investment | office letting commercial property … · fresh superlatives were needed to describe...

LOCAL EXPERTISE – ACROSS GERMANY

WWW.GERMANPROPERTYPARTNERS.DE

INVESTMENT | OFFICE LETTING

COMMERCIAL PROPERTY MARKETGERMANY’S TOP 7 CITIES2018/Q1-4

Dear Readers,

Fresh superlatives were needed to describe the 2018 property market. At Germany’s top 7 cities the volume of investment transactions was the highest in over ten years, totalling €36.7bn. The top 7 also continued to register great demand for office space, resulting in a respectable year-end total of 3.9m m². Too few properties to meet demand remains a constraint on the market. This shortage is reflected both in the average vacancy rates, which have fallen to an all-time low of 3.4% in these cities, and in the huge proportion of space in new developments that is let before completion.

This market survey provides a review of the year 2018 as it played out on Germany’s top 7 markets. In addition to drawing comparisons between the top 7 markets, we offer a detailed look at the investment and office letting markets in Hamburg, Berlin, Düsseldorf, Cologne, Frankfurt, Stuttgart and Munich. This survey includes a new section on the economic environment and one called “Spotlight” - in this edition we shall be shedding more light on the pro-viders of coworking space.

This market survey was made possible by the partnership between five of the leading service providers specialized in commercial properties based in north, central and south Germany - the nationwide network German Property Partners (GPP). Our detailed knowledge of local markets gives us access not only to data on the overall market, but

CONTENT

Top 7 | Overview and Key figures ................................4/5Economic environment ................................................... 6Spotlight: Coworking space ........................................... 7Top 7 | Investment ........................................................8/9Top 7 | Office letting .................................................10/11Hamburg ...................................................................12/13Berlin .........................................................................14/15Düsseldorf ................................................................16/17Cologne .....................................................................18/19Frankfurt .................................................................. 20/21Stuttgart .................................................................. 22/23Munich ...................................................................... 24/25

also on each of the top 7 locations and the sub-markets within each of these.

We hope you find the survey an informative and illumi-nating read. We would be happy to hold personal talks with you and answer your specific questions about property matters.

Guido NabbenSpokesman for German Property Partners

LOKALE KOMPETENZ – DEUTSCHLANDWEIT


MARKTBERICHT INVESTMENT/BÜROVERMIETUNG 2018/Q1-2

LOCAL EXPERTISE – ACROSS GERMANYGERMAN PROPERTY PARTNERS

Grossmann & BergerA real estate consultant with expe-rience stretching back for over 80 years, Grossmann & Berger is one of the leading service providers for the sale and letting of commercial and resi-dential real estate in Northern Germany, and is an affiliate in the HASPA-group of companies.

E & G REAL ESTATEE & G is one of the leading providers of real estate services in South Germany and has many years’ experience in the fields of investment in commercial and residential properties and the com-mercial letting of office, retail, indus-trial or logistics premises.

Anteon Anteon is an owner-managed real estate consultancy firm that spe-cializes in brokering office lets, invest-ments and industrial & logistics prop-erties. In addition, as one of the market leaders, Anteon offers property mar-keting, project support and research services.

GREIF & CONTZENThis owner-managed service company has been providing consultancy, evalu-ation, brokering and management ser-vices for commercial and residential properties in the metropolitan region of Cologne | Bonn for over 40 years, and is experienced in the entire value chain of real estate transactions.

blackoliveblackolive is an owner-managed real estate consultancy firm that focuses on office letting and investment. The man-aging directors both have more than 26 years of experience and stand for an in-depth understanding of the market.

Each of us being a leading commercial real estate company in its respective region, we have joined together to form a Germany-wide real estate network. We are five strong partners.

In Northern Germany, Grossmann & Berger offers its real estate services out of its locations in Hamburg and Berlin, while E & G Real Estate covers Southern Germany from its bases in Stuttgart and Munich. ANTEON Immobilien is the firm to contact about property matters in and around Düsseldorf, while GREIF & CONTZEN Immobilien are your eyes and ears in the metropolitan area of Cologne and Bonn. blackolive guarantees full market coverage in the Frankfurt region.

We have founded German Property Partners with the aim of providing our special services in all of Germany’s major real estate centres. That way, whatever your commercial real estate requirements, wherever you are in Germany, you can obtain your advice from a single provider, and that is us. Via our network and thanks to our respective market positions, we can offer you outstanding local knowledge and preferential market access throughout Germany.

The many years of service our employees have put in with us, make German Property Partners a reliable partner for long-term collaboration in the fields of commercial real estate and finance.

Partner

ABOUT USGERMAN PROPERTY PARTNERS



MARKET SURVEY INVESTMENT/OFFICE LETTING 2018/Q1-4

2 3

Office letting2018/Q1-4 Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7

Take- up of space [m²] 590,000 835,000 334,600 310,000 639,400 218,000 955,000 3,882,000

Year-on-year change [%] -8 -7 -7 0 -12 -19 +9 -5

Average rent [net €/m²/mth] 15.80 21.30 16.10 15.00 20.00 13.90 18.65 -

Year-on-year change [%] +4 +9 +5 +9 -1 +1 +10 -

Premium rent [net €/m²/mth] 27.50 33.50 27.50 23.00 43.50 23.00 36.80 -

Year-on-year change [%] +6 +12 +2 +7 +9 -5 +5 -

Vacant space [m²] 477,200 350,000 555,000 200,000 858,600 186,000 420,000 3,046,800

Year-on-year change [%] -18 -19 -12 -29 -15 +11 -28 -17

Vacancy rate [%] 3.5 1.8 7.6 2.6 7.4 2.3 1.8 3.4

Year-on-year change[percentage points (pp)] -0.8 -0.4 -0.8 -1.0 -1.2 +0.2 -0.7 -0.7

Completions2019+2020 [m²] 313,000 843,000 269,000 235,000 472,000 168,600 465,000 2,222,000

Pre-let rate [%] 63 55 41 74 55 48 90 77

Investment2018/Q1-4 Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7

Transaction volume [€m] 5,950 6,750 3,840 2,100 9,685 2,147 6,237 36,709

Year-on-year change [%] +65 -8 +30 -9 +42 +79 +6 +22

Share CBD [%] 29 25 10 48 60 10 9 31

Share of foreign investors [%] 26 60 39 26 51 39 41 44

Share of forward deals [%] 19 20 12 18 27 10 7 18

Share of asset class Office [%] 55 57 63 52 86 60 68 67

Prime yield Office [%] 2.80 3.00 3.00 3.30 3.00 3.30 2.85 3.04

Year-on-year change [pp] -0.10 0.00 -0.40 -0.40 -0.30 -0.20 -0.15 -0.22

Prime yield Commercial premises [%] 2.70 2.90 3.00 2.90 2.90 2.80 2.40 2.80

Year-on-year change [pp] -0.20 0.00 -0.50 -0.30 -0.20 -0.30 -0.05 -0.22

Prime yield Logistics [%] 4.50 4.20 4.35 4.20 4.20 4.50 4.00 4.28

Year-on-year change [pp] -0.10 -0.30 -0.40 -0.50 -0.40 0.00 -0.40 -0.30

OFFICE LETTING » Take-up of office space, although considerable at

3.9m m², not on a par with the good result of 2017 » Vacancy rate at new all-time low » Take-up spurred by new build projects with high pro-

portion of pre-letting » Average rent rises in almost every top 7 city

INVESTMENT » Strong growth boosts transactions by 22% to €36.7bn » Forward deals account for remarkable 18% » Result betters previous record year of 2007 by almost

€5.0bn » Strong 4th quarter with transactions totalling €12.0bn

KEY FIGURES OFFICE LETTING/INVESTMENT:

Take-up of space (year-on-year change)

Premium rent (year-on-year change)

Average rent (year-on-year change)

Vacancy rate (year-on-year change)

Transaction volume (year-on-year ch.)

Prime yield office (year-on-year ch.)

OVERVIEW TOP 7 | 2018/Q1-4

KEY FIGURESTOP 7 | 2018/Q1-4

HAMBURG 590,000 m² (-8 %)

27.50 €/m² (+6 %)

15.80 €/m² (+4 %)

3.5 % (-0.8 pp)

€5.95bn (+65 %)

2.80 % (-0.1 pp)

COLOGNE 310,000 m² (0 %)

23.00 €/m² (+7 %)

15.00 €/m² (+9 %)

2.6 % (-1.0 pp.)

