With only one exception, the office leasing markets in Berlin, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart, closed the first quarter with year on year gains, some of them quite substantial, according to the analysis by Colliers International.
‘Overall, we noted take up of space totalling 602,200 square meters in the six cities, equivalent to an increase of some 6% in comparison to the first quarter of 2010. This result is also nearly 3% above the median for the past five years,’ the report says.
After the first three months of 2011, the leading market in terms of take up of space is Munich, at 154,200 square meters and a gain of 12%. It is closely followed by Berlin, with 153,100 square meters and an increase of about 31%. The biggest percentage gains were realized in the Frankfurt office market, where take up of space was up nearly 50%, to 76,400 square meters. Hamburg at 103,000 square meters, and Stuttgart at 37,500 square meters, also recorded rising figures.
The only office space market that saw a decline in take up of space was Düsseldorf, although this development is easily explained, the report adds. ‘While the same quarter of 2010 was dominated by the Vodafone lease signing, no comparably large signings were registered this year,’ it says.
'Since the end of the recession, many companies have returned to a significantly greater degree of certainty for planning purposes in terms of personnel development, which also gives them greater certainty with regard to leasing of new office space. In many cases, companies have also returned to requests that had been put on hold during the crisis and are now signing new leases based on those requests.'
The report also shows that a comparison with the previous year’s figures shows a significant increase in vacancies, which have risen 8%, to approximately 8.02 million square meters, not a very positive development. ‘Compared with the preceding two quarters, however, we can see that at least stagnation, and possibly even a slight downward trend, has set in,’ it adds.
While Berlin was the only market to have less office space available for leasing in the short term than the previous year, at nearly 1.47 million square meters and a vacancy rate of 8.2%, a comparison with the preceding quarter yields more promising results at least for Düsseldorf, where 877,000 square meters of office space was 11.3% vacant, and Hamburg, with some 1.22 million square meters of vacant space, some 9.4%.
In Frankfurt, Munich, and Stuttgart, by contrast, vacancy figures rose both year on year and from the previous quarter. Frankfurt has the most office space without tenants, with almost 2.14 million square meters or 17.9% of the total existing space, currently vacant, followed by Munich, at 1.82 million square meters, 8.2%.
While a comparison with last year shows a tendency toward declining prime rents or stagnation, trends in a shorter term comparison with the previous quarter predominantly show slight upward movement. The highest prime rent is still found in Frankfurt, at €37.50 per square meter, although that figure is slightly below the levels seen last year and in the last quarter.
The report concludes that the financing environment for real estate investors continues to be favourable, with almost no change having been registered this quarter. ‘Banks are much more willing to enter into discussions regarding smaller to mid range investment volumes than it was the case 12 to 18 months ago. Large volume sales are also once again on the rise, with borrowing often spread across several banks,’ the report points out.
‘The continued upturn in the overall economy should also benefit the real estate markets, with employment on the rise and unemployment figures falling, greater consumer confidence in the retail sector, high order volumes in the manufacturing industry, and positive figures for take-up of space in the office leasing markets. All of this adds up to a good environment in which to make riskier investments than before and buy real estate with promising potential. Some uncertainty does remain, however, in connection with the debt crises in Europe and elsewhere,’ it adds.
