Office Market Overview Positive Expectations Outshine the Current Situation Recovery Expected in the Second Half of the Year

Q2 | July 2021

Research Germany Office Market Overview Positive expectations outshine the current situation Recovery expected in the second half of the year

We are now halfway through 2021, and the coronavirus ten years. On the other hand, in June the Labour Market pandemic is still taking its toll on the German property Barometer of the Institute for Employment Research market. A fourth wave of COVID-19 infections could arri- (IAB) in Nuremburg reached its highest level since its ve in the second half of the year, but is likely to be much first measurement in 2008. This leading indicator ref- weaker than its three predecessors, with varying effects lects the willingness of companies to recruit over the on property markets. The economy and its various parti- coming few months, supported by the further recovery cipants are at least only factoring in a relative risk from of the global economy but primarily on the basis the pandemic. Some economic research institutes have of a dynamic domestic economy. revised their 2021 forecasts upwards in recent weeks. According to Consensus Economics, the gross domestic Of course, risks must not be ignored. In addition to the product (GDP) is expected to rise by 3.3% this year. The infection rate, other aspects that could slow the econo- signs are also pointing to growth next year, with 4.2% mic upswing are rapidly rising prices and supply bottle- currently forecast. It’s a sign not only of the current posi- necks especially for building materials and electronics. tive sentiment but also the positive expectations for fur- For the German office lettings market in particular, the ther business growth. This is fed by two indicators that end of the obligation to work from home is an enor- are also essential for lettings markets: the absence of a mous challenge. On the one hand, we will now see how wave of insolvencies and the situation on the labour serious companies are about implementing flexible re- market. On the one hand, the number of corporate mote working strategies. On the other hand, it remains bankruptcies has continued to decline even though in- to be seen to what extent office workers can, must or solvency applications are now mandatory again in Ger- want to return to their workplaces in city offices. many: only 8,800 companies filed for insolvency in the first half of 2021, according to figures from credit agency The picture is still unclear because of these issues. Com- Creditreform. That equates to 1.7% fewer insolvencies panies will probably wait until the autumn before rolling compared to a year previously – the lowest figure in over out their strategic plans for a post-pandemic working environment. There is likely to be a general consensus that we are heading towards a more hybrid way of wor- Completions and Vacancy Rate Big 7 king. However, the balance between working in the office, at home or in a third place will heavily depend on the business activity and employee preferences. And it has been unclear for some time whether more or less office space will be required as a result. It is essential that the quality of office furnishings improves, and that the number of square metres per workspace no longer ser- ves as the sole defining benchmark in future.

Demand for office space is stabilising – outlook is cautiously positive The short- to medium-term outlook for the rest of the year is not so negative given the complex situation. How ever, the figures for the last three months or the first half

Cover page 2 Contacts of the year only confirm that the prevailing uncertainty German office market would then still emerge in very prevented more dynamic activity on the German office good shape from a crisis situation never seen before lettings market. This is one of the reasons why take-up in this form. stood at around 1.31 million sqm for the six months to the end of June. The figure is virtually unchanged from Vacancies continue to rise significantly except the first half of 2020 (minus 1%). Nothing else was to be in Frankfurt and Stuttgart expected since the office market represents a lagging The growth in vacancies that was already evident in the indicator of economic fluctuations. It will be some time first quarter continued in the period from April to June. yet before the positive underlying data will affect de- Currently, more than 4 million sqm of office space is mand, and furthermore assumes that the vaccination available at short notice in the seven strongholds, an in- rate will continue to rise and that any fourth wave in the crease of just over 1 million sqm or 35% compared to autumn would not require a mandatory return to home the end of June 2020. This further cements the somew- working. Against this backdrop, some companies are hat unusual turning point in the cycle at the end of 2020, sticking to a policy of working from home for the next with increasing vacancies yet rising or stable rents. The three months. What’s clear is that almost all industries average vacancy rate for the Big 7 currently stands at and companies will face changes, but it’s also clear that almost 4.3% and is therefore 40 basis points higher than the office will remain a central hub for communication in the first quarter. However, in the last 20 years vacancy and the exchange of information. In addition, many em- rates have been lower in only nine of the 80 quarters ployees may appreciate the positive effect of a regular in total. Furthermore, the proportion of sub-lettings – office routine more than ever. a type of seismograph for future developments – has remained at a consistent level and accounts for 12% A glance at the individual markets reveals broadly similar trends compared to the first three months. Four of the seven strongholds recorded growth, with Cologne Prime Rental Index and Take-up Big 7 and Frankfurt in the lead (each with over 50% growth). Hamburg (+34%) and Berlin (still with +6%) are next. The German capital also recorded the highest absolute take- up figure of around 366,000 sqm. Düsseldorf, Stuttgart and Munich, on the other hand, registered losses of between 30% and 37% compared to the previous year. There was an absence of large lettings that would normally boost take-up levels. This also reflects the fact that large companies with several locations or with heterogeneous office space concepts currently have to rearrange and restructure themselves. What will the second half bring? Some recovery, yes, but not a spectacular race to catch- up. We are unlikely to see significantly greater momen- tum on lettings markets before 2022. Our take-up forecast for 2021 as a whole is about 2.8 million sqm, which would be 5% more than 2020. In terms of demand, the

