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Facts and Figures

Office market am Q3 2019 “To understand matters rightly we should understand their details.“ Quote from François VI. Duc de La Rochefoucauld

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Dr. Konrad Kanzler Head of Research +49 (0) 69 - 970 505-614 [email protected]

Andreas Wende Managing Partner +49 (0) 69 - 970 505-171 [email protected]

Martin Angersbach Director Business Development Office +49 (0) 69 - 970 505-122 [email protected]

Lenny Lemler Director Investment +49 (0) 69 - 970 505-174 [email protected] Market Environment

Population development Frankfurt a. M.

Frankfurt am Main registered continuing 760.000 Inhabitants June 2019: 752,321 740.000 population growth in the first six months

720.000 of 2019. According to municipal statis-

700.000 tics, the city is gaining around 25 citizens

680.000

per day this year, and reached a new all- 660.000 time high of 752,321 inhabitants as of 30 640.000 June 2019. This means that Frankfurt’s 620.000 population has risen by around 8,200 in- 600.000 Source: City of Frankfurt a. M. Frankfurt of City Source: 2012 2013 2014 2015 2016 2017 2018 Jun-19 habitants or 1.1 % in the past 12 months. A foreseeable end to this devel- opment is not yet in sight. Purchasing power per capita Germany and Frankfurt a. M. Although Frankfurt’s economic develop- Purchasing power per capita Germany Purchasing power per capita Frankfurt a. M. ment also appears to be cooling off a lit- 30,000 Purchasing power per capita 2019: Germany € 23,779 / Frankfurt € 27,088 tle, unemployment on the labour market 25,000 has continued to fall. As of August 2019, 20,000 the rate of unemployment in the city

15,000 stood at 5.0 %. The number of employ- ting GmbH

e ees subject to social contribu- 10,000 tions amounted to 596,722 as of 31 De-

5,000 GfK GeoMark : cember 2018 - representing an increase

0 Source of over 21,000 employees or 3.7 % 2012 2013 2014 2015 2016 2017 2018 2019 compared to the previous year. This rate of growth puts Frankfurt well ahead of Unemployment / employees subject to social insur. contribution both (2.3 %) and Germany Employees Frankfurt a. M. thereof tertiary sector (2.1 %). Unemployment rate Germany Unemployment rate Frankfurt a. M. 700,000 8.0 The current economic situation of com- 600,000 7.5

7.0 panies in Frankfurt still appears to be 500,000 EmploymentAgency

6.5 , positive, although topics such as Brexit 400,000 6.0 and international trade disputes are 300,000 5.5 slowly making themselves felt in the local 200,000 5.0 economy. While future business expec-

100,000 StateStatistical OfficeHesse 4.5 : tations have deteriorated compared to

0 4.0 Source 2012 2013 2014 2015 2016 2017 2018 Aug-19 previous surveys, 87.5 % of respond- ents to the Mittelstandsbericht 2019 Consumer price index Germany and Hesse (Report on Small and Medium-Sized En- terprises 2019) from the Frankfurt

CPI Germany (base year: 2015) CPI Hesse (base year: 2015) Chamber of Industry and Commerce

115 CPI August 2019: Germany 106.0 / Hesse 105.3 provided consistent or improved as-

110 sessments of their business situation in the coming months. On balance, 12 % 105 of SMEs current plan to recruit more

100 staff, signaling continuing moderate 95 growth. As a result, further robust de-

90 FederalStatistical Office mand for space on the Frankfurt office :

Source market is expected from Frankfurt- 85 2012 2013 2014 2015 2016 2017 2018 Aug-19 based companies. Market Data

Take -up, vacancy, prime rent, average rent, prolongation

Vacancy (in thousand) Take-up (in thousand) Prolongation after market screening (in thousand) Average take-up 10 years (in thousand) Prime rent (in €/sqm) Average rent (in €/sqm) 2,500 50.00 45.00 42.00 43.20 45.00 40.30 39.20 2,000 39.00 39.00 38.00 38.00 39.00 40.00 36.50 36.00 35.00 s qm 1,960 1,500 30.00 s qm 1,760 s qm 1,680

s qm 1,590 25.00 22.00

s qm 1,520 21.70 21.00 20.30 20.50 20.50 20.50 20.50 20.70 20.00 19.50 19.30

1,000 s qm 1,340 20.00 s qm 1,316 s qm 1,251 s qm 1,246 15.00 s qm 979

500 10.00 s qm 743 s qm 720

s qm 210 5.00 s qm 113 s qm 97 s qm 74 s qm 50 s qm 46 s qm 350 s qm 472 s qm 427 s qm 515 s qm 452 s qm 712 s qm 622 s qm 510 s qm 369 s qm 394 s qm 541 s qm 364 0 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019 : NAI apollo Source

The Frankfurt market for office space including and -Kaiserlei experienced a temporary lull in the third quarter of 2019 following a strong first half. Space take-up by tenants and owner-occupiers amounted to 101,400 sqm during this period. Expected deals, such as the rental of more than 25,000 sqm by the City of Frankfurt in City West, have yet to be finalised. Thus, the recent quarterly result was about 14 % below the ten-year average for third quarters.

