CONTENTS OFFICE MARKET GERMANY 2016 CONTENTS Executive summary... 3 Overview of the German office locations... 5 Office investment... 10 Berlin... 12 Cologne... 16 Düsseldorf... 20 Essen... 24 Frankfurt... 28 Hamburg... 32 Leipzig... 36 Munich... 40 IMPRINT Publisher and copyright: BNP Paribas Real Estate GmbH Prepared by: BNP Paribas Real Estate Consult GmbH Translation: Clive Winter, Siegburg Realisation: KD1 Designagentur, Cologne Title picture: UPPER WEST, STRABAG Real Estate GmbH Status: January 2016 Circulation: 500 carbon neutral natureoffice.com DE-140-296982 print production All rights reserved. This Property Report is protected in its entirety by copyright. No part of this publication may be reproduced, translated, transmitted, or stored in a retrieval system in any form or by any means, without the prior permission in writing of BNP Paribas Real Estate GmbH. The statements, notifications and forecasts provided here correspond to our estimations at the time when this report was prepared and can change without notice. The data come from various sources which we consider reliable but whose validity, correctness or exactness we cannot guarantee. Explicitly, this report does not represent a recommendation of any kind, nor should it be regarded as forming a basis for making any decisions regarding investment or letting or renting property or premises. BNP Paribas Real Estate can accept no liability whatsoever for any information contained or statements made herein.
OFFICE MARKET GERMANY 2016 EXECUTIVE SUMMARY EXECUTIVE SUMMARY Second-best take-up of last ten years Take-up of office premises in 2015 in the eight main German office locations Berlin, Cologne, Düsseldorf, Essen, Frankfurt, Hamburg, Leipzig and Munich totalled around 3.49 million m². That was more than 20 % above the prior-year level. All the major office markets better their prior-year results Berlin lifted its take-up by a handsome 34 % to 814,000 m². This gave the capital first place in the inter-city ranking. The biggest increase in take-up was posted by Düsseldorf: a year-on-year rise of 39 % to 453,000 m². Similarly positive developments were observed in Essen with 130,000 m² (+29 %), Munich with 741,000 m² (+24 %) and Cologne with 281,000 m² (+17 %). Single-digit rises were registered by Frankfurt with 438,000 m² (+7 %), Hamburg with 529,000 m² (+3 %) and Leipzig with 103,000 m² (+1 %). Further fall in overall supply The overall supply of office premises in the locations under review has declined by about 8 % to 6.96 million m². Vacancy, the key component of supply, has shrunk steadily. Viewed across all the locations, it has fallen by over 10 % to about 6.2 million m². Space under construction has grown by just under 4 % to reach an aggregate volume of over 1.6 million m². Slightly more than 47 % of this total is still available to the rental market. Increase in prime rents in some cities Prime rents climbed by an average of 2 % across all the locations in 2015. Rises were registered in Berlin with almost 9 % (25 /m²), Leipzig with 4 % (13 /m²), Munich with 3 % (35.50 /m²) and Hamburg with 2 % (25.50 /m²). In all the other locations, prime rents remained stable in 2015.
Hamburg Berlin Essen Düsseldorf Cologne Leipzig Frankfurt Munich German office locations REMARKS Take-up comprises space let under new lease agreements concluded by 31.12.2015, irrespective of when tenants actually occupy their new premises. It does not include space let under lease agreements that have simply been renewed or extended, nor does it include the exercising of previously agreed options. Take-up by owner-occupiers is included in line with the definition laid down by the German Society for Property Business Research (gif). The rent levels given refer exclusively to agreements concluded in 2015 and represent the nominal net rent per square metre of lettable space per month. Vacant space is unoccupied office space available for letting in existing buildings which will be ready for occupying by 31.03.2016. This also includes space without contractual ties registered by 31.12.2015 as well as unlet new space which has to be developed for tenants. Premises that have not been let at all since completion are classified as newly built vacant space for a period of up to 18 months. Available space is calculated as follows: Unoccupied space + Available space under construction = Available space Projected space is space where a building permit has been issued or a permit is likely to be issued on application.