€2.10bn (-9 %)

3.30 % (-0.4 pp)

STUTTGART 218,000 m² (-19 %)

23.00 €/m² (-5 %)

13.90 €/m² (+1 %)

2.3 % (-0.2 pp)

€2.15bn (+79 %)

3.30 % (-0,2 pp)

DÜSSELDORF 334,600 m² (-7 %)

27.50 €/m² (+2 %)

16.10 €/m² (+5 %)

7.6 % (-0.8 pp)

€3.84bn (+30 %)

3.00 % (-0.4 pp)

BERLIN 835,000 m² (-7 %)

33.50 €/m² (+12 %)

21.30 €/m² (+9 %)

1.8 % (-0.4 pp)

€6.75bn (-8 %)

3.00 % (-0 pp)

FRANKFURT 639,400 m² (-12 %)

43.50 €/m² (+9 %)

20.00 €/m² (-1 %)

7.4 % (-1.2 pp)

€9.69bn (+42 %)

3.00 % (-0.3 pp)

MUNICH 955,000 m² (+9 %)

36.80 €/m² (+5 %)

18.65 €/m² (+10 %)

1.8 % (-0,7 pp)

€6.24bn (+6 %)

2.85 % (-0.15 pp)




4 5

GERMANY BUSINESS ENVIRONMENT

In 2018 the German economy’s growth rate was slower than in any of the past five years. Figures released by the Federal Statistics Office show that the gross domestic product (GDP) grew 1.5% in 2018. Since Germans are still happy to spend money and the labour market is booming, the economy has not faltered too much. However, foreign trade did not grow by as much as in prior years. Since the 3rd quarter Germany’s economic upswing has cooled quite noticeably. Reasons include uncertainty caused by trade disagreements and the looming “no-deal” Brexit.

LABOUR MARKET IN GERMANYIn December 2018 the number of jobless people in Germany sank to 2.2m, its lowest post-reunification level. The un-employment rate in December 2018 was 4.9%, down by 0.4 percentage points from the same month of 2017. Despite the economic slowdown, the labour market has continued to progress well.

The ifo employment barometer also indicates that more German companies wish to add to their payrolls. Having fallen back in the prior month, the barometer rose in De-cember to reach 104.2 points again.

INTEREST RATESThe European Central Bank continues, for the moment, to pursue a zero-interest policy. Experts do not expect to see a rise in the base rate before the beginning of 2020. It is highly probable that interest rates in the USA will be raised as planned.

Following a rise at the start of 2018, 10-year Federal bonds fell back to 0.22% in January 2019. Mortgage rates usually track the changes in Federal bond rates. Accordingly, mortgage rates will not, in all likelihood, rise very much in 2019. Thus the cost of borrowing money for real estate re-mains at an all-time low.

IFO SURVEY OF BUSINESS CONFIDENCE IN GERMANYAccording to the ifo index of business confidence, Ger-many’s business managers are increasingly worried. The index of business confidence fell by 3.0 points between August and December, dropping to 101.0. Business man-agers are now less satisfied with their current business situation too. Expectations about what the coming fi-nancial year will bring are also far less buoyant than in the summer of 2018. FORECAST GDPThe major economic institutions in Germany forecast growth of 1.1% to 1.8% in 2019. It seems probable that the German economy’s long period of growth is not yet over, but will proceed at a slower pace. The economy is bene-fiting from a flourishing construction industry and stable labour market, which is reflected in consumers’ great will-ingness to spend money. Uncertainties are created by the lack of clarity about how Great Britain plans to leave the EU and by the trade war between the USA and China.

Employment 2013-2018/12 | year end values | in millions

Ifo business climate Germany2013-2018/12 | Index 2015 = 100

101.0101.0101.0101.0

104.7104.7104.7104.7

97.397.397.397.3

104.2104.2104.2104.2

2013 2014 2015 2016 2017 2018

Source: ifo InstitutSource: Destatis, Bundesagentur für Arbeit

2.95 2.90 2.80 2.69 2.53 2.21

0.460.49

0.570.66

0.73

0.78

6.9%6.7%

6.4%6.1%

5.7%

4.9%

2013 2014 2015 2016 2017 2018/12

Unemployment rate Registered job offersUnemployed Business situation

Business expectations

Business climate

Employment barometer

SPOTLIGHTCOWORKING SPACE AND BUSINESS CENTRES

Year on year even more space was rented in 2018 by the providers of coworking space and business centres. Take-up in the top 7 cities was some 268,000 m², an in-crease of 28% compared with the prior year. This figure translates into 7% of the total amount of office space taken up over the year.

PREFERRED LOCATIONSProviders of coworking space and business centres were most active in Berlin, where they rented 84,220 m², fol-lowed by Frankfurt (58,200 m²) and Munich (45,500 m²). However, the biggest single let was agreed in Cologne. Design Offices took 13,000 m² in the city’s “DO-Haus”. This segment took 93,900 m² in inner city areas and central business districts (CBDs) of the top 7 cities, 28% less than in the year before. Such figures reveal that the providers of flexible office space are now increasingly obliged to seek properties outside the centres, thus generating greater demand for premises in peripheral locations.

OUTLOOKCoworking space and business centre providers have exerted an enormous influence on demand for office premises in the top 7 cities. Rental agreements for more than 5,000 m² of space illustrate the massive expansion policies pursued by these companies. Design Offices, WeWork and Spaces (Regus) are the fastest growing players in the sector. Companies seeking offices find an al-ready limited choice shrinking further as a result of leases signed by operators of coworking space and business centres.

Top 7 | Take-up of space for coworking2013-2018 | in 000s m2

86 %86 %86 %86 % 19 %19 %19 %19 %30303030 82828282 210210210210 26826826826811111111 9999

53 %53 %53 %53 %

50 %50 %50 %50 %

62%62%62%62%

35 %35 %35 %35 %

2013 2014 2015 2016 2017 2018

Take-up of space

Share CBD

Source: German Property Partners (GPP)

PROVIDERS OF FLEXIBLE OFFICE SPACEBusiness centres » Target groups: companies, self-employed persons/freelancers » Focus on private atmosphere (individual + group offices) » Providers: Regus, Contora, Dussmann, etc.

Coworking space » Target groups: companies, self-employed persons/

freelancers, startups » Focus on communication and collaboration, open spaces » Providers: Beehive, Places, etc.

Hyprid model: mix of business centre and coworking » Target group: mix of the target groups for business

centres and coworking space, corporates » Mix of open space, individual + group offices » Providers: Design Offices, WeWork, rent24, Spaces,

Mindspace, etc.

TOP 10 OFFICE LETTINGS | TOP 7 CITIES2018/Q1-4

Provider City Project/Property rented space [ca. m²]

Design Offices

Cologne “DO-Haus”Schanzenstrasse/Von-Sparr-Strasse

13,000

WeWork Munich Arnulfstrasse 60 12,300

Spaces (Regus)

Frankfurt “Global Tower”Neue Mainzer Strasse 32-36

9,200

WeWork Berlin “The Brighter Hub” Warschauer Platz 11-13

9,000

Design Offices

Berlin “Easton House” Koppenstrasse 93

8,500

rent24 Berlin Karl-Liebknecht-Strasse 34 7,700

Spaces (Regus)

Frankfurt “Omniturm”Großer Gallusstrasse 16-1

6,500

The Office Group

Frankfurt “Oper 46”Bockenheimer Anlage 46

6,500

Design Offices

Cologne “Kaiser Hof”Erftstrasse 19

5,600

Spaces (Regus)

Munich Mühldorfstrasse 5,000

Top 7 | Take-up of space for coworking2018/Q1-4 | by locations

Source: German Property Partners (GPP)

84,22084,22084,22084,220

58,20058,20058,20058,20045,50045,50045,50045,500

31,00031,00031,00031,000

27,40027,40027,40027,400

18,00018,00018,00018,000

4,1004,1004,1004,100

Berlin Frankfurt München Köln Hamburg Düsseldorf Stuttgart

MunichBerlinHamburg FrankfurtDüsseldorf StuttgartCologne




6 7

2018 was a new record year in terms of property invest-ments in Germany’s top 7 cities, with a total transaction volume of €36.7bn. This result bettered the previous record year of 2007 by almost €5.0bn.

TRANSACTION VOLUMEThe transaction volume at four of Germany’s top 7 cities showed double-digit growth rates. Stuttgart saw the greatest increase with a 79% rise (€2.1bn) followed by Hamburg (+ 65%, €5.95bn), Frankfurt (+42%, €9.7bn) and Düsseldorf (+30%, €3.8bn). Frankfurt was the front runner in terms of volume traded. In the 4th quarter alone, com-mercial properties changed hands for a total of €12.0bn. Forward deals accounted for a remarkable 18% of the total volume traded. Year on year their volume doubled to €6.6bn. Currently the market features a large number of properties in which space has already been let before completion. Investors are especially interested in these properties, causing the number of forward deals to rise appreciably during 2018.

Comprising 67% of the volume traded in 2018, office prop-erties remained the most sought-after asset class. Year on year the proportion of portfolio sales on the market fell from 23% to 16%. Amounting to a share virtually un-changed against 2017 (29%), 31% of the volume traded was located in the central business districts (CBDs) or inner cities.

INVESTORS AND VENDORSInternational investors accounted for about half (44%) of the volume sold in 2018. Year on year their share of the market fell by around 6 percentage points. Accounting for 60% and 51% respectively, this segment was most active in Berlin and Frankfurt. Six of the ten biggest transactions were completed by international players. Investors from Asian countries were much in evidence in Frankfurt.

YIELDSThe top 7 prime yields on office properties slipped back by 0.22 percentage points to 3.04%. In this sector the lowest prime yield was registered in Hamburg, at 2.80%, the highest in Cologne and Stuttgart at 3.30%. Yields shrank most in Cologne and Düsseldorf, where returns fell by 0.40 percentage points. Commercial buildings and logistics properties also saw yields declining further year on year.