Take-up in the first nine months of 2019 reached a total of 364,100 sqm. Although the figure is more than 17 % below the previous year’s result of 440,900 sqm, it is still almost 5 % above the long-term average of about 347,000 sqm. Lease renewals that took place after office users were unable to find new spaces despite intensive explorations of the market increased significantly to 113,100 sqm, representing the highest volume realised since 2014.

Take-up according to location Q1-Q3 2019

Total: 364,100 sqm 100.000 89.900 sqm 142 Deals 90.000 80.000 66.300 sqm 70.000 27 Deals 60.000 42.100 sqm 50.000 38 Deals 40.000 33.700 sqm 32.100 sqm 50 Deals 66 Deals 29.400 sqm 30.000 67 Deals 21.500 sqm 16.800 sqm

11.200 sqm 20.000 12 Deals 16 Deals 8.300 sqm 9 Deals llo 4.800 sqm 10.000 25 Deals 2.700 sqm 1.800 sqm 3.500 sqm 17 Deals 5 Deals 2 Deals 2 Deals 0 : NAI apo Bankenlage Westend Stadtmitte Messe Westhafen Nordend City West Bockenheim Lyoner Quartier Eschborn Mertonviertel OF-Kaiserlei other locations Source Market Data

Take-up according to unit size Q1-Q3 2019 Large contracts signed in the second Total 364,100 sqm quarter continue to dictate this year’s 160.000 145.500 sqm 416 Deals market development. Higher take-up 140.000 was registered only in the segment in- 120.000

100.000 cluding deals above 10,000 sqm, with 65.600 sqm 71.700 sqm 80.000 an increase of around a fifth. 41 Deals 3 Deals 60.000 45.600 sqm In addition to the big deals already rec- 13 Deals 35.700 sqm

40.000 5 Deals orded, such as the rental by DekaBank 20.000 : NAI apollo of 46,200 sqm in the Lyoner Quartier or

0 Source < 1,000 sqm 1,000 - 2,500 sqm 2,501 - 5,000 sqm 5,001 - 10,000 sqm > 10,000 sqm the lease signed by Randstad for about 14,800 sqm in Eschborn, the rental of almost 7,500 sqm by Check24 at 55 Take-up according to rents Q1-Q3 2019 Speicherstraße in the third quarter also Total: 346,900 sqm* counts as one of the largest contract 120.000 97.600 sqm signings during the first nine months of 83 Deals 100.000 77.500 sqm 2019. In terms of the industry ranking, 69.300 sqm 102 Deals 80.000 155 Deals “banking, financial services & insur-

60.000 ances” remained in a dominant position 45.300 sqm 36.600 sqm 52 Deals 49 Deals with a market share of 27.8 % or a take- 40.000 20.600 sqm 34 Deals up volume of 101,200 sqm. The “con- 20.000

: NAI apollo sulting, marketing & research” sector

0 Source < 10 € 10 < 15 € 15 < 20 € 20 < 25 € 25 < 30 € ≥ 30 € was a distant second with a 14.5 % *lettings only, no owner occupiers share, while “construction & real estate” was in third place with an 11.6 % market Take-up according to space quality Q1-Q3 2019 share. 10.2 % With regard to location, the Lyoner Quartier again accounted for the highest Total 364,100 sqm take-up volume of 66,300 sqm because superior 23.4 % of the Deka deal. Eschborn was next average with 42,100 sqm, ahead of the banking

ordinary district, Westend and the city centre, 66.4 % where similarly high lettings perfor-

: NAI apollo mances in the range of 29,400 sqm and Source 33,700 sqm were achieved. Rentals in recently completed office de- velopments in the banking district had a Take-up according to industry Q1-Q3 2019 positive influence on the prime rent in the third quarter of 2019. In the last

Banking, Financial Services & three months, the rate rose by €1/sqm 28.0 % 27.8 % to €45.00/sqm — an increase of 8.4 % Consulting, Marketing & Research year on year. This means that the prime Construction & Real Estate rent in the Frankfurt office market has in- creased to the third-highest level ever Communication & IT 8.3 % achieved after 2001 and 2000. The av- 14.5 % Public Institutions : NAI apollo erage rent currently stands at

9.8 % Source Others 11.6 % €22.00/sqm, an increase of 2.3 % over the past 12 months, although it has re- mained stable. Office L ocations Frankfurt a.M. Q3 2019 We have divided the office market Frankfurt i nto the most important main locations and have colored them separately. In addition, every location is divided into the particular borough and identified with the correspond- ing apellation of site.

