Frankfurt’s Office Market Releases the Handbrake

1 Oct, 2010, Frankfurt

• The rental space for Frankfurt’s office market was 162,000 m2 for the 3rd quarter
• Recovery in all size segments
• Prime rent unchanged
• All signs point to annual sales above 500,000 m2

Frankfurt’s office market has definitely started off well in the second half of the year after the summer break. A total of about 162,000 m2 of office space was leased again. It is the strongest quarter since 2007 - at that time, the PWC had significantly contributed to quarterly sales by leasing 60,000 m2 in Project Tower 185. Altogether, the rental space in 2010 to date amounts to around 392,000 m2, up by almost 40% from the same time last year. The handbrake, which in times of global economic turmoil had attracted many players, seems to have been released.

Recovery in all size segments

According to international property consultants Cushman & Wakefield (C&W), the market has recovered in all size segments. “With Allianz Global Investor’s acquisition of around 28,700 m2 in Triton for their own use, we certainly have a remarkable finish. However, what we’re all the more pleased about is overall market recovery.” Dennis Stern from C&W’s Frankfurt Office Leasing Department, said “Especially in the areas of banking and financial services, consultation and IT and communication, the number of rental contracts and, at the same time, rental space has increased sharply: together, they amount to 53% of the rental space for the 3rd quarter. Further, we are carefully observing that international companies are again venturing the first step to Frankfurt. Just in the Opernturm alone, two rental contracts were concluded with Neu Frankfurter companies. It seems that there is confidence in the region and its future. We are anxious to see if this trend continues in the coming months.” In addition, the market has recovered especially in segment sizes ranging from 1,000 to 3,000 m2. In the 3rd quarter, there were 27 contracts (sales: 38,900 m2), almost as many as in the entire first half of the year.

Vacant spaces fell slightly

The volume of vacant spaces fell slightly in the 3rd quarter. Currently, there are about 1.61 million m2 available for short-term rent. With a total area of 11.98 million m2, this corresponds to a rate of 14.7% (second quarter: 14.8%). “Renters’ demands are more focused than ever on high-quality space. The majority of companies is taking advantage of the currently favorable rental terms and is improving their space in terms of equipment and address. The problem of the so-called base vacancy is and remains on the agenda” says Dennis Stern. “Furthermore, owners are also certainly reacting to this vacancy situation by converting their property. In the 3rd quarter, five office properties were taken off the market and are now used for residential or hotel space.”

In the 3rd quarter, around 187,200 m2 of office space was completed. Including the redevelopment of the Silver Tower and the Deutsche Bank towers Soll & Haben, there are about 394,000 m2 under construction.

Prime rent unchanged

At the end of September 2010, the prime rent remained unchanged at Euros 34.00 per m2/month and was obtained in the West End. The premium property Opernturm in Frankfurt stayed the course with potential new tenants. Tenants are willing to pay the asking price for space in this so-called trophy building. Overall, rent levels in Frankfurt’s market area have been stable at the beginning of the second half. Also, owners in secondary locations have not further increased the amount of incentive packages they are willing to give.

All signs point to annual sales above 500,000 m2

We would not have considered this quarterly result possible until the time of the World Cup,” said Inga Schwarz, head of C&W Germany’s Research Department. “Players have operated cautiously the entire first half of the year, and the result of the first half of the year was largely sustained the European Central Bank’s acquisition (German: EZB) of 104,000 m2 in Frankfurt’s East End for their own use. Now, in early autumn, it seems that the good news and numbers that the German economy has been sending to companies for weeks is true. And not only that: the stabilizing economy and the looming path of slow economic growth appear to give confidence. The bottom of the valley seems to have been crossed as far as possible in the minds of people. We expect a stable market development for the end of the year. The entire results for the year may be above 500,000 m2.”

back to real estate News & Events

Printer Friendly Version

Contact Us

For further information, please contact:

Susanne Weber
+49 69 50 60 73 - 365

More contacts