, Quarters 1–3, 2014

Market Survey Commercial

Office Letting

Grossmann & Berger’s promise: Market transparency. Commercial Market Survey Hamburg Quarters 1–3, 2014 Office Letting

Office Letting

Key figures office Q 1–3 Q 1–3 2013 2014

Take-up of space in m²...... 325,000... 380,000 + 17 % Premium rent in €/m²/mth...... 23.50...... 24.50 Average rent in €/m²/mth...... 13.80...... 14.50 Vacancy rate in %...... 6.5...... 6.3 Total stock of office space in millions m²...... 13.28...... 13.35

Take-up of space 2010–Q 3, 2014 Take-up of space (in 000s m², incl. owner-occupiers) Total take-up of office space was 155,000 m² in the 3rd quarter, making 600 it the strongest so far this year. Adding to the sound result returned in 10-year average (2004–2013): approx. 478,000 m² the 1st half of the year, which was partly due to the Deutsche Telekom 500 lease agreement for a large amount of space, the overall figure has ris- 400 en to 380,000 m², representing year on year growth of 17%. The share at- tributable to owner-occupiers was some 20%, i.e. about 73,000 m² of of- 300 Q3Q3Q3 fice space. In addition to three leases for over 10,000 m² the strong result 155 is, first and foremost, due to a large number of lets for over 1,000 m² and 200 2,000 m².

100 Rather like the situation in the previous quarter, some 36% of the space 506 540 430 440 380 0 taken up was registered in the 5,000 m² or more section of the market; alto- 2010 2011 2012 2013 Q3, gether 2014 has seen eleven such leases, three of them in the 3rd quarter. 2014 In terms of size, the biggest new agreement was the building start for the VBG main administrative offices (Krüsistrasse/Drosselstrasse, Barmbek) to provide the insurance company with 22,000 m² of office space. There Take-up of space Q 1–3, 2014 by size was great public interest in the two next-biggest agreements concluded in (in 000s m², incl. owner-occupiers) and no. of lettings the 3rd quarter: WPP Deutschland Holding GmbH plans to group its Ham- burg companies together in the “Zeisehallen Studios”; this new-build pro- 160 ject on a vacant lot on Friedensallee/Behringstrasse (Altona) will provide 140 some 12,600 m² of office space. And the Funke Media Group is relocating

120 the staff of Hamburger Abendblatt, a newspaper, to 10,300 m² of space in the “Burstah Offices” (Grosser Burstah 18-30). The small size categories, 100 i.e. 500 m² or less and 1,000 m² or less, accounted for about 17% of letting 80 activity, very similar to the 16% share of lets in the mid sized segment of 2,001 m² to 5,000 m². Interesting to note in this size category are the four 60 leases signed by a games developer in , which add up to about 40 13,000 m² of office space. 260 94 35 20 11 20 17% 17% 14% 16% 36% 66 64 54 61 135 At the end of the 3rd quarter, City’s take-up of space is once again far 0 up to up to up to up to over ahead of the other sub-markets for office letting, with a share of 23% 500 1,000 2,000 5,000 5,000 (85,900 m²) and 149 agreements signed. One of the biggest agreements signed for a property in the City was, apart from the Hamburger Abendblatt

page 2 Commercial Market Survey Hamburg Quarters 1–3, 2014 Office Letting

lease already mentioned, the Kreditech contract for 3,850 m² (LES_1, Selected top deals Q 1–3, 2014 Ludwig-Erhard-Strasse 1). Accounting for about 11% each, the next big- gest sub-markets were City South (42,200 m²) and City North (41,000 m²).

1. Telekom...... Überseering 2...... ca. 32,000 m² Whereas figures for take-up of office space in City North are primarily due to the Telekom lease for 32,000 m² at Überseering 2, City South registered 2. VBG...... Krüsistr./Drosselstr...... ca. 22,000 m² the second-highest number of agreements at 55. Among the companies 3. Marquard & Bahls. Shanghaiallee...... ca. 15,000 m² signing new agreements in City South during the 3rd quarter were Star

4. WPP...... Friedensallee/Behringstr...... ca. 12,600 m² Finanz-Software (3,300 m² at Grüner Deich 15-17) and EHA Energie-Han- dels-Gesellschaft (some 2,600 m² at the VTG Centre, Amsinckstrasse 57- 5. Funke Media...... Großer Burstah 18-30...... ca. 10,300 m² 61). Fourth and fifth-placed (31,900 m²) and Barmbek (30,800 6. Jungheinrich...... Friedrich-Ebert-Damm 129...... ca. 10,000 m² m²) each accounted for some 8% of office take-up.

