Savills reports prime rental rise in German office market
According to international real estate advisors Savills, the lack of development pipeline over the last few years has caused prime rents in the German office market to increased in H1 2014 by 3.3% to €28.00 per sqm on average across the top six markets.* The extent of the change ranged from +8.8% in Munich at €34.50 per sqm to no change in Dusseldorf with prime rents remaining at €27.50 per sqm.
Savills finds the average rents also increased to €14.57 per sqm during the same time period, which marks a 5.2% increase across the six markets. Cologne record the highest growth of all markets with a double-digit increase of average rents at +13.7% to €13.25 per sqm and Frankfurt was the only market where average rents decreased by 1.4%.
Marcus Mornhart, Managing Director and Head of Office Agency at Savills Germany, comments: “The rise in average rent is due to the high prime rents as well as the lack of suitable space in the city centre locations. Occupiers are therefore moving out to secondary locations causing average rents to rise. We are seeing developers of speculative projects benefitting from the lack of space in the central submarkets of some of the cities such as Berlin and Munich and rents are rising accordingly. We believe this rental growth will continue, albeit it could be at a slower pace than recorded in H1 2014.”
*Markets covered by the research include Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich.