CESAR. Certification and Sustainability Radar. Germany 1st half of 2017 Published in August 2017

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1 CESAR Certification and Sustainability Radar Germany 1st half of 017 Published in August 017

2 The proportion of certified office space in the Big 7 reaches 7.4% The sustainability of real estate is important for both investors and users of the buildings. For many users, environmental aspects are anchored in corporate values and play an important role in internal processes such as letting decisions. For investors, this aspect is relevant if it increases the chances of attracting tenants and therefore to let their properties. This is confirmed by a survey of investors conducted by JLL in the framework of a study for the dena Deutsche Energie-Agentur (Office Property - Energetic State and Incentives to Increase Energy Efficiency, May 017). For example, a sustainability certificate can often be regarded as essential in order to attract international tenants. In the current market climate of high demand for investment properties and therefore intense competition amongst investors, investors are often willing to accept a building which does not have a sustainability certificate; however, in some instances, especially when acquiring a new office building, more than two-thirds of respondents consider a sustainability certificate to be important or very important. In this context, we use CESAR to analyse the office property markets in the seven major property centres, Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart. In our analysis, we always use the terms Certification and Certified to refer to properties which are certified, precertified or registered for certification. We have investigated the stock of office space in the major property centres, but not developments under construction or at the planning stage. We take account of all established certificates in Germany, i.e. DGNB, LEED, BREEAM and (specifically for Hamburg) the regionally important HafenCity-Siegel. The stock of certified office space in the Big 7 has grown and by the end of the first half of 017 it had reached over 6.8 million sqm. This corresponds to over 7.4% of the total office stock, and has therefore grown by 0.4 percentage points over the past 1 months. In the ranking of cities with the highest percentage of certified office space, Frankfurt remains in pole position with.3 million sqm and 19.6%, CESAR Certification and Sustainability Radar CESAR August 017

3 Certified Office Stock Office Stock (million sqm) Certified* (million sqm) in % of Stock Berlin Düsseldorf Frankfurt/M Hamburg Cologne Munich Stuttgart incl. Ratingen, Neuss, Erkrath und Hilden incl. Eschborn und Kaiserlei 3 incl. Surrounding areas 4 incl. Leinfelden-Echterdingen * Certified, pre-certified or registered for certification followed closely in relative terms by Düsseldorf with 7.3% and Munich with 6.%. In last place is Stuttgart which has reached the 4% mark. There are now more certified office buildings than a year ago, not only in total but in all seven cities. This increase is mainly due to the completion of new office properties. For example, in the first half of 017, office properties with a total area of over 400,000 sqm were constructed in the Big 7, almost 30% of which is certified. Examples include the DGNB-certified Upper West building on Kurfürstendamm in Berlin and Fleet Office II, which was completed in Hamburg City-South with almost 0,000 sqm (also with a DGNB certificate). LEED certificates have also been awarded to the Am Oktogon building in Berlin-Adlershof and to the Andreas-Quartier in Düsseldorf, both of which were completed in the second quarter of 017. User demand for certified buildings is somewhat higher than the proportion of certified buildings in the total office stock suggests. In the Big 7, total take-up in the first six months was 1.84 million sqm, with 41,000 sqm of this concluded in certified office properties. This corresponds to 10% of the total take-up, proving that there is aboveaverage demand for certified space. top 10 sectors with the highest take-up in certified buildings in the Big 7 in the first half of 017. With take-up of 58,000 sqm, business-related service providers head the field with an above-average share of 17%, followed by IT companies and the publishing industry / media. Although a lower volume of take-up was recorded for the new media and insurance sectors, they still accounted for 9% and % of lettings of certified space respectively. There are examples of high volume lettings of certified offices in Frankfurt, where the German Federal Bank leased 7,000 sqm in the LEED-certified Trianon building. The US Wework co-working centre leased 5,000 sqm in the LEED-certified Junghof building. In Düsseldorf, Atos Information Technology GmbH concluded a lease of more than 7,500 sqm in a BREEAM-certified building in the Seestern submarket, and in Cologne and Munich there were also lettings from 5,000 sqm. We believe that the demand for certified space from both building users and investors will continue to grow. Although the certification of existing space has become more important, the major source of growth in certified office space will come from the completion of new buildings. Just less than 360,000 sqm of the projects currently under construction are already certified. The demand for certified office space varies depending on the user s industrial sector. The table on page 4 shows the CESAR August 017 3

4 Take-up H1 017 in Certified Buildings Office Space Take-up H1 017 Total (sqm) in Certified Buildings* in % Berlin 397,00 4, Düsseldorf 1 18,400 15, Frankfurt/M 37,900 60, Hamburg 300,000 0, Cologne 155,400 1, Munich 3 418,000 46, Stuttgart 4 110,900 5, incl. Ratingen, Neuss, Erkrath und Hilden incl. Eschborn und Kaiserlei 3 incl. Surrounding areas 4 incl. Leinfelden-Echterdingen * Certified, pre-certified or registered for certification Business Sectors with Highest Take-up H1 017 in Certified Buildings Office Space Take-up H1 017 Total (sqm) in Certified Buildings* in % Business Services 338,500 57, IT 16,000, Media, Publishing 103,600 18,00 18 Banking, Finance 98,700 15, Manufacturing 49,300 1,100 5 Construction, Real Estate 107,800 10, Public Administration 173,800 8,600 5 New Media 7,000 7,900 9 Insurance 7,600 6,00 Social and personal services 6,300 4,00 7 CESAR August 017 4

5 Contacts Martin Hofmann Head of Project & Development Services Germany Munich +49 (0) Matthias Barthauer National Director Research Hamburg +49 (0) jll.de Information regarding JLL and our services jll.de/research All research reports on current market figures and special topics jll.de/immo Commercial real estate properties for sale or to let throughout Germany Copyright JONES LANG LASALLE GmbH, 017. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.