OUTLOOKThe number of people in employment rose to record levels in 2018 and the economy is proving stable. In view of this, the outlook for the market in commercial property in-vestment is set to remain healthy in 2019. However, as the supply of real estate is shrinking, no-one believes that quite such a good result will be returned in 2019 as in 2018. Overall we expect to see a year of solid investment activity similar to 2016/2017 and a closing transactions figure of around €29.0bn.

INVESTMENTTOP 7 | 2018/Q1-4

Top 7 | Transaction volume2014-2019 | in € bn

Top 7 | Strongest buyer groups by location2018/Q1-4 | Transaction volume in € millions

22.022.022.022.0 29.329.329.329.3 28.828.828.828.8 30.030.030.030.0 36.736.736.736.7

Q4Q4Q4Q4

12.012.012.012.0

29.029.029.029.0

2014 2015 2016 2017 2018 2019

Forecast5-year average (2014-2018): ca. € 29.4bn

400400400400

624624624624

755755755755

881881881881

1,6381,6381,6381,638

1,7471,7471,7471,747

3,7033,7033,7033,703

Cologne

Stuttgart

Düsseldorf

Hamburg

Berlin

Frankfurt

Munich

Source: German Property Partners (GPP)Source: German Property Partners (GPP)

Specialist funds

Open-end retail funds (real estate)

Asset managers

Listed property investment companies-AGs/REITs

Project developers2.80

3.00

3.30

3.00

3.30

2.85

2013 2014 2015 2016 2017 2018/Q4

Hamburg Berlin Düsseldorf KölnFrankfurt Stuttgart München

Top 7 | Transaction volume2018/Q1-4 | by asset class

Top 7 | Prime Yields Office2013-2018/Q4 | (Net) initial yield | in %



TOP 10 TRANSACTIONS | TOP 7 LOCATIONS | 2018/Q1-4

City Project/Property Vendor BuyerPurchase

price[ca. €m]

Frankfurt “Omniturm” Große Gallusstrasse 16-18 Commerz Real for Hausinvest Tishman Speyer Properties

Deutschland GmbH 700

Frankfurt “Trianon”Mainzer Landstrasse 16-24

Igis Asset Management / Hanan Financial Investment NorthStar Realty Europe Corp. 650

Frankfurt “Eurotower”Kaiserstrasse 29 Fubon Life Insurance IVG Institutional Funds (IVG IF) 530

Frankfurt Administrative buildingGutleutstrasse 116-124 Aroundtown Wealthcap

HFS Deutschland 500

Hamburg “Springer Quartier” (Sections A+B) Kaiser-Wilhelm-Strasse

Management company forprofessionals’ pensions,Hannover

MOMENI / Black Horse Investments 400

Frankfurt “Junghof Plaza”Junghofstrasse 14-16

Triuva Kapitalverwaltungsge-sellschaft mbH for providers of professional pensions

Joint Venture between PGIM Real Estate and FGI Frankfurter Gewerbeimmobilien

400

Munich “OSKAR”Oskar-von-Miller-Ring 20

Swiss Life / Bayerische Ver-sorgungskammer

Joint Venture between Korean pensionsfunds and Hines Inte-rests Limited Partnership

390

Frankfurt “Gallileo”Gallusanlage 7/Kaiserstrasse

Capital and Commercial Trust (CCT)

Fund managed by Triuva forSouth Korean investor 356

Stuttgart “Allianz Campus”Reinsburgstrasse

Hines Interests Limited Partnership Officefirst (Blackstone Group) 340

Hamburg “Hanseviertel”Große Bleichen 36

CBRE Global Investors for Europafonds Allianz Versicherung AG > 300

Asset managers

Specialist funds

67%67%67%67%

8%8%8%8%

8%8%8%8%

8%8%8%8%

5%5%5%5%2%2%2%2%

3%3%3%3%

Office

Other

Retail

Logistics

Commercial premises

Hotel

Undeveloped land




8 9

Top 7 | Completions | Pre-let rate2015-2020 | in 000s m2

927927927927 983983983983 946946946946 919919919919 1,3031,3031,3031,303 1,4621,4621,4621,462

73 %73 %73 %73 %

51 %51 %51 %51 %

80808080

114114114114

104104104104

116116116116

126126126126

112112112112

2015 2016 2017 2018 2019 2020

3.5%

7.6%

2.6%

7.4%

2.3%1.8%

2013 2014 2015 2016 2017 2018/Q4

Hamburg Berlin Düsseldorf KölnFrankfurt Stuttgart München

Top 7 | Vacancy rate2013-2018/Q4 | in %



OFFICE LETTINGTOP 7 | 2018/ Q1-4

AVAILABLE AND VACANT SPACEThe average vacancy rate across the top 7 cities fell to a record low of 3.4%. By the end of the year Berlin and Munich had the lowest rates with a mere 1.8% of space standing empty. Year on year all top 7 cities report further shrinkage of the vacancy rate. The biggest contraction was 1.2 percentage points in Frankfurt, although its va-cancy rate of 7.4% was the highest of all 7 cities apart from Düsseldorf.

Taking all top 7 cities together, scheduled building com-pletions will add 2.2m m² of office space in the years 2019/2020. Berlin takes the lion’s share of building activity; here 843,000 m² of office space is due for completion by 2020. In Munich and Frankfurt the amount is about half that of Berlin. Across the board, pre-letting rates are over 50%. The rate is highest in Munich, where 90% of space is pre-let. This situation reflects the huge demand for office premises.

OUTLOOKThe domestic economy remains on a firm footing in Germany, wages and employment rates are rising. It will not be possible to provide all potential customers with the space they need in 2019 due to the shortage of properties and the sky-high levels of off plan letting in new build de-velopments. Against such a backdrop, one has to reckon with lower total take-up in 2019 than in 2018. An acute lack of suitable premises may lead to further rent rises in some cities.

Although 2018 ended with a very respectable figure of 3.9m m², the top 7 cities reported slightly less office space taken up than in the outstanding year of 2017.

TAKE-UP OF SPACEAt the close of the year 2018 a very satisfactory result was announced for Germany’s top 7 office letting markets. The take-up of space was 3.9m m² and thus 5% less than the excellent result of the prior year. Take-up in the 4th quarter totalled 1.1m m². An aggravated shortage of prop-erties and less space standing empty contributed to the slight fall.

Once again Munich led the way in terms of take-up (955,000 m², +9%), well ahead of Berlin (835,000 m², -7%) and Frankfurt (639,400 m², -12%). With office take-up of 310,000 m² Cologne equalled its result for the prior year. There was a slight year on year decline in take-up in Hamburg (590,000 m², -8%) and Düsseldorf (334,600 m², -7%).

RENTSAs in the past, the highest premium rents were paid in Frankfurt at €43.50/m²/month, an increase of 9%. Rates rose more steeply in Berlin than in the other six cities, in-creasing by 12% to €33.50/m²/month. Only in Stuttgart did the premium rent fall, dropping 5% to €23.00/m²/month. Most average rents also increased, remaining relatively unchanged only in Stuttgart (+1%) and Frankfurt (-1%). Here the front-runner was Berlin with average rates of €21.30/m²/month, ahead of Frankfurt (€20.00/m²/month) and Munich (€18.65/m²/month).

2.92.92.92.9 3.53.53.53.5 3.93.93.93.9 4.14.14.14.1 3.93.93.93.9

Q4Q4Q4Q4

1.11.11.11.1 3.63.63.63.6

2014 2015 2016 2017 2018 2019

Top 7 | Take-up of space2014-2019 | in millions m2 | incl. owner-occupiers

5-year average (2014-2018): ca. 3.6m m² Forecast

Office letting | Strongest industries by location2018/Q1-4 | Take-up of space in m2

65,00065,00065,00065,000

70,30070,30070,30070,300

71,60071,60071,60071,600

76,00076,00076,00076,000

120,700120,700120,700120,700

155,000155,000155,000155,000

195,300195,300195,300195,300

Cologne

Düsseldorf

Hamburg

Stuttgart

Frankfurt

Munich

Berlin


Public administration/Social services providers

Financial Services

Industry

Law firms/Tax accountants

Public facilities, associations and federations

Internet/Media/Telecommunications

TOP OFFICE LETTINGS >10,000 m² | TOP 7 LOCATIONS | 2018/Q1-4

City Project/Property Tenant/Owner-occupier Rented space [ca. m²]

Stuttgart Bregenzer/Steiermärker Strasse (Project development)

Robert Bosch GmbH (owner-occupier, construction start) 50,000

Hamburg “Beiersdorf headquarters”Troplowitzstrasse

Beiersdorf AG (owner-occupier, construction start) 45,000

Munich “Campus One”Einsteinring 30 Wirecard AG 40,500

Munich “iCampus”Friedenstrasse /Grafinger Strasse Serviceplan Gruppe 40,000

Frankfurt “Cielo”Theodor-Heuss-Allee 100-104 Commerzbank AG 36,100

Düsseldorf “Heinrich Campus” Heinrich-Erhardt-Strasse 61 Deloitte GmbH (Accountants/Auditors) 35,500

Berlin Hildegard-Knef-Platz 2 Vattenfall GmbH 29,000

Munich “Kustermannpark”Balanstrasse 55-59 HR Department of Bavarian state capital Munich 25,000

Frankfurt “Section 43”Europa-Allee 92 Frankfurter Allgemeine Zeitung GmbH (FAZ) 24,000

Munich Agnes-Pockels-Bogen 1 IT and Communications Technology Department of Bavarian state capital Munich 23,000

Number of projects

Public administration/Social services providers




10 11

3.73.73.73.7 4.04.04.04.0 4.54.54.54.5 3.63.63.63.6 6.06.06.06.0

Q4Q4Q4Q4

2.02.02.02.0

4.54.54.54.5

2014 2015 2016 2017 2018 2019

24.0024.50

25.00

26.00 26.00

27.50

14.0014.50 14.50

15.50 15.2015.80

2013 2014 2015 2016 2017 2018/Q4

525525525525 540540540540 550550550550 640640640640 590590590590

Q4Q4Q4Q4

160160160160 550550550550

2014 2015 2016 2017 2018 2019

Hamburg | Transaction volume2014-2019 | in € bn

Hamburg | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers

Hamburg | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

INVESTMENTHAMBURG

170 transactions were reported on the investment market for commercial properties in Hamburg in 2018, setting a new record total of €5.95bn and overshooting the prior year’s mark by 65%.

