According to Savills, at 3 million sq m, German office take-up for 2022 showed an increase of 3% compared with 2021. Yet, as expected, the top six office lettings markets, Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich, lost momentum in the final quarter of 2022. Savills expects take-up for 2023 to come in lower than last year, albeit the decline is likely to be moderate.
The vacancy rate rose by 0.5 percentage points during 2022 to an average of 4.8%, while absolute vacancies rose by some 400,000 sq m or 12%. Prime rents rose by an average of 7%, while median and average rents rose more sharply by 11% and 8% respectively.
Jan-Niklas Rotberg, Head of Office Agency, Savills Germany, says: “In view of the uncertain economic environment, many companies have become noticeably more reticent when it comes to leasing decisions, and some have deferred their requirements for the time being. Larger companies in particular are acting more cautiously. However, when occupiers do decide to relocate to new office space, we are often seeing increased demands in terms of the property or the location - and frequently both.”
Since landlords are more inclined to retain their existing tenants in the current market environment, they are granting some very attractive offers to extend leases.
Rotberg adds: “Despite the incentives, most occupiers are faced with rising costs of space. The often higher nominal rents are compounded with massively increased energy costs. This is also a significant driver of the rising number of sublettings we are seeing in the market.”
Matthias Pink, Head of Research Germany for Savills, says: “A significant proportion of currently vacant office space may well become base vacancy if it does not undergo an energy-efficient refurbishment and is not upgraded to reflect changes in occupier requirements. In any case, the rental gap between higher rated and lower rated office space is growing wider.”