Cover page 3 Contacts (about 480,000 sqm) of overall vacancies. This share the proportion of space that is already rented and occu- could creep up to 15% during the year, but would still be pied stands at a somewhat lower level of 43%. It remains well below the rate recorded in 2002 (24%) with a similar to be seen whether this trend of declining pre-letting economic crisis but without a banking crisis. rates is already an effect of the recent sharp rise in building prices. The property market is not immune to hig- The vacancy rate has risen particularly strongly in Berlin. her construction prices. Both new construction projects Within the last 12 months, it has more than doubled – and the renovation or modernisation of property are re- albeit from a very low level. At 3.9%, the vacancy rate in source-intensive, and delivery bottlenecks and sharply the capital is still below the average for the Big 7. Frank- rising prices can have significant effects on the markets. furt registered the smallest rise in vacancies in a year- The markets become gripped by uncertainty, which can on-year comparison (by 5% to 6.6%). In Stuttgart, va delay the completion of projects already under cons- cancies fell by another 9%, and the vacancy rate again truction and thus increase the risk for project developers dropped below 2%. We still expect to see a further mo- and users. If a move cannot take place as planned and derate increase in vacancies to an average of 4.5% by an old lease has already been terminated, such delays the end of the year. In addition to vacancies in existing can cause problems for companies that have opted for buildings, newly built space is now exerting at least a new space in projects that have not yet been completed. certain amount of pressure on vacancies due to an increase in the share of speculative builds. We assume Prime rents remain stable – growth expected that the office market will fundamentally become in- in Berlin and Cologne creasingly differentiated: modern and flexible office The demand for space is stable and prime rents are also spaces will remain in demand, while offices that only at consistent levels. The JLL prime rent index remained support rigid concepts and fail to score points in terms at 222.35 points at the end of the second quarter and of sustainability will find fewer takers,. was therefore unchanged for the third quarter in a row. In a 12-month comparison, the rate has increased by Building volume rises as pre-letting rates fall – a rise 0.9%, which is owing to the increases in Berlin and in construction costs could have a dampening effect Hamburg at the end of 2020. Over the course of this In the first six months of the year, a total of around year, we see potential rent increases in Berlin (+2.6%) 817,000 sqm of office space was completed. That repre- and Cologne (+1.9%), leading to an overall 0.7% increase sents an increase of almost 82% compared to the first in the Big 7 index in 2021. half of 2020. For the second half of the year, a further 828,000 sqm is under construction, so that the annual volume will amount to 1.65 million sqm, around 13% more than in 2020. In total, and including subsequent years, 4.4 million sqm of office space is under construc tion, of which Berlin alone accounts for 39%. Previous studies show that the share of speculative or available space has increased slightly compared to recent quarters. Projects that have a high pre-letting ratio have now been completed; new projects under construction tend to have a lower pre-letting rate. Or to put it another way:

Cover page 4 Contacts Office Space Take-up incl. Owner Occupier (sqm) 2020 H1 2020 H1 2021 % Berlin 1 745,300 344,800 365,800 6.1 Düsseldorf 2 303,100 181,000 116,100 -35.9 Frankfurt/M 3 336,100 111,800 165,500 48.0 Hamburg 4 363,700 176,400 235,600 33.6 Cologne 5 208,200 97,700 146,300 49.7 Munich Region 6 569,800 332,100 231,800 -30.2 Stuttgart 7 140,700 78,800 49,800 -36.8 Total 2,666,900 1,322,600 1,310,900 -0.9

Vacancy incl. Space for Subletting Q4 2020 Q2 2020 Q2 2021 % sqm Rate (%) sqm Rate (%) sqm Rate (%) Berlin 1 589,300 2.8 379,700 1.9 811,800 3.9 113.8 Düsseldorf 2 633,100 6.8 566,500 6.2 708,500 7.6 25.1 Frankfurt/M 3 714,000 6.1 728,400 6.3 764,900 6.6 5.0 Hamburg 4 450,400 3.0 406,200 2.7 474,400 3.1 16.8 Cologne 5 202,000 2.6 169,400 2.2 240,000 3.1 41.7 Munich Region 6 735,700 3.5 561,900 2.7 877,600 4.2 56.2 Stuttgart 7 181,700 2.1 182,700 2.1 165,600 1.8 -9.4

Prime Office Rents (€/sqm/month) Q4 2020 Q2 2020 Q2 2021 % Berlin 1 38.00 37.00 38.00 2.7 Düsseldorf 2 28.50 28.50 28.50 0.0 Frankfurt/M 3 41.50 41.50 41.50 0.0 Hamburg 4 31.00 30.00 31.00 3.3 Cologne 5 26.00 26.00 26.00 0.0 Munich Region 6 41.00 41.00 41.00 0.0 Stuttgart 7 25.50 25.50 25.50 0.0

Completions (in sqm) 2020 H1 2020 H1 2021 % Berlin 1 488,500 149,200 220,500 47.8 Düsseldorf 2 102,700 25,500 46,400 82.0 Frankfurt/M 3 223,800 65,300 84,700 29.7 Hamburg 4 174,800 53,200 83,300 56.6 Cologne 5 80,500 28,800 42,100 46.2 Munich Region 6 347,800 110,600 159,000 43.8 Stuttgart 7 34,300 5,500 181,300 3,196.4

Office Space Stock (in Mill. sqm) Q4 2020 Q2 2020 Q2 2021 % Berlin 1 20.80 20.49 20.98 2.4 Düsseldorf 2 9.24 9.17 9.27 1.1 Frankfurt/M 3 11.63 11.60 11.65 0.5 Hamburg 4 15.14 15.04 15.19 1.0 Cologne 5 7.84 7.79 7.85 0.7 Munich Region 6 20.96 20.73 21.09 1.7 Stuttgart 7 8.84 8.81 9.02 2.3

1 City Area; 2 City Area incl. Ratingen, Neuss, Erkrath and Hilden; 3 City Area incl. Eschborn and Kaiserlei; 4 City Area; 5 City Area; 6 City Area incl. surrounding areas; 7 City Area incl. Leinfelden-Echterdingen

Cover page 5 Contacts Berlin: Sobering second quarter in the Berlin office letting market

There was a total take-up of around 365,800 sqm in the Development of Main Indicators Berlin office letting market over the first six months of 2021. This is a rise of around 6% compared to the same period the previous year. The second quarter contri buted 148,000 sqm, which means that an average first quarter was followed by a weak second quarter. The market uncertainties as a result of the COVID-19 pandemic have left their mark on demand. Nevertheless, there were three lettings concluded in the >10,000 sqm size category over the last three months. The most active tenant was Bundesanstalt für Immobilienaufgaben (BIMA, Institute for Federal Real Estate) which leased 19,400 sqm in the submarkets Northern Suburb and 14,800 sqm Eastern Suburb. The most active sectors over the first half of the year were the public sector and 3.9%. The combination of a lack of highly priced lettings banks and financial services providers, which together and the increase in the number of low-priced transac- accounted for around 30% of take-up. The lack of de- tions has resulted in a slight fall in the weighted average mand and the increasing number of unlet newly com- rent from €26.47/sqm/month to €26.26/sqm/month. The pleted properties are now noticeable from the steady prime rent has remained stable at €38.00/sqm/month. rise in the vacancy rate, which increased by 0.5% points compared to the previous quarter to its current level of