INVESTMENT PROPERTIESA large number of transactions for over €100m each are behind this exceptional year, unlike any experienced before in Hamburg. 16 sales in all, totalling €2.7bn, fell into this category. In 2018 the biggest transaction posted was the sale of the “Springer Quartier” (Kaiser-Wilhelm-Strasse, City) for which some €400m was paid in the 1st quarter. The market was mainly dominated by single property sales, which accounted for 73% of total transactions. Forward deals amounting to €1.1bn comprised 19% of the total volume of transactions. This result is double the figure seen last year.

INVESTORS AND VENDORSIn 2018 national investors featured most prominently on the market for investment in commercial properties in Hamburg. A mere 26% (€1.6m) of the investment trades originated abroad, mainly in the USA and Great Britain. Listed property investment AGs/REITS were the most active group of buyers in 2018, accounting for 15% of the total volume (€881m). Two types of investor were most in evidence as vendors. Private equity funds/opportunity funds were behind 27% of the total traded (€1.62bn). Here the primary reason was Black-stone’s sale of its Officefirst portfolio. Developers formed the second largest group of vendors in 2018, with a share close to 27% (€1.58bn). They are benefiting from the current high levels of demand for rental offices in new builds and the resultant early pre-letting agreements, which in turn leads to buildings being sold prior to completion.

OUTLOOKIn 2019 there will still be demand for suitable investment properties in Hamburg. The good market environment, on-going low interest rates and the stability of the German economy are likely to ensure that business remains brisk in the year just started. However, the year 2019 is not expected to repeat the exceptional performance of 2018 and experts reckon with a total transaction volume of between €4.0bn and €4.5bn.

5-year average (2014-2018): ca. € 4.3bn Forecast

Forecast

5-year average (2014-2018): ca. 569,000 m²

Source: German Property Partners (GPP) Source: German Property Partners (GPP)Source: German Property Partners (GPP)

Premium rent

Average rent

640,000 m² was the record result returned in 2017, and it could not be matched the following year. In the year 2018, 590,000 m² of space was was let or taken up by own-er-occupiers and thus some 8% less than in 2017. Most of this reduction is attributable to the shortage of available properties

TAKE-UP OF SPACEThose occupiers of large suites of offices who decided on new locations in 2018 were increasingly likely to select premises off plan. Of 15 agreements signed for more than 5,000 m², eight related to new build developments. Overall in 2018 firms requiring over 5,000 m² of office space ac-counted for about 27% of total take-up. Beiersdorf was the front runner in this field, with the start of construction for their new 45,000 m² headquarters (Troplowitzstrasse, Eimsbüttel). As in the prior year, City ranked ahead of all other sub-markets in 2018. Some 127,700 m² or about 22% of the total take-up was transacted in Hamburg’s central sub-market. One reason for the high volume recorded in City was the successful letting of office space in the “Tower am Michel” (Ludwig-Erhard-Strasse 22), which was built some years ago.

RENTSYear on year there has been a strong rise in both premium and average rents which have climbed to new record levels. By the end of 2018 the premium rent had reached €27.50/m²/month. During the same period average rents across the whole of Hamburg rose to €15.80/m²/month. Numerous rental agreements in new builds or buildings with as-new space lay behind this growth.

AVAILABLE AND VACANT SPACENo improvement on the market for office space in Hamburg was discernible by the close of the year. Although the va-cancy rate fell no further than the prior quarter’s 3.5%, the shortage of available space in some areas continued to curtail take-up activity. At the end of the 4th quarter some 477,000 m² of office space was available at short notice, 100,000 m² less than a year ago.

OUTLOOKMany new build projects due for completion as of 2021 will start to take more concrete shape during the course of the year, so that several large volume agreements may be ex-pected. Overall, in view of the current availability of prop-erties, a decline in take-up to 550,000 m² is expected.

OFFICE LETTINGHAMBURG

TOP 3 SUB-MARKETS (take-up of space / average rent)

CITY / 127,700 m² / €20.20/m²/month CITY SOUTH / 98,600 m² / €13.00/m²/month HAMBURG EAST / 63,000 m² / 13.90/m²/month

TOP 3 CONTRACTS

1. BEIERSDORF AG (OWNER-OCCUPIER, CONSTRUCTION START) Troplowitzstrasse / ca. 45,000 m² 2. POSTBANK “Ipanema”, Überseering 28 / ca. 13,800 m² 3. AKQUINET AG Bramfelder Chaussee 106-112 / ca. 12,000 m²




12 13

INVESTMENTBERLIN

The volume of investment transactions in commercial properties fell by 8% year on year to a total for 2018 of €6.75bn. Nevertheless, it is the third-highest figure seen in the past ten years.

INVESTMENT PROPERTIESSome 110 commercial properties were sold in Berlin during 2018. In one of the three biggest agreements announced in Berlin, Aroundtown paid Park Hotels & Resorts some €297m for the “Hilton Berlin” (Gendarmenmarkt). In ad-dition, the “Zalando Campus” (Valeska-Gert-Strasse 2) was sold again; this time L’Etoile Properties and a South Korean pension fund managed by Capstone were paid €235m by a Hines-managed Luxembourg fund. The third-biggest transaction concerned a shopping centre, “Das Schloss” (Schloss Strasse 34), sold by HFS Immobilien-fonds 10 to Deka Immobilien.

As in previous years office properties were the dominant asset class on the market, accounting for a share of 57% (about €3.9bn); retail followed with 18% of the market (about €1.2bn) and hotels with about 8% (€522m).

The proportion of portfolio sales dropped appreciably from 32% to 18%. Forward deals comprised 20% of the market in 2018, slightly up from 17% in the prior year.

The prime net yield on office properties remained un-changed year on year at an all-time low of a mere 3.00%. Commercial buildings produced a yield of only 2.90%.

INVESTORS AND VENDORSAmong property buyers, fund managers took the lion’s share, closing 2018 with 24% of the total. Fund managers dominated the selling side of the equation too, accounting for 19% of the traded volume. The proportion of interna-tional investors fell slightly from 73% to 60%.

OUTLOOKThe volume of transactions forecast for 2019 is around €5.5bn, because no-one expects to see the same level of big-ticket trades as 2018.

Year on year take-up of office space in Berlin contracted by 7%, although the final total of 835,000 m² was still the fourth-highest posted over the past ten years. A shortage of available properties rather than a lack of demand ham-pered the market.

TAKE-UP OF SPACEBy the end of the year 37 agreements had been concluded for more than 5,000 m² of space and 15 for more than 10,000 m², including the Vattenfall lease (about 29,000 m², Hildegard-Knef-Platz 2, Periphery South) and a contract signed by Berlin Real Estate Management for the Berlin Landeskriminalamt (Office of Berlin State Criminal Police) for some 26,600 m² (Ringbahnstrasse 126-134, Periphery South). For the first time, the most popular sub-market was Charlottenburg with a share of some 15%, followed by Periphery South (about 14%) and Mitte (about 11%). Once again neither Mitte nor Mitte 1a was one of the top 2 sub-markets, thus underlining the shift in take-up loca-tions. Accounting for 27% of total take-up of space, and repeating the prior year’s pattern, the biggest single group of new occupiers were public administrative offices, asso-ciations and social facilities.

RENTSWithin the space of a year the average rent rose by 9% sur-passing last year’s record to set a new one at €21.30/m²/month. The premium rent grew by 12% and its new level of €33.50/m²/month was last seen in the early 1990s.

AVAILABLE AND VACANT SPACEEmpty space stood at a record low of 1.8% or 350,000 m², which was 19% below the level noted in the prior year.

Berlin therefore has almost no space left to rent, which makes life very 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 devel-opments. The result is a trend towards increased volumes of completions coupled with a high level of off plan let-tings. Scheduled completions in 2019 total 338,500 m² of which 67% is pre-let, and in 2020 the projected figure is 504,500 m² (46% pre-let). The last time over 500,000 m² of new office space came onto the market was 1998.

