According to Savills, the top six office lettings markets* in Germany registered overall take-up of 2.2 million sq m in 2023, which is the lowest figure since 2009. Prime rents rose by 6% during the year while median and average rents rose more modestly by 2% and 4%, respectively. Over the same period, the vacancy rate rose by 80 basis points to 5.6%.

Jan-Niklas Rotberg, Head of Office Agency Germany for Savills, says: “2023 was characterised by a number of factors that inhibited demand. In addition to the structurally lower demand owing to the transformation towards hybrid working, the adverse economic situation in Germany had a negative impact on the office letting market. Many occupiers have become significantly more cost-sensitive and, in the current economic climate, are avoiding risk and the investment that relocation and new lettings inevitably entail.

“One ray of hope last year was that some occupiers were making more efficient use of their space and consequently leased more expensive offices. However, cost-sensitivity is naturally imposing pressure on rents.”

Savills expects take-up for 2024 to come in below the long-term average. However, the above-average number of lease extensions since the outbreak of the COVID-19 pandemic is likely to have created pent-up demand for relocations, which is likely to manifest itself once the economic environment improves and companies have more clarity surrounding future space requirements.

Rotberg adds: “Owners of prime offices in good locations can position themselves accordingly by investing in their space, particularly since the surplus demand for modern space is expected to rise further from 2025 owing to expected delays on many developments.”

* Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich

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