7. KVH...... Heidenkampsweg 99-101...... ca. 7,900 m²

8. Airbus...... Hein-Saß-Weg 26...... ca. 7,000 m² As in the same period last year, companies from the information and te- lecommunications sector were the most active, renting 96,500 m², which 9. Gebr. Heinemann...Koreastr. 3...... ca. 6,000 m² translates into 25% of total office take-up. As an established media lo- 10. Serviceplan...... Steinhöft 9...... ca. 4,300 m² cation, Hamburg is attracting more and more companies offering asso- ciated online and internet services. In the current market environment they are growing disproportionately fast and thus need large amounts of space. Trailing some way behind, trade & gastronomy (54,700 m²) follows Premium and average rents with 14%, neck and neck with consultancies/services to business (53,200 2010–Q 3, 2014 (net in €/m²/mth) m²). One representative of the latter is the advertising group WPP, which, as previously mentioned, signed a lease in Altona. Insurance companies 25.00 premium rent (42,500 m²) also reached a double-digit share of the total at 12%.

22.50 23.00 23.50 24.00 24.00 24.50 Rents 20.00 Year on year the premium rent for office space in Hamburg has risen by 17.50 one euro. At the end of the 3rd quarter the premium rent in Hamburg (top 13.00 14.50 14.00 14.00 14.50 price segment with a market share of three per cent of lettings in the past 15.00 twelve months) stood at 24.50 €/m²/month. The average rent, weighted by average rent 12.50 space taken, rose by a further 20 cents to reach 14.50 €/m²/month. This is its highest level since the prior quarter and the year 2011. The current 10.00 rise in average rents is a reflection of steadily growing demand for large, 2010 2011 2012 2013 Q3, contiguous suites of new-build office space at correspondingly high rents. 2014 In Hamburg about 900,000 m² of office space is available for rent at short notice. At the end of the 1st half year the vacancy rate was 6.8%, inclu- ding sub-let space (6.5% excluding sub-let space) and thus 0.3 percent- Vacant space 2010–Q 3, 2014 (in 000s m²) age points lower than the prior year’s figure. and vacancy rate (in %)

1,400 12% Availability and vacancies

1,200 10% Out of some 13.3m sqm of office space in Hamburg, some 840,000 m² are 9.8% available for rent within a short period of time. The vacancy rate has been 1,000 8% falling since 2010 and by the end of the 3rd quarter it had reached a new 8.0% 800 7.4% low of 6.3%, including sub-let space (6.0% without sub-let space). Com- 7.0% 6% 6.3% pared with the same period last year it has thus fallen by a further 0.3 per- 600 centage points. The 36 projects due for completion in the years 2014/2015 4% 400 are expected to add around 253,000 m² of office space to the market. Contracts have already been signed for 62.5% of the total (158,000 m²). 2% 200 The freely available amount of new-build space thus adds up to a mere 1,271 1,046 970 932 840 95,000 m². 0 0% 2010 2011 2012 2013 Q3, 2014

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Outlook The German economy grew more strongly than expected, especially dur- ing the 1st quarter of the year, but by the end of the 3rd quarter the outlook had clouded over quite noticeably. The Hamburg World Economy Institute (HWWI) identifies various reasons for this shift, including the relatively weak growth in the eurozone and a fairly stagnant export industry. Ongo- ing conflicts in Ukraine and the Middle East are holding back the overall willingness to invest. In view of the new situation, the institute has revised its forecast for economic growth in downwards. For 2014 it now expects the real gross product to grow by 1.6% (prior quarter: 2.2%). Since the experts expect the world economy to revive soon, they predict growth of 2.0% for the year 2015. They also forecast that overall the labour market will continue to make good progress and that Germany’s jobless rate will average 6.3%.

The less rosy economic outlook was also reflected in the ifo index of busi- Take-up of space Q 1–3, 2014 ness confidence among members of the service industry. In September by industry (in %) the climate slipped from 20.1 to 18.9 index points. Despite this, the busi- ness situation is still rated as good. Many service providers, moreover, Information & take an optimistic view of future business developments. The ifo index of telecommunication business confidence for trade and manufacturing in Germany fell to 104.7 Other points in September, its lowest value since April 2013. In view of the pos- 24.3% 25.4% sible fallout from the world’s current flashpoints, companies consider the business outlook for the next six months to be appreciably worse than in the months before.