OUTLOOKThis tight market for space and consequent pressure on rents is not set to ease in the immediate future. In 2019 take-up is expected to total some 790,000 m² because so little space is available on the market.


CHARLOTTENBURG / 116,900 m² / €19.50/m²/month PERIPHERY-SOUTH / 112,200 m² / €15.30/m²/month MITTE / 83,000 m² / €25.30/m²/month

TOP 3 CONTRACTS

1. VATTENFALL GMBH Hildegard-Knef-Platz 2 / ca. 29,000 m² 2. BERLIN REAL ESTATE MANAGEMENT Ringbahnstrasse 126-134 / ca. 26,000 m² 3. FEDERAL AGENCY FOR REAL ESTATE MANAGEMENT “Spreestern”, Salzufer 5 / ca. 15,000 m²

OFFICE LETTINGBERLIN

Berlin | Transaction volume2014-2019 | in € bn

4.04.04.04.0 7.87.87.87.8 5.05.05.05.0 7.37.37.37.3 6.86.86.86.8

Q4

2.7

5.55.55.55.5

2014 2015 2016 2017 2018 2019

5-year average (2014-2018): ca. € 6.2bn

Forecast

22.0022.50

24.00

27.50

30.00

33.50

12.3013.20

14.90

16.10

19.50

21.30

2013 2014 2015 2016 2017 2018/Q4

Berlin | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers

Berlin | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

Premium rentAverage rent

630630630630 810810810810 820820820820 900900900900 835835835835

Q4Q4Q4Q4

305305305305 790790790790

2014 2015 2016 2017 2018 2019

5-year average (2014-2018): ca. 799,000 m² Forecast





14 15

INVESTMENTDÜSSELDORF

A new record was set on the market for investments in commercial properties in Düsseldorf. Properties valued at some €3.8m were traded in 2018. The volume of trans-actions was thus 30% above the figure for the prior year, in which turnover of €3.0bn already marked a new high.

INVESTMENT PROPERTIESThree transactions at prices in excess of €200m con-tributed over €700m to this record total; these were the sale of the Metro headquarters (Metro-Strasse), of IKB headquarters (Wilhelm-Bötzkes-Strasse 1/Uerdinger Strasse 88-92) and the Stadttor office block (Stadttor 1). A total of some 90 transactions was posted for 2018.

As in the past, office buildings remained the most popular asset class, accounting for 63% of the trading volume and a total of some €2.4bn. Retail properties were the next most-traded assets, with 9% of the market (€345m), followed by hotels with 8% (€324m). Portfolio sales con-tributed 25% to the final result.

At the close of the year prime net yields on both office and retail properties were 3.0% (prior year: 3.40% and 3.50% respectively). Over the past twelve months prime net yields on logistics properties slipped from 4.75% to the current 4.35%.

INVESTORS AND VENDORSThe most prominent vendors were project developers, whose turnover of €1.1bn translated into 30% of the market. Asset managers were the biggest buyers on the market, investing €755m or about a fifth of the total traded in 2018. International investors accounted for 39% of the market during the period under review.

OUTLOOKDemand will remain high but fewer properties are likely to come onto the market. Therefore the outlook for the property investment business in Düsseldorf is basically positive but with no reason for euphoria. Since the year has started with a well-filled pipeline of trades, 2019 is forecast to close with a transaction total of €3.0bn, on a par with 2017.

2018 closed with take-up of office space in Düsseldorf totalling 334,600 m². This figure is 7% below the prior year’s when 358,700 m² of space was let.

TAKE-UP OF SPACEDuring the period under review the biggest rental agreement was signed by Deloitte GmbH for offices in the “Heinrich Campus” (about 35,500 m², Heinrich-Erhardt-Strasse 61, Kennedydamm/Derendorf); the second largest let was to NRW Bank in “Herzogterrassen” (7,735 m², Herzogstrasse 15, City) followed by IT.NRW (7,337 m², Kennedydamm 15-17, Kennedydamm/Derendorf). By the end of the year law firms/tax consultants/auditors had emerged as the biggest group of new tenants, taking some 70,300 m² of offices, followed by industrial and trading companies with about 39,800 m² and firms in the construction and real estate sector which rented around 35,200 m² of space.

RENTSAs a result, above all, of lettings in newly built properties or off plan agreements, the average rent rose to €16.10/m²/month, a year on year increase of about 5%. At the close of the year the premium rent was €27.50/m²/month. This is a year on year rise of 2%. Primary causes of this increase were lets in development projects in the Königsallee/Bankenviertel sub-market.

AVAILABLE AND VACANT SPACEEmpty space stood at a record low of 550,000 m² or 7.6% of total stock. Year on year vacancies dropped by 12%. However, during the same period the stock of office space also fell by 3% to the current figure of 7,320,000 m². This was offset by 103,000 m² of newly completed offices in

2018 and planned completions totalling 269,000 m² in 2019 and 2020.

OUTLOOKClients are still seeking large premises and the signs are that the Düsseldorf office letting market will start the year 2019 well and a year-end total of 380,000 m² to 400,000 m² may be expected - especially as scheduled completions should add more space than in 2018. In view of consid-erable demand for space, it is quite possible that the premium rent will rise to €28.00/m²/month.


KENNEDYDAMM/DERENDORF / 80,200 m² / €19.50/m²/month CITY / 71,800 m² / €17.00/m²/month AIRPORT CITY/NORTH / 47,000 m² / €15.70/m²/month

TOP 3 CONTRACTS

1. DELOITTE GMBH (ACCOUNTANTS/AUDITORS) “Heinrich Campus”, Heinrich-Erhardt-Strasse 61 / ca. 35,500 m² 2. NRW BANK “Herzogterrassen”, Herzogstrasse 15 / ca. 7,735 m² 3. IT. NRW Kennedydamm 15-17 / ca. 7,337 m²

OFFICE LETTINGDÜSSELDORF

Düsseldorf | Transaction volume2014-2019 | in € bn

1.91.91.91.9 2.72.72.72.7 2.62.62.62.6 3.03.03.03.0 3.83.83.83.8

Q4

1.1

3.03.03.03.0

2014 2015 2016 2017 2018 2019


Forecast

27.50

26.00 26.0026.50

27.0027.50

14.90

13.80

15.2514.40

15.3516.10

2013 2014 2015 2016 2017 2018/Q4

Düsseldorf | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers

238238238238 420420420420 331331331331 359359359359 335335335335

Q4Q4Q4Q4

57575757

390390390390

2014 2015 2016 2017 2018 2019

5-year average (2014-2018): ca. 336,420 m²

Forecast

Düsseldorf | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)


Premium rent

Average rent




16 17

INVESTMENTCOLOGNE

In 2018 the volume of investment transactions in com-mercial properties in Cologne totalled some €2.1bn. This result was the second highest seen for many years and, due to a lower number of available properties, was only about €200m short of the record set in 2017.

INVESTMENT PROPERTIESOne of the biggest transactions was the sale of de-partment store Kaufhof (Hohe Strasse 43-51, corner of Schildergasse) to Signa. The purchase price was thought to be over €150m. This big-ticket purchase was the major reason why retail properties accounted for 13% of the total traded. Several hotel facilities were sold, for example the “Maritim” (Heumarkt 20) and accordingly this segment of the market comprised about 20% of investment trades. Office properties made up around 52% of the investment tally, topping the list by a relatively low margin.

Year on year prime net yields have slipped further back. In the case of commercial buildings and offices, however, the decline has slowed over the course of the year. The prime net yield on commercial buildings was 2.90%, and fell to 3.30% on offices. Yields on these two classes of asset are tending towards convergence. The biggest decline was noted for logistics properties, which slipped from 4.70% in the 4th quarter of 2017 to a current rate of 4.20%. INVESTORS AND VENDORSSpecialist funds were the most active group of buyers, ac-counting for about 19% of investment trading. Developers were the largest group of vendors, comprising about 23% of the market. Several developers were able to benefit from investors’ considerable willingness to enter into forward deals, which comprised some 18% of the total.

Overseas investors secured a little over a quarter of the volume traded.

OUTLOOKInvestors continue to wish to buy into real estate and there is an ongoing lack of alternative investments. As long as in-terest rates and loan terms remain so reasonable, prop-erties that come onto the market in the next few months will be in great demand and investors will be willing to spend money on them. If the right properties are available on the market, it may be possible to close the year with a result of some €2.0bn.

In 2018 total turnover of space was some 310,000 m². This result equals that of 2017. The market was chiefly marked by shrinking amounts of empty space and rising rents.

TAKE-UP OF SPACEDue to the shortage of space in existing buildings many firms requiring large amounts of space opted for new build developments. Two of the biggest rental agreements were signed for premises located in the “I/D Cologne” devel-opment district in Mühlheim sub-market, where Design Offices took 13,000 m² (“DO-Haus”, Schanzenstrasse / Von Sparr-Strasse, Mühlheim) and Siemens some 10,000 m² (“Haus am Platz”, Schanzenstrasse/Von-Sparr-Strasse, Mühlheim). In the banking district the tax and finance office of North Rhine-Westphalia (Oberfinanzdirection) rented some 10,600 m² in the “Dominium”, a premium office block at Unter Sachsenhausen 17-27.

