According to Savills, office take-up in the top six German markets, Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich, has reached approximately 1.05 million sq m in H1 2023 which is about a third lower than H1 2022.

With office take-up of around 486,000 sq m, this represents one of the weakest quarters since Q2 2020. Frankfurt registered the lowest decrease in take-up at 4% whilst Cologne registered the highest at 69%. A key factor is the lack of transactions over 10,000 sq m, with just 0.3% completing so far this year in comparison to the 10-year average of 1%.

The vacancy rate across all top six markets rose by 0.2%, exceeding the 5% mark for the first time since 2017, and they are expected to rise further due to high completion volumes. Across all six markets, rental growth declined by 1% whilst prime rental growth increased by 2%.  

Jan-Niklas Rotberg, Head of Office Agency, Savills Germany, says: “Hybrid working has permanently changed the office environment, leading to a structural decline in demand for office space.

“Rental levels are supported in select markets where quality and location are prioritised, but overall, owners may face the reality that rents will no longer increase as they have in the past. Less desirable locations will face increasing challenges, with noticeable declines in demand, especially for lower quality spaces.”

Matthias Pink, Head of Research, Savills Germany, says: “As a result of inflation, the higher costs of capital has impacted the number of large lettings as larger companies are cautious about incurring additional costs associated with relocation.”

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German Top 6 Office Markets