Finding property will be even more challenging for investors and occupiers alike in 2017. With further initial yield compression likely to be no more than marginal, investors will be targeting rental growth potential. The latter will be found in more and more office locations as well as on inner-city logistics assets, though no longer on retail property.

Results at a glance - Our theses for 2017:

• Thesis 1: Take-up in the office markets will decline owing to a supply shortage. Companies will be increasingly forced to turn to peripheral locations and urban hinterlands. Consequently, rental growth will continue.
• Thesis 2: The retail sector will see increasing demand for smaller units and a decline in requirements for retail space. The number of locations affected by declining rents and vacancies will increase with rental growth expected in only a small number of 1a locations at best.
• Thesis 3: Expansion of logistics space will continue and will increasingly penetrate into cities as the “last mile” becomes a decisive factor. Inner-city rents will therefore rise while, outside cities, the upper limit will remain approximately €6.50 per sq m/ month.
• Thesis 4: Although total returns in the commercial investment market will fall, demand will remain at least in line with the previous year. Consequently, yields will harden moderately further while B locations and niche sectors will move even higher on investors’ agendas.
• Thesis 5: In the residential market, construction activity will accelerate significantly, creating investment opportunities. Supply across the existing building stock will remain extremely scarce. However, with more stringentregulation on the horizon, initial yields will not harden.