DÜSSELDORF EXCELLENT RESULT With take-up of 402,000 m² in the municipal area, the Düsseldorf office market achieved its best result since 2007 (440,000 m²). The total was more than 61 % above the weak prior-year figure and about one quarter higher than the long-term average. The wider overall market, i.e. including the office areas in the periphery, also turned in an outstandingly good performance, with 453,000 m² more than at any time since the boom year of 2007 (487,000 m²). Overall, the office locations within the municipal boundaries have gained considerably in relative significance compared with the year before: in 2014, they accounted for only around 77 % of all take-up, in 2015 for all of 89 %. Worthy of note were several large deals of the kind that had been almost entirely lacking the previous year, e.g. the Telekom lease of 28,800 m² in the Seestern district or that concluded by hotel search engine company Trivago for 25,900 m² in the Medienhafen. DEVELOPMENT OF TAKE-UP, VACANT SPACE AND TOP RENTS IN DÜSSELDORF Take-up in m² Vacant space in m² Top rents in /m² 1,500,000 m² 1,200,000 m² 900,000 m² 600,000 m² 300,000 m² 362,000 1,093,000 2011 346,000 1,040,000 2012 415,000 974,000 325,000 989,000 26.00 26.00 24.25 27.50 MAJOR CONTRACTS IN DÜSSELDORF 2013 2014 453,000 950,000 26.00 2015 200 160 120 80 40 MUNICIPAL AREA GAINS IN STATURE Following the extremely low prior-year result, the municipal area has appreciably stepped up its importance again. Almost without exception, the submarkets generated higher turnovers. This applies especially to the office centres, where take-up was more than doubled to 224,500 m² and included the three biggest new contracts, Telekom, Trivago and L Oréal (16,700 m²). The subcentres were also in favour again, with a total of 78,500 m². Then came the City Centre locations, with about 71,000 m². The Centre Fringe accounted for some 28,000 m². The highest take-up figures within the municipal boundaries were posted by Medienhafen (59,000 m², +195 %), Seestern (55,000 m², +424 %) and Inner City (39,500 m²). TURNOVER HIGHER IN NEARLY ALL SIZE CLASSES Whereas in 2014, only one contract for premises of over 10,000 m² was signed, in 2015 the biggest size category attracted far more activity, generating take-up almost six times the prior-year figure. That gave it 25 % of all turnover (+19 percentage points) and put it out in front in the size-class ranking. But the excellent overall result was not just due to large leases. Together, the size classes up to 10,000 m² also generated higher take-up than the year before. Shares of around 17 % were obtained by each of the brackets 200-500 m², 500-1,000 m² and 2,000-5,000 m², while the 1,000-2,000 m² segment accounted for just over 13 %. Considerably lower proportions were registered by the 5,000-10,000 m² class (7 %) and by that up to 200 m² (5 %). OMZ Company m² 2.4 Telekom 28,800 2.2 Trivago 25,900 2.3 L'Oréal 16,700 3.2 PWC PricewaterhouseCoopers AG 15,600 2.5 Handelsblatt 13,200 4.3 Rheinbahn AG 11,100 5.1.2 SAP AG 9,000 1.2 MDK (medical service) 5,600 2.4 T-Systems 5,600 TAKE-UP ACCORDING TO SIZE CATEGORIES IN DÜSSELDORF 45 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 % Number of contracts in % Take-up volume of contracts in % 27.0 4.7 40.3 16.8 m² < 201 201-500 18.7 16.8 7.5 13.4 4.5 17.0 0.9 6.7 1.1 24.6 501-1,000 1,001-2,000 2,001-5,000 5,001-10,000 > 10,000
OFFICE MARKET GERMANY 2016 DÜSSELDORF SIX GROUPINGS WITH DOUBLE-DIGIT SHARES The demand side was once again very broad, with all of six sectors making double-digit contributions to aggregate take-up. The list is headed by information and communications technology firms with nearly 16 %, which represents a slight year-on-year rise (+5 percentage points). Second place was taken by consultancies, which also lifted their share modestly, to gain 14 % (+1 percentage point). Other services, the second biggest source of demand the year before, slipped back into third place (12 %). Then, virtually equal, with each obtaining just under 11 %, come the headquarters of industrial companies, the sector transport and traffic, and wholesale/retail. The only other sector to exceed the 5 % mark was media and advertising (just over 8 %). TAKE-UP ACCORDING TO SECTORS IN DÜSSELDORF in % ICT firms Consultancies Other services Industrial HQs Transport and traffic Wholesale / retail Media and advertising Healthcare Public administration Banks, financial services Lobbyists Others 15.8 14.0 12.1 10.9 10.9 10.8 8.4 4.7 3.5 