According to the advanced report, last year was the strongest year for German office space, with the exception of the boom year of 2000. In the nine most important German office locations--Berlin, Cologne, Dusseldorf, Essen, Frankfurt, Hamburg, Leipzig, Munich and Stuttgart--the aggregate turnover of office space in 2007 was 39.8 million sf. That represents a year-on-year rise of 14.5%.
"As was anticipated at the end of 2006, office markets continued to pick up in 2007 and the positive overall economic development led to a further climb in turnover," says Peter Rösler, chairman of Atisreal Germany. Growth was fuelled by very lively demand in all market segments. "This performance indicates a stable and lastingly expanding market," says Rösler.
Only three locations failed to match their prior-year results. In Berlin, take-up fell to 5.4 million sf, a decline of 14.7% on the record result of the year before, which had been fuelled substantially by the new building for the German Federal Intelligence Service. Cologne ended the year with total turnover of 2.9 million sf, about 6% down on 2006. Leipzig registered a year-on-year fall of 14%, with a turnover of 947,000 sf.
The strongest growth in take-up was registered by Essen, with a rise of 105% to 1.7 million sf. About one-quarter of that amount is a result of a new head office for ThyssenKrupp.
Dusseldorf, up 66 %, and Hamburg, up 23 %, also posted banner years, as did Stuttgart, up 28 %, and Munich, up 24 %. In the Greater Frankfurt market the rise in turnover was 1.3%; within the Frankfurt municipal boundaries, the increase was almost 6%.
Vacant space fell by 3.5%. Office space offering modern specifications saw vacancies drop by 14%, while the vacancy rate for unrefurbished office space grew by about 10%.
Construction activity has picked up, with the total volume of office space under construction rising in 2007 by almost 38%, to 24.2 million sf. Approximately 10.3 million sf of that was still available to the rental market.
According to the report, this indicates that a large proportion of vacant space was either preleased or built for owner-occupation. "The high preletting rate underlines the marked focus of demand on high-grade premises," says Rösler. "Since just under half of the space under construction will not be completed until 2009 or later, there will be only a manageable volume of modern premises coming onto the market in 2008."
In most markets, there has been an uptick in rents. With the exception of Leipzig and Stuttgart, peak rents in 2007 rose in all locations, on average by 4.7%. The most significant climb was in Berlin, where top rents increased by 7.3%. In close second was Frankfurt, with a 7.1% increase.
On the basis of these numbers, the Atisreal report predicts a positive forecast for the German office market in 2008. Rösler notes that "although there are clouds on the economic horizon as a result of the turbulence in the financial markets, the increase in the price of oil and worries about a possible recession in the US, the basic conditions for an ongoing economic upturn remain stable, particularly in Germany."
He continues that "all the available forecasts point to a lower workless rate, accompanied by an increase in the number of people in gainful employment, above all in the services sector. And most German business companies are still posting good results. Against this background, and also taking the level of existing inquiries into account, Atisreal expects 2008 to generate a result which is up on the long-term average for the office markets, although it is unlikely to quite match the level achieved in 2007."
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