German
Market Review
4.57% 4.75%
5.10%
4.85%
4.50%
4.00%
5.10%
GERMANY
BERLIN DÜSSELDORF FRANKFURT HAMBURG MUNICH STUTTGART
Prime Yields-Ofice
Prime yields
Source: Colliers International
Secondary Cities and IREIT’s Portfolio
According to a Deka Bank report fromDecember 2014 and
cited by Colliers International, many of the leading locations
for real estate in Germany are held by the secondary cities.
The survey included cities with populations of more than
200,000. Among the cities surveyed, which included the
big A cities such as Munich, Bonn was ranked seventh and
Munster eleventh as the most attractive places for real
estate. Munich retained the number one spot. Darmstadt’s
population fell below the 200,000 mark and was therefore
not included in the survey, however market indicators
showed that Darmstadt is also a leading and vibrant real
estate market in Germany.
Colliers International reported that Darmstadt has had
strong leasing and investment activity during 2014, with
an increase in take-up of 40% year on year. It was also
reported that most of the take-up was due to leasing as
opposed to purchasers. It is important to note that 80% of
the letting is attributed to second-hand rather than newly
built properties. The vacancy rate inDarmstadt remains low
at 3.6%. Most of the newly built offices have been pre-let
including the Deutsche Telekom Building in the TZ Rhein
Main business park. In general Colliers reports that office
rents are stable, with a slightly downward trend in the
average rental price due to the extensive number of second
hand lettings of varying quality.
Bonn and its Federal Quarter have shown a very strong
market performance for 2014. Colliers International
reported that therewere seven significant lease transactions
of between 2,000 and 4,100 sqm during 2014 in a current
market where most lettings are to smaller tenants less
than 500 sqm. The most popular location was the Federal
District, which absorbed 45%of the 37,500 sqm let during
2014. Colliers International reports that office rents in Bonn
are stable and vacancy remains low at 3.9%.
According to Colliers International the Munster office
market has remained stable. The letting market remains
the bastion of local and regional companies. The data on
exact vacancy levels has not been reported, however IREIT
estimates that the overall vacancy remains low at circa 5%.
Significant building starts and developments have not been
reported in the area except for the Induna property which
was built in the 1960’s and is slated for redevelopment
during the coming years.
Market Outlook for 2015
According to Colliers International, 2014 ended with a
transaction volume just above the ten year average. As
uncertainty continues to loom in Europe and the slowing
down in the German economy, analysts are expecting a
stable performance of the office occupational market in
2015. The market is anticipating that occupiers may delay
relocations or large scale lettings. However, as construction
activity in the sector remains at a very low level, vacant
office stock will likely continue to decrease.
Cushman & Wakefield LLP’s Marketbeat Office Snapshot
Report for Q4 2014 has forecast that the office take-up
levels in 2015 will probably match, if not exceed, those
of 2014. The demand is backed by positive growth in the
employment market and a high number of office leases
expiring in 2015. The same report also mentioned that
falling vacancy rates should boost higher investment
volumes in 2015 as investors compete for the best assets,
while the same occupiers may opt for more cost-effective
opportunities in secondary markets due to the expected
increase in prime rents.
IREIT Global
annual report 2014