Main Location Vacancy*

F-CBD 261,900 sqm F-WEST 47,000 sqm F-SOUTH 55,800 sqm F-NORTH 25,300 sqm F-EAST 62,800 sqm OFFICE CENTRES 266,700 sqm

Total 720,000 sqm

data as of 30.09.2019 * inclusive subletting spaces edition: January 2008 / © Stadtvermessungsamt Frankfurt a. M., 2008

Frankfurt am Main Airport

Office stock 382,700 m²

Take up 29,000 m²

Average rent 20.00 €/m²

Prime rent 28.00 €/m² ource: NAIapollo

S Submarkets Office Stock (sqm) Vacancy (sqm) in % Ø-Rent (€) Prime Rent (€) Rentable Objects 1. Höchst 189,000 2,800 1.5 9.00 15.50 4 2. Eschborn-West 168,100 20,700 12.3 10.00 13.50 8 3. Eschborn-Süd 392,100 69,700 17.8 12.50 16.50 20 4. Eschborn-Ost 123,900 6,600 5.3 11.80 15.00 3 5. 89,300 15,500 17.4 11.00 12.50 1 6. 700 0 0.0 8.90 11.00 0 7. Rödelheim 110,300 9,800 8.9 10.50 13.00 4 8. Griesheim 16,800 0 0.0 6.00 8.50 0 9. City West 517,100 46,600 9.0 15.50 21.00 10 10. Gallus 574,600 18,000 3.1 11.00 16.00 14 11. Lyoner Quartier 590,800 63,500 10.7 13.50 16.50 17 12. Niederrad (Stadt) 12,500 400 3.2 10.00 13.00 1 13. 138,300 700 0.5 11.50 13.00 2 14. Westhafen 102,300 13,000 12.7 22.00 28.00 6 15. Bahnhofsviertel 384,600 22,300 5.8 18.50 24.50 27 16. Messe/Europaviertel 313,400 34,300 10.9 28.00 40.00 4 17. Bockenheim 311,200 8,000 2.6 15.00 19.00 10 18. Westend 662,200 52,700 8.0 24.00 38.00 54 19. Bankenlage 1,225,900 38,600 3.1 32.00 45.00 24 20. Stadtmitte 581,100 41,000 7.1 25.00 40.00 58 21. Nordend 126,700 5,400 4.3 17.50 22.00 12 22. City Ostend 226,300 25,800 11.4 14.00 18.00 3 23. Sachsenhausen 441,300 29,100 6.6 14.00 23.50 22 24. 4,500 200 4.4 11.50 15.00 1 25. OF-Kaiserlei 222,100 27,300 12.3 11.00 13.50 6 26. Ostend-Ost 382,800 25,100 6.6 15.50 18.00 21 27. Bornheim 36,900 0 0.0 9.00 13.50 0 28. / 224,700 10,200 4.5 9.00 12.50 5 29. Bergen-Enkheim 50,600 1,700 3.4 8.00 11.00 2 30. Seckbach 15,100 100 0.7 7.00 9.00 1 31. 13,900 300 2.2 12.00 15.00 2 32. 33,400 0 0.0 11.00 16.50 0 33. Nieder- 138,000 14,300 10.4 8.00 11.00 7 34. Mertonviertel 284,500 79,000 27.8 13.50 14.50 7 35. 10,900 300 2.8 10.00 12.00 1 36. /Hausen 94,000 6,600 7.0 11.50 13.50 8

Total apollo NAI Source: 11,446,000 720,000 6.3 22.00 45.00 375 (inclusive other locations) Market Data

Geographi cal localisation of large-scale lettings Q1-Q3 2019 accor. to size categories (> 1,000 sqm)

Lettings according to size > 1,000 sqm - ≤ 2,500 sqm > 2,500 sqm - ≤ 5,000 sqm > 5,000 sqm - ≤ 10,000 sqm >10,000 sqm

