The five major German office markets of Berlin, Düsseldorf, Frankfurt, Hamburg and Munich ended 2011 on a three-year high in terms of take-up according to international real estate advisor Savills.
The firm's research shows that total take-up reached approximately 2.85 million m², close to 2008 levels (approx. 2.9 million m²). Compared to 2010 turnover increases are just below 7%.
Robert Kellershohn, Managing Director of Office Agency at Savills Germany, says: "As expected, the record growth of Germany's economy clearly stimulated office markets last year which seem to have reached a cyclical high."
According to Savills, Munich recorded the highest increase in take-up with over a 40% rise on 2010 to just below 850,000 m², followed by Hamburg with an increase of 10%. Berlin recorded a slight decrease (- 3%) in take-up compared with the previous year, while Frankfurt and Düsseldorf's take-up declined by 13% and 16%, respectively.
The firm attributes the comparatively poor results of the latter two markets to the fact that in 2010 each of them had been largely characterised by a single large-scale transaction (ECB in Frankfurt, Vodafone in Düsseldorf). Demand in the small and medium-sized segments also exceeded 2010 levels in these markets.
High levels of demand for office space and low number of new development completions in 2011 led to a year-on-year reduction of vacancy rates in all German markets, with the exception of Düsseldorf where the rate remained unchanged. On average across the five key markets the vacancy rate stood at just below 10% at the end of 2011, equating to 6.7 million m² (72.1m sq ft) of vacant office space.
Average rents remained largely stable across all markets in 2011 while most prime rents showed an upward trend. Given the scarcity of new developments coming onto German markets and the fact that many tenants favour high quality offices Savills believes prime rents have further upward potential over the coming months.
Matthias Pink, Head of Research at Savills Germany, says: "In light of the economic parameters it is most likely that the cyclical high is now behind us and demand for office space may decrease in the second half of 2012. However, this year's completion figures will be lower than those of 2011 across all markets making it unlikely that vacancy rates will rise significantly or that average rental levels will decline noticeably, at least in the first half of the year."