10.0% 14.4% Take-up of space: Manufacturing industry 11.9% The flagging pace of economic growth in Germany has had no short-term Trade 14.0% effects on take-up of space in Hamburg. On the contrary, the good results

Insurance of the first three quarters and the larger transactions still awaiting con- clusion this year are likely to result in space take-up of some 500,000 m², Services to business which is higher than the ten-year average.

Rents: During the course of the year the average rent has risen further. In the Completions 2011–2015 (in 000s m²) months to come, office rents are expected to stabilize somewhere above and pre-let rate (in %) the 14.00 €/m²/month mark.

250 Available space: There has been an appreciable drop in the amount of space available in 200 Hamburg at short notice. In view of the small amount of speculative space being added to the total stock, coupled with relatively brisk take-up, it is 150 fairly safe to assume that the amount of space available at short notice will continue to shrink a little. It is therefore likely that the vacancy rate will

100 fall below 6.0% in the coming months. 66% 58%

50

181 211 173 139 114 0 2011 2012 2013 2014 2015

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Focus topic: City North is modernizing

There has been reversal in City North’s image over recent 36,000 m², which is to be occupied by Telekom alone. The years. Many property owners and sitting tenants in City North modern new complex is scheduled for completion in the 3rd have demonstrated their commitment to the location with new quarter of 2016. The owner and builder is TAS Group, a family- leases and lease renewals. In 2010 the insurance company Al- owned company from Hamburg that was also responsible for lianz, for example, rented 30,000 m² of space in the former Esso refurbishing the Allianz headquarters at Kapstadtring. In the House (Kapstadtring 2). They were followed in 2011/2012 by spring of 2013 TAS KG purchased the 23,000 m² property com- other well-known companies such as Edeka, Tchibo and RWE. prising the land and old BP building from Allianz Real Estate. These leases show that City North, once predominantly used by owner-occupiers, is becoming a place for firms seeking to During the course of constructing the new building, TAS will re- rent large amounts of space. Hand in hand with the new letting furbish a multi-storey car park on the neighbouring plot, Über- activity in City North a process of structural renewal has been seering 3, which will provide parking for some 650 cars when set in motion. In the summer of 2014 the new building project completed. The car park building will also be extended to in- Ü8 (Überseering 8) was started by Hansainvest, with insurance clude about 1,800 m² of retail space. Apart from the new Te- company Signal Iduna as the anchor tenant. The firm will be lekom building, TAS is also building an 18-storey hotel, which renting some 4,000 m². The project, offering 20,000 m² in all, is Bierwirth & Kluth Hotel Management GmbH from Wiesbaden due for completion in the summer of 2016. will operate as the Holiday Inn Hamburg City Nord.

The sale of the land on which BP used to have its headquarters represents one further milestone. Deutsche Telekom AG PROJECT DATA Überseering 2/Telekom seized the chance offered by this plot of land to bring together Address: Überseering 2 various corporate divisions and house them in a modern, ef- Area: ca. 36,000 m² (gross floor area) ficient new building. Floors: ground to 8th Underground In May Telekom signed a rental agreement for the 9-storey about 650 parking spaces: new-build at Überseering 2. Construction work will start Completion: Q3, 2016 soon. The new office building, which conforms to state of the art building technology standards and satisfies the spe- cific user’s latest requirements, was designed by ksp Jürgen Engel architects. The building offers a gross floor area of some

Project Überseering 2/Telekom

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An overview of Hamburg’s sub-markets for office lets Q 1–3, 2014

Take-up of office Sustainable Completions space in m² incl. Vacancies Vacancies rent levels Average rent by 2014 / 20145 Sub-market owner-occupiers in m² in % in €/m²/mth in €/m²/mth in m²