2.1 1.4 5.4 0 4 8 12 16 DECLINE IN VACANCY The volume of unoccupied premises has continued to shrink, producing a year-end figure in the overall market area of 950,000 m² (-4 %). Within the city borders, the reduction at all of 9 % was more marked, creating a total of 669,000 m². Modern vacant space also underwent a sharp reduction, of over 9 %, to give an aggregate volume of 261,000 m², of which some 220,000 m² is located in the municipal area. There, one third of all vacant space features modern specifications, while in the periphery the relevant proportion is only around one seventh. By far the biggest stocks are located in the Seestern district (118,500 m²), with other notable reserves to be found for example in Düsseldorf North (67,500 m²) and the highly favoured Inner City (61,000 m²). The vacancy rate has fallen to 8.6 % in the municipal area and to 10.2 % in the market as a whole. VACANT SPACE ACCORDING TO LOCATION IN DÜSSELDORF in m² Top 12 office market zones 2.4 Seestern 5.3 Miscellaneous 4.1 Düsseldorf North 4.3 Düsseldorf South 1.2 Inner City 4.4 Düsseldorf West / Left Bank 5.2.2 Neuss Hammfelddamm 5.1.1 Ratingen West 2.1 Grafenberger Allee 1.1 CBD / Banking District 2.3 Kennedydamm 3.1 Friedrichstadt 0 30,000 60,000 90,000 120,000 118,500 113,000 67,500 63,500 61,000 60,500 60,000 55,500 50,500 44,500 42,000 40,000 LESS SPACE UNDER CONSTRUCTION During the past year, the volume of space under construction went on falling, producing the lowest end-of-december total since the economic and financial crisis in 2009, with just 149,000 m² (-6 %). However, just under half of this some 68,000 m² is still available to the market. This space is basically confined to the central locations, in particular the Inner City and the office centres, where especially the Medienhafen exhibits considerable building activity. Over 60 % of the available space is scheduled for completion in this present year. The decline in vacancy and in the volume of ready-to-rent premises under construction has reduced the overall available supply of space to a year-end total of 1.02 million m² (-5 %), thus only marginally above the 1 million m² mark. SPACE UNDER CONSTRUCTION IN DÜSSELDORF 400,000 300,000 200,000 100,000 Space under construction in m² available in m² 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20 21
PRIME RENT STABLE AT 26 /m² The prime rent in the Düsseldorf market area remained static during the course of the year to end 2015 at the prior-year level of 26 /m². As before, it is obtained in the CBD / Banking District. On the other hand, some office locations registered slight or even marked increases in their top rents. This includes, in particular, the Inner City, where the top rent posted a leap of 19 % to 22 /m². In the field of average rents, a modest upward trend was evident across the different submarkets, extending especially across the City Centre areas and the office centres. On the other hand, average rents in the Centre Fringe, the subcentres and the peripheral locations failed to reveal any uniform trend, with some appreciable increases contrasting with minor falls. TOP RENTS ACCORDING TO LOCATION IN DÜSSELDORF in /m² Top 12 office market zones 1.1 CBD / Banking District 2.2 Medienhafen 1.2 Inner City 2.3 Kennedydamm 2.5 Derendorf 4.4 Düsseldorf West / Left Bank 2.6 Airport City 3.1 Friedrichstadt 5.1.2 Ratingen East 4.3 Düsseldorf South 2.1 Grafenberger Allee 2.4 Seestern 26.00 24.50 22.00 20.50 17.50 17.50 16.50 16.00 14.30 14.00 13.00 13.00 0 5 10 15 20 25 30 OUTLOOK FOR 2016 MORE MODERATE The cluster of several out-of-the-ordinary large deals seen in 2015 is unlikely to be repeated to that extent in the months ahead, suggesting that despite the ongoing buoyant level of demand, take-up in 2016 is likely to be much more moderate in scale. Space under construction is set to expand again, with some project developments due to be commenced, but since a large proportion of the premises concerned have already been assigned, the volume of available space will nevertheless continue to decline. Since new-build premises remain in short supply, vacancy should fall, because vacant premises will represent the only way of meeting most of the demand. In view of several premium projects, such as the Kö-Quartier and the Carlsquartier, there is a possibility of a modest rise in the prime rent. TRENDS IN IMPORTANT MARKET INDICATORS IN DÜSSELDORF Take-up Vacant space Space under construction (total) Space under construction (available) Top rent