Also during 2003 there will be no major improvement in the German office market according to DIP (Deutsche Immobilien Partner) in its review of 2002. Office space turnover has dropped by approximately 2.5 mln m2 or almost 25% in the major 13 cities.
Short term, supply of office space have increased in view of the excellent economic conditions during the period 1999-2001.
According to DIP the main reasons for this substantial drop are the present economic crises and the uncertainty what the newly re-elected Red-Green coalition government may do, especially in the area of real estate taxing.
During 2003 it is expected that office space rental transactions will amount to some 2.1 mln m2, which is expected to decrease annually by some 10-15% in the following years. Vacancy rate is expected to be around 7.1%. Rental prices are expected to drop further from the present EUR 26.30 p/m2 on A-locations and EUR 18.60 p/m2 for the middle office market segment.
Office market highfliers with previous rental prices of EUR 60 p/m2 and higher, Munich, Frankfurt and Main, saw the biggest rental price reductions to presently EUR 40 p/m2 or lower, whereas prices in Dusseldorf, Leipzig, Magdeburg and Mannheim remained stable.