Hamburg, Quarters 1–2, 2015 Market Survey Commercial Office Letting Grossmann & Berger’s promise: Market transparency. Commercial Market Survey Hamburg Quarters 1–2, 2015 Office Letting Office Letting Key figures office Q1 – 2 Q1 – 2 2014 2015 Take-up of space in m² ......................... 225,000 ...251,000 + 12 % Premium rent in €/m²/mth ................. 24.50 .......24.00 Average rent in €/m²/mth ..................14.30 .......14.60 Vacancy rate in % ................................. 6.8 ...........5.5 Total stock of office space in millions m² .....12.27 .......13.30 Take-up of space Take-up of space 2011–Q 2, 2015 (in 000s m², incl. owner-occupiers) The early-year surge in the market for office space in Hamburg continued during the 2nd quarter of 2015. Growth of 12% compared with the same 600 10-year average (2005–2014): quarter of the prior year boosted total take-up for the first half of 2015 approx. 486,000 m² 500 to 251,000 m². With owner-occupiers accounting for some 30% of the to- tal, however, take-up of rental space was very similar to the prior year’s at 400 around 180,000 m². The big transaction in the 1st quarter of 2015, when Hamburg Mitte Borough Council bought a 32,000 m² property to use as 300 offices, was later joined by another large deal brokered by Grossmann & 200 Q2Q2Q2 Berger. The three district tax offices for Bergedorf, Oberalster and Wands- 128 bek and the tax office for large enterprises in Nordkanal Strasse have tak- 100 en some 20,000 m² of space in a new building project in City South. The two 540 430 440 525 251 agreements with the City of Hamburg alone add up to more than 50,000 m² 0 2011 2012 2013 2014 Q2, and make a significant contribution to the good figures for this half year. 2015 In the 1st half of 2015, most of the agreements for more than 5,000 m² of space involved owner-occupiers. Such transactions included, in addition Take-up of space Q 1–2, 2015 by size to the City of Hamburg’s purchase of part of the former Axel-Springer com- (in 000s m², incl. owner-occupiers) and no. of lettings plex to provide 32,000 m² of offices for Hamburg-Mitte Borough Council (Caffamacherreihe 3, City), the construction start at Stresemannallee 101 90 (Eimsbüttel) of a new 8,000 m² head office building for NXP Semiconduc- 80 tors. The third-biggest owner-occupier transaction was the first-quarter 70 purchase of an office and logistics property in the west of Hamburg of- 60 fering some 7,000 m² of office space plus warehousing and hall space. In the 1st half of 2015 the share of take-up in the size category 5,000 m² or 50 207 70 26 11 6 more was lower than in the same period of 2014, while the share of smaller 40 units increased accordingly. Suites measuring 500 m² or less accounted 30 for 23% (57,000 m²) and the 501 to 1,000 m² size segment made up 20% 20 (49,000 m²). 10 23% 20% 15% 11% 32% 57 49 37 28 80 Returning to their traditional places in the ranking of sub-markets, the cen- 0 up to up to up to up to over tral districts of City, HafenCity and City South together accounted for 58% 500 1,000 2,000 5,000 5,000 of take-up of space in the 1st half of the year and some 41% of all agree- ments signed. First-placed City was far ahead of the other sub-markets, page 2 Commercial Market Survey Hamburg Quarters 1–2, 2015 Office Letting with 33% of take-up (82,900 m²) and 33% of all agreements. This good Selected top deals Q1–2, 2015 result owed much to the owner-occupier transaction with Hamburg- Mitte Borough Council and two agreements for premises in the 2,001 to 5,000 m² size category. For example Jopp AG, a fitness studio operator, 1. Council office........Caffamacherreihe 3 .................ca. 32,000 m² has taken some 2,600 m² in the “Alte Oberpostdirektion” (Gorch Fock Wall 2. Tax office ..............Nordkanalstr. 22+24 ................ca. 19,500 m² 1a) and the Dr. Binnewies engineering studio is renting about 2,200 m² 3. NXP .......................Stresemannallee 101 ................ ca. 8,000 m² of office space in the “Schumacher-Kontor” (Dammtor Strasse 25). City 4. Wholesaler ............Hamburg West ...........................ca. 7,000 m² South placed second with a share of 16% (38,900 m²) and HafenCity was third with 9% (23,600 m²). 