1 CITY 85,900 217,300 7.2% 12.00 – 25.00 18.30 85,600 2 HAFENCITY 31,900 42,500 8.7% 15.00 – 24.00 19.80 24,000 3 PORT RIM 1,900 20,900 9.8% 14.50 – 24.00 16.50 1,900 4 ALSTER WEST 6,500 22,000 4.3% 10.00 – 22.00 15.30 8,300 5 ALSTER EAST 4,600 10,500 3.5% 10.00 – 17.00 14.00 0 6 ST. GEORG 3,000 30,300 6.7% 12.00 – 17.00 13.70 0 7 CITY SOUTH 42,200 164,000 10.6% 6.50 – 13.50 10.30 0 8 ST. PAULI 6,100 10,100 2.3% 11.00 – 23.00 16.80 4,500 9 ALTONA 23,900 31,900 4.8% 9.00 – 16.00 15.00 25,100 10 BAHRENFELD 27,400 47,000 10.9% 7.50 – 15.00 10.30 9,200 11 EIMSBÜTTEL 7,600 14,600 7.1% 7.50 – 13.50 7.80 0 12 EPPENDORF 7,200 22,400 7.1% 9.50 – 16.50 13.70 8,000 13 AIRPORT 14,800 27,900 3.4% 8.00 – 12.00 8.40 20,000 14 CITY NORTH 41,000 11,000 2.1% 5.00 – 15.00 15.50 0 15 BARMBEK 30,800 46,600 8.1% 6.00 – 17.00 14.90 13,200 16 14,400 40,500 6.9% 6.00 – 12.50 11.10 0 17 19,400 46,900 5.0% 7.50 – 13.00 10.70 52,600 18 HAMBURG EAST 6,500 18,100 4.2% 5.00 – 12.50 7.80 0 19 HAMBURG WEST 4,900 15,300 1.7% 6.00 – 11.00 8.80 0

TOTAL 380,000 839,800 6.3% 5.00 – 25.00 14.50 252,400

Office sub-markets in Hamburg Flughafen Fuhlsbüttel

Niendorf Groß 13 Ohlsdorf Borstel 14

Alster Stellingen 19 18 12 Eppendorf Barmbek - 15 West Hoheluft- Ost 5 16 Bahrenfeld 11 Harveste- Uhlen- horst Wandsbek Eimsbüttel hude 10 Rother- baum Hamburg Marienthal Altona-Nord Außen- Groß Flottbek 4 alster 9 8 St. Georg Hamm Horn 6 St. Pauli Binnen- Borg- Altona-Altstadt 1 alster felde Süderelbe Altstadt Harburg Neustadt Neuland 3 Bille Elbe 7 17 2 HafenCity

Waltershof Kleiner Eißendorf Grasbrook

page 6 Commercial Market Survey Hamburg Quarters 1–3, 2014 Glossary / Definitions

Glossary / Definitions

Take-up of space Contact Take-up of space is the total of all space let plus that sold to, or finished by or for an owner-occupier during the period under review. The operative date for inclusion in the statistic is the date on which the lease or pur- chase agreement was signed. Lease renewals are not counted as take- up. The basis for the floor space data is the guideline for calculating the leasable space for commercial premises (MF/G).

Premium rent Tatjana Merger The premium rent relates to the top 3 % of the market for new lets (not counting owner-occupiers) during the 12 months just ended and is stated Master of Science Urban Planning as the average of such rents. Research

Average rent Phone: +49 (0)40 / 350 80 2 - 231 The average rent is calculated by taking the individual rents agreed in all Email: t.merger @ grossmann-berger.de new leases signed, weighting them by the amount of space rented and computing the mean value.

Contact Vacancies Vacancies include all office space that is available to new tenants within three months. Subletting space is part of the vacancy.

Premium yield The premium yield is the (gross) initial yield on excellently appointed top quality properties in the very best locations of the specific property market. Anna Martens Photo credits: Cover/page 2: Axel-Springer-Platz 3/Wextr. “Hanse-Forum” © PlusAlpina Real Estate Ma- nagement, page 5: Überseering 2 © TAS KG, page 7: Bleichenbrücke 9. Diplom-Ingenieur We draw your attention to the fact that all statements made here are non-binding. Most of the information Master of Urban Planning, Research is based on third-party reports. The sole intention of this market survey is to provide general infomation for our clients.

Grossmann & Berger GmbH • Bleichenbrücke 9 (Bleichenhof) • D-20354 Hamburg Phone: +49 (0)40 / 350 80 2 - 615 Tel.: +49 (0)40 / 350 80 2 - 0 • Fax: +49 (0)40 / 350 80 2 - 36 • [email protected] • www.grossmann-berger.de Email: a.martens@ grossmann-berger.de Managing directors: Andreas Rehberg, Holger Michaelis, Christoph Ringleben, Lars Seidel Chairman of the supervisory board: Dr. Jörg Wildgruber • Registered office Hamburg Registered at Hamburg no. B 25866

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