Geographical localisation of office spaces completions 2019 accor. to size categories (> 1,000 sqm)

Office space completion according to size > 1,000 sqm - ≤ 5,000 sqm > 5,000 sqm - ≤ 10,000 sqm > 10,000 sqm - ≤ 20,000 sqm > 20,000 sqm Market Data

Vacancy according to vacancy size Q3 2019 In the third quarter of 2019, seven office Total: 720,000 sqm (375 sub-properties), occupied within three months Vacancy Take-up Q1-Q3 2019 developments with total space of 300.000 146,200 sqm were completed in the 218.300 sqm 240.000 11 (sub-)properties Frankfurt market. The most prominent examples include the Omniturm with 180.000 83.600 sqm 149.400 sqm 143.300 sqm 217 (sub-)properties 89 (sub-)properties 125.100 sqm 22 (sub-)properties more than 45,600 sqm of office space 36 (sub-)properties 120.000 and Marienturm with over 41,000 sqm. A total of 29,100 sqm was removed from 60.000 NAI apollo the office market, and primarily affected 145.500 sqm 65.600 sqm 45.600 sqm 35.700 sqm 71.700 sqm 0 Source: the supply of small spaces. Thus, the < 1,000 sqm 1,000 - 2,500 sqm 2,501 - 5,000 sqm 5,001 - 10,000 sqm > 10,000 sqm Frankfurt market registered a slight in- crease in space and offers total office Vacancy according to asking rent Q3 2019 stock of about 11.45 m sqm. By the end Total: 720,000 sqm (375 sub-properties), occupied within three months* of 2019, a further 22,900 sqm of office Vacancy Take-up Q1-Q3 2019 400.000 358.300 sqm space should be completed. As things 128 (sub-)properties 350.000 stand, 254,100 sqm is due to come onto 300.000 the market in 2020, of which more than 250.000 60 % is already spoken for. 200.000

150.000 123.100 sqm Office space that is still available in the 96 (sub-)properties

63.800 sqm 67.700 sqm 100.000 58.600 sqm recently completed projects caused a 39 (sub-)properties 52 (sub-)properties 48.100 sqm 27 (sub-)properties 33 (sub-)properties

50.000 NAI apollo slight increase in vacancies in the third

20.600 sqm 69.300 sqm 77.500 sqm 97.600 sqm 36.600 sqm 45.300 sqm 0

Source: quarter. That means active market va- < €10 €10 < 15 €15 < 20 €20 < 25 €25 < 30 ≥ €30 cancies on the Frankfurt office market - that is, office space that can be occu- Vacancy according to quality of space Q3 2019 pied within three months - amounted to 720,000 sqm by end-September 2019.

22.2 % This still represents a decline of 106,000 Total: 720,000 sqm (375 sub- properties), occupied within three sqm over the past year. The corre- months

superior sponding vacancy rate stands at 6.3 % 45.2 % and is 1.0 percentage point below. average It is anticipated that some ongoing ordinary searches for large office spaces in the fi-

32.6 % nal quarter will have an effect on market : NAI apollo figures. Vacancies will fall again as a re- Source sult, and high-priced deals will further push up rents. Completions Outlook next 12 months

Completions thereof rentable (before completion) Office Stock 350,000

300,000 Vacancy 250,000

200,000 300,500 sqm Take-up

150,000 254,100 sqm 100,600 sqm

100,000 Prime rent 171,100 sqm 49,900 sqm 32,100 sqm 35,500 sqm

50,000 32,600 sqm : NAI apollo 8,300 sqm 126,200 sqm 5,000 sqm 110,500 sqm 77,600 sqm 76,400 sqm 0 Source 2014 2015 2016 2017 2018 2019 2020 Average rent Surroundings

Market Data Surroundings of Frankfurt Average and Prime Rents €/ sqm 12. 20 7. 80 / €/ sqm 10 .10 /

6.30 €/ sqm €/ sqm 10. 50 / 15.10 / Offenbach

Dietzenbach 9. 30 6.20 €/ sqm / 12.90 Bad V ilbel

9.50 €/ sqm senburg senburg €/ sqm 13. 40 /

Neu -I €/ sqm 9. 10 €/ sqm 7.10 / 11.90 Langen Langen €/ sqm / 12.40

8.00 / 12.10 7.80 g Bad H ombur g 9.70 / 16.10 €/ sqm 10 .40 / Steinbach

€/ sqm 6.60 alldorf €/ sqm €/ sqm 0 / 13.40 /

€/ sqm €/ sqm Schwalbach Schwalbach / 10.90 Airport Airport

/ 28.0 /

10.40 Mörfelden -W 13 .30 7.80 / €/ sqm

20 .00 Kelsterbach €/ sqm 8. 20 / 13.00 9.50 €/ sqm 12.9 0 Sulzbach Sulzbach / 14.90 /

g Kronber g 8.60 / Liederbach Liederbach 10 .70 7. 10 / 9.50 €/ sqm €/ sqm 13 .4 0 /

