slid down to 3.3 %.
share of 33 %. International investors took a 45 % share of
the total market, slightly less than the year before. This is
mainly attributable to the fact that two of the three most
expensive transactions featured buyers from Germany.
OUTLOOK
2018 will continue to see unabated high demand but it will
be increasingly difficult to find suitable investments. Even
if buyers tend to hold their properties for shorter periods,
investors are still resorting to B and C locations, higher-risk
properties (core+, value-add) and other classes
of asset (mixed use buildings). International investors will
continue to play an important part in 2018.
Transaction volume Frankfurt
(in €bn)
5-year average (2013-2017):
ca. €5.5bn
OFFICE LETTING
FRANKFURT
In Frankfurt around 729,100 m² of office space was let,
30 % more than in 2016. The result is comparable to
volumes seen in the early 2000s.
TAKE-UP OF SPACE
Railway operator Deutsche Bahn AG was the biggest
player on the Frankfurt office market in 2017, just as it
had been in 2016. As of 2020 the firm will be occupying
some 52,600 m² in “The Brick” (Europa-Allee 70-76) and
the neighbouring “Office Tower”, two building developments
in the Europaviertel district (City Periphery). The
next biggest transaction of the year was an agreement
by the central bank Deutsche Bundesbank to take some
44,400 m² in the “FBC” (Mainzer Landstrasse 46, Financial
District). Demand was greatest in the Central Business
District (CBD), where 42 % of the total was registered. Because
Deutsche Bahn AG selected property in the City
periphery district, this sub-market accounted for 17 %.
Financial services comprised the biggest group of new
tenants, taking a good quarter of the total space. Transport
and construction & property firms shared second place.
Deutsche Bahn AG was by far the biggest of the transport
companies; the good result returned by property services
is partly a result of a vast increase in demand by the providers
of co-working space, who secured over 40,000 m²
of space compared with 7,500 m² the year before.
RENTS
Several rental agreements for large amounts of space in
top-quality properties in the CBD pushed the average rent
up by 13 % to € 20.30/m²/month. The premium rent rose by
3 % to € 39.75/m²/month.
5-year average (2013-2017):
ca. 498,820 m 2
AVAILABLE AND VACANT SPACE
The vacancy rate at the end of 2017 was 8.7 % and thus
1.8 percentage points below the prior year’s figure. Less
space stood empty in almost all the sub-markets. The
biggest reduction was in the Banking District, where
only half as much space stood empty as 12 months ago.
Frankfurt North was the only sub-market to register an increase
in empty space (+11 %). Following the low level of
completions in 2017, when 81,100 m² came onto the market,
the figure for 2018 will be around 138,200 m²; however, 73
% of this space has already been pre-let. As of 2019 considerably
more building projects will be completed.
OUTLOOK
Demand will remain high in 2018. Considering that some
clients are still searching for large premises, the annual
total take-up of space could be just under 600,000 m².
TOP 3 SUB-MARKETS (take-up of space / average rent)
FINANCIAL DISTRICT / 193,100 m² / € 31.00/m²/month
CITY PERIPHERY / 127,300 m² / € 18.00/m²/month
WESTEND / 60,400 m² / € 21.00/m²/month
TOP 3 CONTRACTS
Take-up of space Frankfurt Rents Frankfurt
(in 000s m 2 , incl. owner-occupiers) (net in €/m 2 /mth)
1. DEUTSCHE BAHN AG
“The Brick”/”Office-Tower”, Europa-Allee / ca. 52,600 m²
2. DEUTSCHE BUNDESBANK
“FBC”, Mainzer Landstrasse 46 / ca. 44,400 m²
3. HELABA LANDESBANK HESSEN-THÜRINGEN
“Mainblick³”, Kaiserleistrasse 26 / ca. 26,500 m²
35.00
38.00 38.00
39.50
premium rent
38.50
39.75
INVESTORS AND VENDORS
The biggest group of buyers consisted of open property
mutual funds and open-ended special property funds,
which together accounted for 30 % of the total volume.
However, project developers were involved in the largest
number of transactions (46). The first-named types of
funds were the most active sellers in the market with a
3.4 5.0 5.7 6.5 6.7 6.5
2013 2014 2015 2016 2017 2018
448 368 389 561 729 575
2013 2014 2015 2016 2017 2018
17.50
2012
18.50
2013
average rent
19.50
20.30
18.00 18.00
2014 2015 2016 2017
16 17
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