Take-up in Germany’s top six office leasing markets* totalled 1.1m sq m in the first half of 2024, an increase of 4.5% year on year, says Savills. However, the total for the first half of 2024 was 24% lower than the ten-year average half-year take-up.

According to the international real estate advisor, those larger companies that are willing to lease new medium or larger lot sizes are mostly seeking new-build space in central locations. However, these are rare commodities. This is also evident from the high pre-let rate, which stands at an average of 68% across the top six cities for this year.

At the same time, Savills is witnessing higher availability of existing space below 1,000 sq m in central locations, since larger companies are surrendering space or completing fewer leases. In view of the lower demand from larger occupiers and rising vacancies, owners are more open to letting their space in smaller lot sizes. Consequently, the average vacancy rate across the top six cities rose by 30 basis points on the previous quarter to 5.9%.

The focus of occupiers on central, high-quality space is producing further increases in prime rents despite the rising vacancies. The average prime rent across the top six cities rose by 0.4% compared with the previous quarter. One driver of this is the high building costs, which owners are often seeking to offset with higher rents. Average rents rose by 0.8% compared with the previous quarter. Owing to the competitive market with rising vacancies, many landlords continue to offer generous incentives.

Jan-Niklas Rotberg, Head of Office Agency Germany for Savills, says: “Despite the below-average take-up numbers, the leasing market remains active, particularly when it comes to existing property. Due to economic conditions, many companies have extended their existing leases for the short to medium term to avoid costs, to adapt to hybrid working or because of the scarcity of suitable space.”
While, last year, many occupiers were still in the discovery phase in terms of hybrid working models, these have now been firmly integrated into working culture, particularly in major companies and extensive areas of the public sector.

Savills Senior Research Consultant Antonia Wecke says: “Many companies are now on the verge of taking the next step and are seeking to adapt their office space to hybrid working. However, they are often uncertain as to what a good office space should look like, what motivates employees to spend more time in the office and how space will be utilised in the long term.”

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Market in Minutes Top 6 Office Markets Germany