5. Engel & Völkers .....Großer Grasbrook, Baufeld 60 ...ca. 6,700 m² 6. Carat .....................Alsterufer 1-3 .............................ca. 5,200 m² Local government, with a share of some 29% of total take-up, including 7. Eurofins ................Neuländer Kamp 1 .....................ca. 3,000 m² the two agreements with the City of Hamburg, advanced to the top slot among clients for office space in the 1st half of 2015. Consultancies and 8. Dr. Weiland & P. .....Am Kaiserkai 60-62 ................... ca. 3,000 m² companies in the tourism and transport industries were also prominent 9. AIDA Cruises .........Großer Grasbrook 9................... ca. 2,800 m² players on the letting market, with shares of 17 % (41,900 m²) and 10 % 10. Jopp AG .................Gorch-Fock-Wall 1a .................. ca. 2,600 m² (23,800 m²) respectively. Rents Premium and average rents 2011–Q 2, 2015 (net in €/m²/mth) Year on year, the premium rent has fallen by a modest 50 cents to €24.00/ m²/month. The reason for this is that some expensive lets in the over 25.00 premium rent €20.00/m²/month category seen in the prior reporting period are now no 22.50 longer included in the statistics. Year on year the average rent weighted 23.50 24.00 24.00 24.50 24.00 by floor space rose by a modest 30 cents to €14.60/m²/month. In the past 20.00 twelve months the largest share of take-up, namely 20%, fell to properties renting for between €12.51 and €15.00/m²/month. 17.50 14.50 14.00 14.50 14.60 15.00 14.00 average rent Availability and vacancies 12.50 Due to the high level of take-up and the low volume of completions in the 10.00 past year, vacancies have fallen year on year from around 900,000 m² to 2011 2012 2013 2014 Q2, 2015 the current figure of about 730,000 m². At the end of the 2nd quarter the vacancy rate, including sublet space, was a mere 5.5% of the total stock of office space of 13.3m m². This development reflects the current state of the market. It is not possible to satisfy demand for efficient office space Vacant space 2011–Q 2, 2015 (in 000s m²) with the rate of completions seen so far. This year and in the coming year, and vacancy rate (in %) 2016, some 47 projects are expected to add 419,000 m² to the total stock of office space; however, contracts with new occupiers already exist for 1,200 9% some 57% of this space. Many companies have already secured offices 8% 1,000 8.0% for themselves in projects that are still three years from completion. If 7.4% 7% we take each year separately, the pre-letting rate for 2015 is already over 7.0% 800 6% 70%. This shows that the market is very receptive to the projects now un- 6.0% 5.5% 5% der construction and that interesting projects in Hamburg currently stand 600 4% a good chance of success. 400 3% 2% 200 1% 1,046 970 932 798 729 0 0% 2011 2012 2013 2014 Q2, 2015 page 3 Commercial Market Survey Hamburg Quarters 1–2, 2015 Office Letting Outlook In the first half of the year the German economy resumed its pattern of growth. The domestic economy was and is the mainstay of this positive trend because it has profited from the good employment figures and rising incomes. Capital spending, for example on buildings and equipment, also contributed to growth. The Hamburg World Economic Institute (HWWI) ex- pects the global economy to gather momentum during the course of the year, leading to a further increase in the gross domestic product. In view of the current environment, the Institute is forecasting economic growth of 1.9% for 2015. The 2016 growth forecast for the real gross domestic prod- uct is unchanged at 1.7%. The biggest risk in connection with this forecast is what will happen in the euro zone, especially how the situation in Greece develops. In June, German service companies rated their current and future busi- ness situation in positive terms. Firms are still planning to expand pay- rolls, although not by as many new people as in May. The ifo index of busi- ness confidence in the service industries rose by 27.1 points in June to its Take-up of space Q 1–2, 2015 highest level since 2011. The mood at German manufacturing companies, by industry (in %) by contrast, is less optimistic. The ifo index of business confidence among managers in trade and industry fell from 108.5 in May to 107.4 points in Public administration June. Other Take-up of space: 27.7% 28.8% A dynamic market in the first half-year points to a good overall result for the year 2015. If clients currently seeking large amounts of space con- clude agreements in 2015, the take-up of space is likely to be higher than 500,000 m² by the end of the year.