We Stand for Office
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We stand for Office Office Market Report Vienna |Spring 2018 We stand for real estate. Preface In 2018 the Vienna office market will see the strongest production of new office space in more than ten years. This development will bring new impulses for both the letting and investment markets and also create interesting perspectives. The completion of high-quality new construction projects will continue to stimulate the interest of potential tenants in new office locations and set the stage for further successful lettings. This favourable climate will also benefit the investment market, which remains very popular with international investors. Michael Ehlmaier FRICS Our experienced EHL team is pleased to help you develop the best real estate Managing Partner strategy or identify the property that perfectly fits your needs! Yours, EHL — the office specialist The EHL Real Estate Group has been one of the leading providers of property services in Austria for many years. We offer a complete range of real estate services throughout the entire property life-cycle as well as a successful international network. “We are seeing a greater focus on urbanity, flexibility and services in location decisions. Our office experts at EHL are pleased to provide you with comprehen- Stefan Wernhart MRICS sive and structured advice for the lease of the right office space!“ Head of Commercial Properties [email protected] EHL Market Reports EHL market reports are updated regularly and provide a comprehensive evaluation and overview of the real estate market. “Indicators for office space demand in 2018 point towards a further strong year- on-year increase in momentum. Details on the key indicators and developments on the office and investment markets can be found in our EHL Real Estate Market Reports.“ Thomas Schanda, MA Head of Market Research [email protected] 2 Overview Office Market Vienna Executive Summary Deliveries at record high Increase in take-up At 280,000 sqm, the production of new space will The substantial production of new space has been well reach the highest level in more than ten years. A received by the market and, from the current point of number of large-scale projects including, among others, view, take-up is expected to top the 2017 level. the Austria Campus, THE ICON VIENNA and ViE are scheduled for completion in 2018. The investment market becomes more international Higher average rents Office properties remain the most popular segment The economic recovery has driven companies to of the Vienna investment market. A growing number increasingly focus on quality instead of cost aspects in their of investors who were previously not represented in search for office space. Most of the lettings are located Austria are expected to enter the market in 2018. in prime new buildings, which has led to an increase in average rents from EUR 14.30/sqm to EUR 14.50/sqm. DEMAND* | SUPPLY 2018 RENTS I FIRST OCCUPANCY**** (in EUR/sqm/m.) Deliveries 280,000 sqm Prime locations 16.0-25.5 Take-up 210,000 sqm Quality locations 13.5-16.5 Standard locations 11.0-13.5 MARKET INDICATORS Prime rents 25.5 Deliveries strongly increasing Take-up increasing ECONOMIC DATA AUSTRIA 2018* Vacancy rate slightly increasing Unemployment rate Austria 5.5% Prime yields slightly decreasing (Eurostat) EU (28) 7.3% Eurozone (19) 8.5% RENTAL RATES Nom. GDP EUR bn. 387.9 Average rents slightly increasing Economic growth 3.00% Prime rents stable Inflation 2.00% State budget deficit -0.40% OFFICE MARKE Q1 2018 Total space** VRF*** * Forecast Office space in sqm 11,055,000 5,746,000 ** All figures in the report refer to total office space consisting of modern office properties and office space in older buildings. Vacancy rate 5.3% 5.4% *** according to Vienna Research Forum, www.viennaresearchforum.at **** EHL-average rent levels of 100 newly built or refurbished office buildings at various locations Office Market Vienna 2014—2018 320,000 280,000 300,000 sqm 8% 220,000 210,000* 225,000 sqm 7% 200,000 185,000 150,000 150,000 sqm 130,000 6% 120,000 Vacancy rate 75,000 sqm 60,000 5% 4% 2014 2015 2016 2017 2018 Deliveries in sqm Take-up in sqm *Forecast Source: EHL Market Research | Q1 2018 3 © 2015 www.oln.at © Christian Stemper Co-Working spaces enliven the market Co-working spaces are currently experiencing an un- co-working space provider, Talent Garden: in the first disputed boom on the Vienna office market, and the quarter of 2018, EHL brokered a property with 5,000 available office space is becoming significantly more sqm of usable space in Liechtensteinstraße in Vienna’s differentiated. In recent years, the market was char- ninth district to this innovative company for single- acterised primarily by numerous local initiatives which tenant use. successfully transformed smaller commercial proper- ties into new space for creative freelancers from the Additional benefit in new office properties neighbourhood. Large, international providers with corresponding space requirements are now sounding Developers frequently reserve part of the usable out the Vienna market for the first time. One of the space in high-quality new construction projects for forerunners is the established serviced office provider co-working areas already during the planning phase. Regus, which leased several sites for the implemen- For example, the concept of the ORBI Tower included tation of its new co-working space concept in 2017. 