Catching of one’s breath on Frankfurt’s market for office space

Catching of one’s breath on Frankfurt’s market for office space
5 Jan, 2011, Frankfurt

The annual property area turnover of 475,000 m² in 2010 represented an increase of about 36% over the result achieved in 2009

http://www.cushwake.com/

About 475,000 m² office space was let in 2010 on Frankfurt’s office space market. Thus the rental volumes increased by a very respectable 36% compared to the previous year’s level of 350,000 m². Also the property turnover in terms of area in the fourth quarter of 107,000 m² was significantly stronger than that achieved in the same period in 2009 (69,000 m²). Nevertheless, the market had still not recovered back up to the pre-crisis level by the end of 2010. The total result for the year still lay below the average over the last seven years of 504,000 m².

According to the international real estate consultants Cushman & Wakefield (C&W), it is also necessary to correct the overall autumn figures downwards somewhat since two of the rental transactions concerning more than about 24,000 m² were cancelled. Therefore the area turnover in the third quarter reached just 138,000 m². The fourth quarter turned out to somewhat weaker than expected: “We could not close any large contracts in the fourth quarter“, stated Dennis Stern from the Frankfurt office rental department of C&W. “Apart from the large, almost 40,000 m², deal struck with ING-Diba AG in Poseidon Haus, we just recorded one other rental of office space of just over 5,000 m².“

In 2010 Frankfurt’s office space market was again, after a long time, strongly influenced by the banks and financial services providers. Together they represented an impressive 47% of the market. The large transactions involving EZB, ING-Diba AG and Allianz Global Investors made a major contribution to this result.

The percentage of empty properties in the fourth quarter remained stable at 14.7%. There is currently about 1.46 m. m² of property available for short-term let. The total stock of office space for let in the city at the end of the year was about 12.01 m. m².

About 288,000 m² of new office space was completed in 2010 including the modernised Deutsche Bank towers Soll & Haben. There is building work currently going on, including the EZB head office and modernisation of the Silver Towers, which involves about 301,000 m² of office space. More than 90% of this new area had already been let or reserved for own use at the turn of the year from 2010 to 2011.

The highest rent paid at the end of the year reached € 35.00 per m²/month, achieved in CBD. Thus the highest rent paid increased over the year by € 1.00 per m²/month. While such rental levels had only been achieved a few months before in the Frankfurt premium property Opernturm (Opera Tower), there were also properties in Taunusanlage 11 which were being let at such top prices by the year end.

“We still hoped for a strong result at the end of the year “, stated Inga Schwarz, Manager of the Research Department at Cushman & Wakefield Deutschland, “but was forced to accept that the Frankfurt office space market was not able to pick up any further speed at the end of the year. However we can, overall, be quite satisfied with the developments which took place throughout 2010. The letting activity picked up in all of the major segments of the market compared to the previous year and the most important branches for Frankfurt, namely the banks and financial services providers, again impressively confirmed their trust in the location Frankfurt in 2010. The perspectives for 2011 look good. It is probable that the proportion of properties that have remained empty has peaked and there were some large rentals negotiations at the end of the year which were just shortly before conclusion. The players involved will probably be undertaking everything they can to get these transactions concluded very shortly which would certainly guarantee a good start in the new year for the Frankfurt market. We also have no doubt at all that the predicted economic recovery will have a positive effect on the Frankfurt office space market – we are just not quite in position yet to say how much.“

http://www.cushwake.com/