Government departments and various associations ac-counted for around 21% of overall take-up, renting several large and a number of smaller office suites. Providers of coworking space and business centres rented 31,000 m² and thus increased their share of turnover from 4% in 2017 to around 10% last year.

RENTSLandlords were well placed to demand higher rentals. The average weighted rent rose by about 9% during the year to around €15.00/m²/month. The average rent rose by 7% to €23.00/m²/month. The top rent paid was about €25.00/m²/month.

AVAILABLE AND VACANT SPACEOnly about 200,000 m² of office space remains empty, equivalent to some 2.6% of the total stock. In the city centre alone, vacancies have shrunk by nearly 40,000 m², or 37%. Only some 50,000 m² of office space was completed in 2018. In 2019 the total is likely to be 140,000 m², however less than 20% of this space is still available to rent.

OUTLOOKBecause the economy has slowed and very little space is available at short notice, the take-up of space in 2019 is likely to be lower than it was last year. Overall, annual total take-up of 280,000 m² seems a probable result.


CBD NORTH / 50,000 m² / €16.00/m²/month COLOGNE NORTH / 30,000 m² / €12.90/m²/month COLOGNE RING ROAD / 21,000 m² / €15.20/m²/month

TOP 3 CONTRACTS

1. DESIGN OFFICES GMBH “DO-Haus”, Schanzenstrasse / ca. 13,000 m² 2. TAX AND FINANCE OFFICE OF NORTH RHINE-WESTPHALIA “Dominium”, Unter Sachsenhausen 17-27 / ca. 10,600 m² 3. SIEMENS AG “Haus am Platz”, Schanzenstrasse / ca. 10,100 m²

OFFICE LETTINGCOLOGNE

1.31.31.31.3 1.91.91.91.9 1.81.81.81.8 2.32.32.32.3 2.12.12.12.1

Q4Q4Q4Q4

0.60.60.60.6 2,02,02,02,0

2014 2015 2016 2017 2018 2019


Cologne | Transaction volume2014-2019 | in € bn

Forecast

21.25 21.25 21.25 21.50 21.50

23.00

12.70 12.7012.40

14.1013.70

15.00

2013 2014 2015 2016 2017 2018/Q4

260260260260 290290290290 440440440440 310310310310 310310310310

Q4Q4Q4Q4

100100100100 280280280280

2014 2015 2016 2017 2018 2019

5-year average (2014-2018): ca. 322,000 m²

Forecast

Cologne | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

Cologne | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers


Premium rent

Average rent




18 19

INVESTMENTFRANKFURT

In 2018 property investment transactions in Frankfurt totalled some €9.7bn; this figure is 42% higher than the result for 2017 and breaks the record set in 2007 (> €8.0bn).

INVESTMENT PROPERTIESThe biggest trade in 2018 was the sale of the “Omniturm” (Grosse Gallusstrasse 16-18) for which CommerzReal paid Tishman Speyer some €700m. In a similar price category, NorthStar sold the “Trianon” (Mainzer Landstrasse 16-24) to IGIS/Hana Financial Investment, a South Korea con-sortium, for some €650m. Largely due to the sale of many big-ticket high-rise buildings, office property assets ac-counted for 86% of the total trading volume. Seven forward deals at prices in excess of €100m added up to over €2.7bn or 27% of the total volume traded. The fact that a greater proportion of properties change hands before construction work is completed is indicative of the growing shortage of available real estate.

The market share of portfolio sales, which declined from 26% in 2016 to 12% in 2017, fell to 8% in 2018. Because core properties accounted for 63% of the total in 2018, the prime net yield on office real estate dropped back 0.3 per-centage points to 3.00%. There was also brisk demand for core plus and value add properties, with 50 transactions in this sector.

INVESTORS AND VENDORSOpen property mutual funds were the buyers in the two largest transactions, so that their share of the total volume traded was a top-ranking 18%. On the selling side, devel-opers took the largest share of the market by number of trades (22) and volume generated (24%); this also re-flects the greater number of forward deals. International

investors were involved in a number of the top-priced transactions and their share of the total volume traded was thus more than 50%.

OUTLOOKConsidering the decimated selection of available prop-erties, the transaction volume in 2019 will not go beyond the figure posted in 2018. Demand remains unabated, and in 2019 Frankfurt will remain a major investment magnet attracting both national and international players. In the coming year investors will continue to prefer core plus and value add properties in top locations to real estate in B and C towns.

Although 12% less space was let in 2018 than in the prior year, the final result of some 639,400 m² was never-theless appreciably higher than the five-year average of about 537,000 m².

TAKE-UP OF SPACEThe biggest let of the year concerned 36,100 m² in the “Cielo” (Theodor-Heuss-Allee 100-104, City West) taken by Commerzbank in the 3rd quarter. Second place went to the FAZ, a newspaper, which took close to 24,000 m² off plan (Europa-Allee 92). Deloitte, a financial consultancy and ac-counting firm, chose some 15,800 m² in the “Zebra” (Eu-ropa-Allee 91-93, City Rand). The banking district (Banken-viertel) sub-market reported most demand (17%) followed by City Rand (16%) where the two off-plan lets in the Eu-ropaviertel section of this sub-market were posted. Pro-viders of financial services rented more space than other groups (19%) in the banking metropolis of Frankfurt. Partly due to the agreement signed by the FAZ, companies from the internet/media/telecoms sector placed second (15%). They were closely followed by providers of construction and property services (14%) fuelled by the ongoing strength of demand for coworking space.

RENTSBecause all new lets involving more than 10,000 m² were located outside the CBD, the average rent fell 1% to €20.00/m²/month. However, the premium rent climbed 9% to €43.50/m²/month due to a number of rental agreements for space in prime tower blocks such as the “Omniturm” and the “TaunusTurm”.

AVAILABLE AND VACANT SPACEThe vacancy rate fell by a further 1.2 percentage points to 7.4% and a growing shortage is becoming noticeable in certain locations (CBD). Very little new build space has come onto the market in recent years - a mere 88,000 m² in 2018 - but from 2019 onwards more new buildings will be completed, adding around 170,000 m² in 2019 and over 300,000 m² in 2020, although 65% (2019) and close to 50% (2020) of this space has been pre-let.

OUTLOOKDemand for offices in Frankfurt will remain high in 2019. However, in view of the shortage of available space, take-up for the year will probably be between 500,000 m² and 550,000 m². This in turn could lead to higher rents in all parts of the city and a further modest reduction in the amount of empty space.


BANKING DISTRICT / 108,500 m² / €31.20/m²/month CITY RAND / 100,300 m² / €20.10/m²/month CITY / 62,800 m² / €19.10/m²/month TOP 3 CONTRACTS

1. COMMERZBANK AG “Cielo”, Theodor-Heuss-Allee 100-104 / ca. 36,100 m² 2. FRANKFURTER ALLGEMEINE ZEITUNG (FAZ) Europa-Allee 92 / ca. 24,000 m² 3. DELOITTE GMBH (ACCOUNTANTS/AUDITORS) “Zebra”, Europa-Allee 91-93 / ca. 15,800 m²

OFFICE LETTINGFRANKFURT

5.25.25.25.2 5.75.75.75.7 6.56.56.56.5 6.86.86.86.8 9.79.79.79.7

Q4

3.0

7.07.07.07.0

2014 2015 2016 2017 2018 2019


Frankfurt | Transaction volume2014-2019 | in € bn

Forecast

38.00 38.0039.50

38.5039.75

43.50

18.5019.50

18.00 18.00

20.30 20.00

2013 2014 2015 2016 2017 2018/Q4

368368368368 389389389389 561561561561 729729729729 639639639639

Q4Q4Q4Q4

184184184184

550550550550

2014 2015 2016 2017 2018 2019


Frankfurt | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

Frankfurt | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers


Premium rent

Average rent




20 21

INVESTMENTSTUTTGART

Investments in commercial properties in Stuttgart reached a new record total of €2.1bn in 2018. Year on year the volume of transactions grew by 79% or €950m, soaring past the previous best mark set in 2016.

INVESTMENT PROPERTIESThis high volume of transactions was attributable to the sale of the “SI Centre” in Möhringen and of the “Alte Bahn direktion” in the city centre during the 1st half year; likewise to CommerzReal’s 3rd-quarter purchase of the “Uhland Carré” in the Uhlandstrasse district and, in the last quarter of the year, the sale of the “Allianz Campus” on Reinsburgstrasse, which was acquired by Hines. These four transactions accounted for some €820m in total. In-vestors focussed on office buildings which - partly a result of the sale of the “Uhland Carré” and the “Allianz Campus” - comprised some 60% of the volume traded, followed by mixed use properties with a share of about 17% of the market. Forward deals constituted around 10% of the volume traded and portfolio transactions made up some 7%.

The prime net yield on office assets was 3.30%, having dropped 0.2 percentage points from its level in the prior year. The statistics show a prime net yield on commercial buildings of 2.80% and 4.50% on logistics properties.

