It’s no surprise that tech giants Samsung and Alphabet, Google’s parent company, top the list of the biggest companies in the world when it comes to research and development (R&D) investment with €13.43 billion and €13.38 billion invested in 2017/2018 respectively.

What’s perhaps slightly more surprising is that German car giants Volkswagen and Daimler come third and tenth with €13.13 billion and €8.66 billion apiece, according to European Commission data analysed by Savills.

Daimler recently announced that it plans to cut up to 10,000 jobs worldwide by 2022, many of them in Germany, among other locations, by not replacing those going into retirement. Reasons cited include the automotive corporation’s drop in sales and revenue. So at first glance, with Daimler being one of the biggest employers in and around Stuttgart in South Germany, these job reductions should free up office and logistics space in the city and its outskirts at a time when office vacancy rates are as low as 2 per cent and prime office rents as high as €24.30 per sq m as of Q3 2019, according to our research.

However, with the company’s R&D investments having risen from €6.52 billion in 2016/2017 to the aforementioned €8.66 billion in 2017/2018, it seems fair to speculate that Daimler’s office and logistics requirements have actually been changing for a while, with, for example, R&D tech hubs replacing old-style factories and offices.

One of the key requirements of the group’s newly designed 90,000 sq m office building in Stuttgart Vaihingen, due to open this year, was to offer its 4,500 employees ‘networked, digital and mobile working corresponding to modern employee needs’. Similarly, in December 2019, daughter company Mercedes-Benz announced plans to produce its electric powertrains (eATS) in-house in Stuttgart Untertürkheim, rather than buying them as was previously the case.

So the demand for space is still there, it’s just a different type of space that is being sought. The reasons for these changes have been all over the press: the move away from diesel towards electric/hybrid vehicles and more and more younger drivers preferring car sharing to car ownership, to name but a few.

Daimler is of course not the only German car company reacting to these changes. Porsche, owned by Volkswagen and like Daimler headquartered in Stuttgart, is also increasingly investing in R&D and as a consequence requiring different types of spaces, and we are seeing similar developments in the other automotive heartlands in Germany such as Munich where BMW has its headquarters. So it’s all change in the German car industry and the office and logistics markets are slowly but surely feeling the shifts.  

Further information

Read more: Spotlight European Offices Outlook