4,000 sqm for co-working spaces. Lettings to co- This new type of use is creating exciting impulses for working providers are not the only option in Vienna, the Vienna office market. Co-working spaces are be- owner operations are also a viable alternative. The ing integrated in new office developments in estab- level of rents in lettings to co-working providers lished office clusters, but also offer interesting oppor- corresponds to the prices for conventional office tunities for older properties outside the conventional space. Developers can also generate added benefits office regions. for their standard tenants with options that facilitate the use of co-working space for short-term additional Urbane living- as well as established office locations requirements or the project-related letting of creative areas which are often missing in traditional office Established office regions are no longer the focal structures. point of location searches, even for large international providers. Properties in urbane and lively structures Key factors for the design of co-working spaces are, close to the living environment offer added value, above in any case, flexible structures with optimal open-plan all with a view towards the start-up scene. Single tenant concepts, creative rooms, generous communication usage is also an important factor for the maximum zones and open-space areas. These factors support flexibility of co-working space. This development is the network philosophy that plays such an important illustrated by the market entry of a further international role in co-working spaces. 4 Rent levels and vacancy rates Development of rents 2011—2018 Prime rents Prime locations Quality locations Standard locations 2018 Rental rates in Vienna office regions 30 EUR/sqm 25 EUR/sqm 20 EUR/sqm 15 EUR/sqm 10 EUR/sqm 5 EUR/sqm Inner city Hauptbahnhof Vienna DC Lassallestr. Southern Eastern Region Seestadt Northern Western Surroundings Quartier Surroundings Messe Region Erdberg Aspern Region Region Belvedere Prater Wienerberg Prime rents (in EUR/sqm/m.) Vacancy rates (in %) 127.7 London (West End) 14.0 Warsaw 65.0 Paris 12.0 Milan 44.2 Milan 9.5 Madrid 40.0 Frankfurt 9.1 Bucharest 35.5 Munich 8.1 Frankfurt 33.3 Amsterdam 7.8 Prague 31.8 Berlin 7.6 Budapest 31.0 Madrid 7.4 Amsterdam 25.5 Vienna 6.5 Bratislava 23.0 Warsaw 5.3 Vienna 22.0 Budapest 3.6 London (West End) 19.5 Prague 3.3 Munich 18.5 Bucharest 2.8 Paris (CBD) Source: EHL Market 15.5 Bratislava 2.0 Berlin Research | Q1 2018 5 The Vienna office regions The Vienna office market consists of several cluster regions where office production is concentrated. The following map provides an overview of the most important office axes as well as indicators for the supply, demand and development of rent levels. U4 1. Inner city | Surroundings 2. top PROPERTIES 1010, Goldenes Quartier Office 1010, Fleischmarkt 1 U5 1010, Kohlmarkt 8 U3 1. 1010, Georg-Coch-Platz 2 © SPB Beteiligungsverwaltung SPB © Rents EUR 15.0 -25.5 1010, Schwarzenbergplatz 3 3. U2 U5 Rents tendency 1030, myhive Ungargasse 37 U4 Demand 1040, Bureau am Belvedere A1 Supply 2. Northern Region 4. U2 top PROPERTIES 1190, Skyline 1190, Kay 29 1190, Square Plus A23 1190, space2move © SRE/FOTOSTUDIO MENZL Rents EUR 11.0 -18.5 1200, Rivergate U6 Rents tendency 1200, Millennium Tower Demand 1200, Optimum Supply 1210, Florido Tower A21 A2 3. Western Region 4. Southern Region | Wienerberg top PROPERTIES TOP PROPERTIES 1120, Forum Schönbrunn 1100, Business Park Vienna 1120, Arcade Meidling 1100, myhive Twin Towers © © IMMOFINANZ 1140, Bergmillergasse 5 1100, Office Provider © barus graphicdesign barus © 1140, Scheringgasse 2 1100, The Brick - Biotope Offices Rents EUR 10.0 -14.5 1150, BahnhofCity Wien West Rents EUR 11.5 -18.0 am Wienerberg* Rents tendency Rents tendency 1120, Euro Plaza Demand Demand 1120, INNO Plaza* Supply Supply 6 5. Vienna DC | Surroundings top PROPERTIES 1220, Ares Tower expressiv.at expressiv.at 1220, DC Tower © 1220, Andromeda Tower A22 1220, Tech Gate Vienna U1 Rents EUR 12.5 -22.0 1220, IZD Tower Rents tendency Demand S2 U6 Supply 6. Lassallestraße | Messe | Prater 5. top PROPERTIES U2 1020, Green Worx 6. 9. 1020, Austria Campus* 1020, messecarree Wien 1020, Denk Drei, Viertel Zwei IC DEVELOPMENT / MOPIX © Rents EUR 12.0 -18.0 1020, Galaxy 21 U5 Rents tendency 1020, E-Zone Demand Supply 8.