INVESTORS AND VENDORSComprising around 29% of the total, developers were the predominant buyers. Open property mutual funds fol-lowed with 18% of the market and specialist funds with 15%. All other groups of investors took less than 10% of the market and thus played only a minor role. Private equity/opportunity funds comprised the single biggest group of

vendors, with a 26% share of the volume of transactions, followed by developers with a share of 20%. Compared with last year, the proportion of overseas buyers on the market has contracted a little. These investors accounted for some 39% in 2018.

OUTLOOKSeveral more big-ticket transactions involving com-mercial properties in Stuttgart are in the pipeline for 2019. However, due to the short supply of properties for sale, the final transaction volume is expected to be about €1.75bn and thus lower than the result for 2018.

In Stuttgart the year 2018 closed with total take-up of office space standing at some 218,000 m². The annual result was thus 19% below the prior year and 15% lower than the ten-year average.

TAKE-UP OF SPACEFour owner-occupier agreements totalling some 67,000 m² made a crucial contribution to the overall result. Stutt-gart-Feuerbach sub-market posted the highest take-up of space at 54,600 m², almost entirely due to the 50,000 m² of space occupied by the Robert Bosch GmbH project, which was also the biggest contract signed in 2018 in Stuttgart. Bad Cannstatt sub-market placed second with a total of some 34,500 m². Stuttgart city centre fol-lowed with some 28,400 m². Here the state government of Baden-Württemberg purchased a building offering 10,800 m² of space in Kriegbergstrasse. The biggest rental agreement was one for 8,800 m² of space in a building lo-cated in Leinfelden-Echterdingen, likewise signed by the state government of Baden-Württemberg. Industrial firms accounted for some 76,000 m² of take-up, more than any other sector of the economy.

RENTSAt the close of the year the premium rent in Stuttgart was €23.00/m²/month. Year on year this translates into a 5% drop and a return to levels posted in 2016. The average rent for the entire city area including Leinfelden-Echterdingen was about €13.90/m²/month, around 1% more than the figure for 2016.

AVAILABLE AND VACANT SPACEBy the end of the year 2018 the vacancy rate was 2.3%. Year on year the amount of available space rose by 11% to 186,000 m² of office premises. Remedies are not immedi-ately in sight. In 2018 new-builds added some 92,800 m² to the total, in 2019 around 89,700 m² will be completed. However, only about 25,400 m² of this space (28%) will come onto the market.

OUTLOOKAs in recent years, those looking for large premises have no alternative but to choose peripheral locations. Over the next three years practically no new-build space will come onto the Stuttgart City and city centre sub-markets. Take-up in 2019 will probably be on a par with 2018, meaning turnover of between 210,000 m² and 230,000 m².


FEUERBACH/ZUFFENH. / 54,600 m² / €11.70/m²/month BAD CANNSTATT / 34,500 m² / €14.10/m²/month CITY CENTRE / 28,400 m² / €11.90/m²/month TOP 3 CONTRACTS

1. ROBERT BOSCH GMBH (OWNER-OCCUPIER) Bregenzer-/Steiermärker Strasse / ca. 50,000 m² 2. STATE GOV. OF BADEN-WÜRTTEMBERG (OWNER-OCCUPIER) Kriegsbergstrasse 32 / ca. 10,800 m² 3. STATE GOVERNMENT OF BADEN-WÜRTTEMBERG Fasanenweg / ca. 8,800 m²

OFFICE LETTINGSTUTTGART

1.01.01.01.0 1.71.71.71.7 1.81.81.81.8 1.21.21.21.2 2.12.12.12.1

Q4

0.8

1.81.81.81.8

2014 2015 2016 2017 2018 2019


Stuttgart | Transaction volume2014-2019 | in € bn

Forecast

20.00

21.50

22.80 23.00

24.30

23.00

12.0012.50 12.50

12.9013.70 13.90

2013 2014 2015 2016 2017 2018/Q4

278278278278 290290290290 432432432432 270270270270 218218218218

Q4Q4Q4Q4

52525252

230230230230

2014 2015 2016 2017 2018 2019

5-year average (2014-2018): ca. 297,600 m²

Forecast

Stuttgart | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

Stuttgart | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers


Premium rent

Average rent




22 23

INVESTMENTMUNICH

In 2018 the transaction volume on the market for invest-ments in commercial properties in Munich totalled about €6.2bn. This is both an outstandingly good result and a year on year rise of 6%. 16 transactions with price tags of €100m and higher together accounted for about 50% of total turnover.

INVESTMENT PROPERTIESOnce again the most-sought-after assets were office properties, which made up 68% of the total market (€4.3bn). Most activity was recorded in the 1st and 4th quarters, in each of which property trades totalled about €2.0bn. Among the biggest transactions of the year were the sale of “OSKAR” (Oskar-von-Miller-Ring 20) bought in the 4th quarter by a consortium of BVK and Swiss Life for some €390m, and the sale of “Correo Quartier” by the main station for which Credit Suisse paid Postbank around €275m. Although trailing a long way behind, hotels (€673m) were the second most popular assets, followed in third place by mixed use properties (€485m).

The prime net yield on office properties was further squeezed over the course of the year and closed at 2.85%. It is not to be expected that yields will decline any further in 2019; at least as far as core locations are concerned, the bottom has been reached.

INVESTORS AND VENDORSIn 2018 capital spending on properties in Munich was di-vided 40:60 between foreign and domestic investors. Most overseas investment capital came from the USA, Great Britain and Asian countries. Samsung Asset Man-agement from South Korea bought the “Atrium” in north Munich for around €180m. Prominent buyers were, once

again, national and international funds, increasingly acting through their asset managers. Their share of trading amounted to around €3.5bn.

OUTLOOKSustained interest in commercial properties will con-tinue to encourage investors to buy Munich real estate in 2019. A dramatic worsening of the market is not to be ex-pected. Whether and in what manner the reduced growth forecasts for the euro zone as a consequence of a slowing global economy and the imminent Brexit will have an effect will become clear during the course of the year. The first quarters of the new year are already looking to generate a respectable trading volume. A total volume of between €5.75bn and €6.25bn is forecast for the year overall.

Posting take-up of 955,000 m², the second highest result since the early 2000s, Munich office market remains at giddy heights reminiscent of the New Economy era.

TAKE-UP OF SPACEThe biggest rental agreement of 2018 was signed by Wirecard AG (40,500 m², Einsteinring 30, East Envrions) which opted off plan for space in “Campus One” in Aschheim; close behind was a contract signed off plan by Serviceplan Gruppe for space in the “iCampus” on the “Werksviertel” site by Munich East Station (40,000 m², Friedenstrasse/Grafinger Strasse, Centre East). Following in third place, the HR department of Bavarian state capital Munich took 25,000 m² (Balandstrasse 55-59, Centre East). Altogether 15 lets for more than 10,000 m² were re-ported.

During the year just ended City East sub-market squeezed into first place with a letting volume of around 122,000 m² (12%). This is not very surprising, because at present most new developments are being planned in this district. The second busiest sub-market was City North with take-up of 111,000 m² (11%). Third place went to Centre East sub-market (108,000 m², 11%). Once again, the public purse ab-sorbed a larger amount of space than any other sector, but IT firms were also very keen to expand premises in 2018.

RENTSThe average rent was €18.65/m²/month in 2018, a year on year rise of 10%. The premium rent increased by 5% to €36.80/m²/month.

AVAILABLE AND VACANT SPACECurrently some 420,000 m² of office space is available to rent. This is equivalent to a vacancy rate of 1.8%, a year on year reduction of 0.7 percentage points. Around 200,000 m² of new office space was completed in 2018, almost all of which has been let. Projected completions in 2019 total around 300,000 m². Here too, a large proportion of space has been pre-let.

OUTLOOKUnabated high demand for office space is forecast for the year 2019. The trend towards renting off plan in buildings that are a few years away from completion is set to con-tinue. Due to the shortage of available space, letting ac-tivity is expected to reach between 800,000 m² and 850,000 m².


CITY EAST / 122,000 m² / €16.50/m²/month CITY NORTH / 111,000 m² / €17.50/m²/month DOWNTOWN EAST / 108,000 m² / €22.00/m²/month

TOP 3 CONTRACTS

1. WIRECARD AG “Campus One”, Einsteinring 30 / ca. 40,500 m² 2. SERVICEPLAN GRUPPE “iCampus”, Friedenstrasse/Grafinger Strasse / ca. 40,000 m² 3. HR DEPARTMENT OF BAVARIAN STATE CAPITAL MUNICH Balanstrasse 55-59 / ca. 25,000 m²

OFFICE LETTINGMUNICH

5.05.05.05.0 5.55.55.55.5 6.56.56.56.5 5.95.95.95.9 6.26.26.26.2

Q4

1.95.85.85.85.8

2014 2015 2016 2017 2018 2019


Munich | Transaction volume2014-2019 | in € bn

Forecast

32.50

34.45

32.50

35.25 35.00

36.80

15.10 14.60 15.00 15.5016.90

18.65

2013 2014 2015 2016 2017 2018/Q4

584 755 764 878 955

Q4Q4Q4Q4

265265265265

825825825825

2014 2015 2016 2017 2018 2019


Munich | Premium and average rent2013-2018/Q4 | in €/m²/mth (net)

Munich | Take-up of space2014-2019 | in 000s m² | incl. owner-occupiers


Premium rent

Average rent




24 25


ASSET CLASSA property is allocated to an asset class according to the predom-inant way in which space is used (at least 75%) when the contract is signed. If at least 75% of a property is not used in one single way, it is classified as mixed use. INDIVIDUAL PROPERTIES AND PORTFOLIO TRANSACTIONSAn individual property transaction means the purchase of a building used for commercial purposes or of a piece of land for development. Portfolio transactions involve the purchase of at least two separate properties in different locations.PRIME YIELDSThe prime yield is the initial return attainable on a property that has been let on normal market terms (tenants with good credit ratings), has top quality structure and fit-out and stands in one of the very best locations. It is stated as the net initial yield in per cent, i.e. the ratio between the annual rental income less non- apportionable ancillary costs and the gross purchase price (net purchase price plus land acquisition tax, notary’s fees and agency commission.)