Krifte l Bad S oden 10. 30 €/ sqm /

9. 50 7. 20 13 .30 Hattersheim Hattersheim 10. 20 / €/ sqm €/ sqm 12 .40 13. 30 Hofheim Hofheim / /

8.70 7.40

Source: NAI apollo Map Basis: RegioGraph GfK GeoMarketing GmbH On the basis of 6,213 offers (08/2018 - 07/2019) empirica-systeme Marktdatenbank Top 5 – Key Facts

Cities

Office space, vacancy, prime rent, average rent Q3 2019

Office Space (in m. sqm) Take-Up (sqm) Vacancy (in %) Prime rent (€/sqm) Average rent (€/sqm)

Berlin 18.74 731,000 1.3 38.00 24.90

Dusseldorf 7.50 355,000 7.0 28.00 16.45

Frankfurt a. M. 11.45 364,000 6.3 45.00 22.00

Hamburg 13.80 429,000 2.9 29.50 17.40

Munich 20.38 620,000 1.8 39.00 19.50 apollo NAI Source:

Prime yields Q3 2019

Prime office yields Prime retail yields Prime logistics yields

Berlin 2.75 % 2.80 % 3.85 %

Dusseldorf 3.15 % 3.10 % 3.90 %

Frankfurt a. M. 2.90 % 3.00 % 3.85 %

Hamburg 2.90 % 3.00 % 3.85 %

Munich 2.75 % 2.80 % 3.80 %

Total Ø = 2,90% Ø = 2,95% Ø = 3,85% apollo NAI Source:

Frankfurt a. M.

Top take -up Q1-Q3 2019

Property + Location Tenant / Owner Occupier Leased area in sqm

Office develop., Lyoner Str. 13 / Lyoner Quartier DekaBank Deutsche Girozentrale 46,200 Office develop., Frankfurter Straße 100 / Eschborn-South Randstad Deutschland 14,800 Bürocenter Eschborn I, Ludwig-Erhard-Str. 30-34 / Eschborn-West Gesellschaft f. Internationale Zusammenarbeit (GIZ) 10,700 DFB Zentrale / Akademie , Schwarzwaldstr. 125 / Sachsenhausen Deutscher Fußballbund (DFB) 10,000

Werfthaus, Speicherstraße 55 / Westhafen Check24 GmbH 7,500 apollo NAI Source:

Top investments Q1-Q3 2019

Property + Location Purchaser Purchase Price in €*

Die Welle, Reuterweg 16-18 Invesco Real Estate approx. 620.000.000

T8, Taunusanlage 8 Wirtgen Invest approx. 400.000.000 Main Airport Center (MAC), Unterschweinstiege 2-14 Capitaland Commercial Trust (CCT) approx. 265.000.000 St. Martin Tower, Franklinstraße 61-63 Publity approx. 130.000.000 *partly estimated *partly Opernplatz 2 Signa approx. 130.000.000 apollo; NAI Source: ONE PARTNER. ALL SERVICES. ALL ASSET CLASSES.

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YOUR PROPERTY PARTNER – Copyright © NAI apollo, 2019. This report is for information purposes only. It was compiled with the WE DISTINGUISH OURSELVES BY utmost care and is based on information from sources that we regard as being reliable, but for which we assume no liability for their accuracy, completeness or correctness. Estimates, figures and forecasts con- OWNER-MANAGED tained in this document are for guidance only. This report does not pur- sue the aim of promoting the purchase or sale of a particular financial PARTNER ACTIVE IN DAY-TO-DAY BUSINESS investment and thus should not be considered as such an offer. The reader of this report must make his or her own independent decisions in regards to correctness and completeness. The NAI apollo assumes no MORE THAN 30 YEARS OF MARKET EXPERIENCE liability for direct or indirect damage that arises through inaccuracies, omissions or errors in this report. We reserve the right to make changes and/or additions to the information contained therein at any time. Neither INDEPENDENT - INNOVATIVE - SOLUTION-ORIENTED the report nor parts thereof may be published, reproduced or passed on without the written consent of the NAI apollo. LOCAL - NATIONAL - TOP NETWORK

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