TYPES OF INVESTORS AND VENDORSInvestors (buyers) and vendors are differentiated using the guide to reporting types of investor in commercial properties (Leitfaden zur Berichterstattung über den Investmentmarkt für Gewerbeim-mobilien, May 2014) compiled by the gif research experts. SHARE DEALA share deal is the acquisition of shares in a real estate or property firm. The primary motive for the investment is purchase of the property. The size of the shareholding acquired is irrelevant to its inclusion as property transaction.

TAKE-UP OF SPACETake-up of space is the total of all space let plus that sold to, or finished by or for an owner-occupier during the period under review. The operative date for inclusion in the statistic is the date on which the lease or purchase agreement was signed. Lease re-newals are not counted as take-up. Areas are stated on the basis of the guide for calculating the rental area in commercial leases (MF/G).PRIME RENTThe prime rent is that paid for the most expensive 3% of the market for new lets (not counting owner-occupiers) during the 12 months just ended and is stated as the median of such rents.AVERAGE RENTThe average rent paid is calculated by taking the individual rentsagreed in all leases signed over the past 12 months, weighting them by the amount of space rented and computing the mean value. Figures refer to nominal net rents ex services.VACANCIESVacancies include all office space that is available to new tenants within three months. Sub-let space is counted as vacancy. TRANSACTION VOLUMEThe transaction volume is the sum of the purchase prices of all commercial property sold in Germany’s top 7 markets during the period under review. The date of signing determines when a transaction is included in the statistics. Buy to let investments in residential properties are not included in the transaction volume.

GLOSSARYGERMAN PROPERTY PARTNERS

Naturally enough, when doing real estate business in Germany, you would like to work with a partner who can provide you with expert professional support in all issues relating to commercial property.

Our spectrum of services covers both real estate investments and commercial letting. We are conversant with all risk classes and types of property. For investors we offer a Germany-wide service extending to the purchase and sale of office, hotel, warehousing, logistics and retail real estate, as well as apartment buildings, either as individual properties or in portfolios. We are also ready to support you with preparation for development projects.

SERVICESGERMAN PROPERTY PARTNERS

Due to the banking background of two of our partners, we are familiar with the workings of the financial industry. We are also well placed to assist you in your search for office, retail, industrial, warehousing and logistics premises, as well as special uses, in the process bringing to bear our in-depth local knowledge and outstanding regional contacts.

In addition, we offer you corporate real estate man-agement, as well as research tailored to your specific project. Further services in the fields of finance, fund man-agement, asset management and administration mean that you can obtain everything needed from us to secure the effective long-term advancement of your project.

WWW.GERMANPROPERTYPARTNERS.DEWWW.GERMANPROPERTYPARTNERS.DE

We draw your attention to the fact that all statements made here are non-binding. Most of the information is based on third-party reports. The sole intention of this

market survey is to provide general information for our clients.

Grossmann & Berger GmbH • Immobiliendienstleister • Bleichenbrücke 9 (Bleichenhof) • D-20354 HamburgPhone: +49 (0)40 / 350 80 2 - 0 • Fax: +49 (0)40 / 350 80 2 - 36 • [email protected] • www.grossmann-berger.deManaging directors: Holger Michaelis, Andreas Rehberg, Lars Seidel, Axel SteinbrinkerChairman of the Supervisory Board: Frank Brockmann • Entered in the commercial register: Hamburg B 25866Supervisory authority: Borough Council Hamburg-Mitte, Department of Consumer Protection, Commerce and the Environment, Klosterwall 2, 20095 HamburgVAT identification number pursuant to Section 27a German Turnover Tax law: DE 118 556 939

Anteon Immobilien GmbH & Co. KG • Ernst-Schneider-Platz 1 • D-40212 DüsseldorfPhone: +49 (0)211 / 58 58 89 - 0 • Fax: +49 (0)211 / 58 58 89 - 88 • [email protected] partners: Guido Nabben, Heiko Piekarski, Jens Reich, Dirk Schäfer, Marius VarroTrading licence: a licence pursuant to Section 34 c of the German Industrial Code/GewO was granted with no restrictions by the Municipal Government of the State Capital Düsseldorf, Department 32, Tel.: +49 (0)211 / 89 - 23 223. • ANTEON Immobilien GmbH & Co. KG • Registered office in Düsseldorf, entered in the Commer-cial Register of Düsseldorf under HRA 19934 • General Partner ANTEON Verwaltungsgesellschaft mbH, registered office in Düsseldorf, entered in the Commercial Register of Düsseldorf under HRB 58418VAT identification number pursuant to Section 27a German Turnover Tax law: DE 259 465 200

Greif & Contzen Immobilien GmbH • Pferdmengesstrasse 42 • D-50968 KölnPhone: +49 (0)221 / 93 77 93 - 0 • Fax: +49 (0)221 / 93 77 93 - 77 • [email protected] directors: Mr Theodor J. Greif, Rainer KraußAmtsgericht (lower court) Registered in: Cologne, Company Register no. 11414Supervisory authority: City of Cologne, Ordnungsamt, P.O. Box 103564, 50475 KölnVAT identification number pursuant to Section 27a German Turnover Tax law: DE 123 055 006

blackolive advisors GmbH • Reuterweg 18 • D-60323 FrankfurtPhone: +49 (0)69 / 907 44 87 - 0 • Fax +49 (0)69 / 907 44 87 - 10 • [email protected] • www.blackolive.deManaging directors: Oliver Schön, Rainer HamacherTrading licence: a licence pursuant to Section 34 c issued by the Ordnungsamt FrankfurtCompetent supervisory authority: Gewerbe- und Ordnungsamt Frankfurt, Kleyerstrasse 86, 60326 Frankfurt am MainCommercial register and no. of entry: Registered in Frankfurt (Amtsgericht), HRB 93813VAT identification number pursuant to Section 27a German Turnover Tax law: DE 283 390 909

E & G Real Estate GmbH • Börsenplatz 1 • D-70174 StuttgartPhone: +49 (0)711 / 20702-700 • Fax +49 (0)711 / 20702-702 • [email protected] • www.eug-realestate.deManaging directors: Mario Caroli, Björn HolzwarthCompetent supervisory authority: Amt für öffentliche Ordnung, Gewerbe- und Gaststättenbehörde, Eberhardstrasse 37, 70173 StuttgartCommercial register and no. of entry: Registered in Stuttgart (Amtsgericht) HRB 733293Responsible under Section 55 par. 2 of the Interstate Broadcasting Agreement (RStV): Björn Holzwarth, managing directorVAT identification number pursuant to Section 27a German Turnover Tax law: DE 257 361 630

Across Germany Services

» Hamburg » Berlin » Düsseldorf » Cologne | Bonn » Frankfurt » Stuttgart » Munich

» Real estate investments » Commercial letting » Corporate real estate management (CREM) » Research » Banking and financing services » Equity financing of development projects » Fund and asset management » Real estate management » Real estate valuation » Agriculture and forestry real estate




26 27



Grossmann & Berger GmbH Locations: Hamburg, Berlin Bleichenbrücke 9 (Stadthöfe)D-20354 Hamburg Phone: +49 (0)40 / 350 80 2 - 0Fax: +49 (0)40 / 350 80 2 - 36Mail: [email protected]

E & G Real Estate GmbH Locations: Stuttgart, Munich Börsenplatz 1 D-70174 StuttgartPhone: +49 (0)711 / 20702 - 700Phone: +49 (0)89 / 17 95 94 - 10Mail: [email protected]

Anteon Immobilien GmbH & Co. KG Location: Düsseldorf Ernst-Schneider-Platz 1 D-40212 DüsseldorfPhone: +49 (0)211 / 58 58 89 - 0Fax: +49 (0)211 / 58 58 89 - 88Mail: [email protected]

GREIF & CONTZEN Immobilien GmbH Location: Cologne | Bonn

Pferdmengesstrasse 42D-50968 KölnPhone: +49 (0)221 / 93 77 93 - 0 Fax: +49 (0)221 / 93 77 93 - 77Mail: [email protected]

blackolive advisors GmbH Location: Frankfurt

Reuterweg 18D-60323 FrankfurtPhone: +49 (0)69 / 907 44 87 - 0Fax: +49 (0)69 / 907 44 87 - 10Mail: [email protected]

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