Berlin: Office Space Market Areas with Rental Bands (€/sqm/month) Berlin: Office Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2

Wedding Gesundbrunnen Klarahoeh Tiergarten Prenzlauer Konradsh Berg Malchow(Hohensch Charlottenburg Area Main Station-Europacity € 28.00-36.50 Friedrichshain Charlottenburg 1A Berlin Northern Suburb Moabit € 23.00-38.00 € 11.00-22.00 Mitte Hansaviertel Mitte 1A € 21.00-36.00 Schöneberg € 26.00-36.50 Friedrichshain Falkensee Wilmersdorf Tiergarten Mitte Area Potsdamer-Leipziger Platz Prenzlauer Berg-Friedrichshain € 25.00-37.00 Kreuzberg € 17.50-30.00 Schöneberg

Western Suburb Charlottenburg-Tiergarten € 11.50-22.50 € 17.00-30.00

Berlin

Mediaspree Eastern Suburb € 26.00-36.00 € 10.00-27.50

Berlin Wilmersdorf-Schöneberg Kreuzberg-Tempelhof € 16.00-30.00 € 15.00-34.50

Gatow Area Airport Berlin-Brandenburg A 117 € 9.00-18.50

Flughafen

Berlin-Schönefeld A 113 Blankenfelde Southern Suburb € 10.00-26.50 Kladow

Adlershof € 13.00-20.50 A 10 © OpenStreetMap&contributors A 13

Cover page 6 Contacts Düsseldorf: Düsseldorf office market is on a downward trend – no deals above 5,000 sqm

There was take-up of 116,000 sqm in Düsseldorf’s office Development of Main Indicators letting market in the first six months of 2021, a fall of 36% compared to the first half of the previous year. The below-average first quarter was followed by an even weaker second quarter. The uncertainties caused by the Corona pandemic have made many occupiers delay their leasing decisions. There were fewer deals registered in almost all size categories compared to the previous year; only in the <500 sqm size category was there an increase of 28%. There were no leases signed for space in the >5,000 sqm size category in the year to date. The largest transaction was a letting of 4,400 sqm to Mitsubishi Chemical in the Linksrheinisch submarket, followed by Deutsche Glasfaser with 3,000 sqm in the Airport submarket. There is no sign of a market recovery in the se- in the first half of the year, which is a much higher level cond half of the year. The full year take-up is expected to than in previous years and included the myhive develop- be around 280,000 sqm, which is significantly below the ment in the Medienhafen submarket and the Smart Of- 10-year average of 400,000 sqm. The vacancy rate rose fice in the Airport submarket. The prime rent has remai- again in the second quarter to its mid-year level of 7.6%; ned stable at €28.50/sqm/month over the first half of the a further slight increase is expected by the end of the year, whilst the weighted average rent has risen slightly year. Around 46,000 sqm of office space was completed to €15.95/sqm/month.

Düsseldorf: Office Space Market Areas with Rental Bands (€/sqm/month) Düsseldorf: Office Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Boesinghoven Eggerscheidt Krefeld Lank-Latum Pempelfort

Langstkierst Altstadt Oberkassel Stadtmitte Rohdenhaus Ilverich Ratingen Ratingen Carlstadt Struemp € 8.00-16.00 CBD Airport € 17.00-28.50 City € 11.00-17.50 Niederschwarzbach Government District € 9.00-26.00 € 11.50-21.00

Hafen Wülfrath Unterbilk Metzkausen North Friedrichstadt City-South Oberbilk € 8.00-17.00 € 10.00-13.50 Ludenberg Bilk Seestern Meerbusch € 9.50-14.50 Kennedydamm Mettmann € 14.50-24.00 Düsseldorf Linksrheinisch € 7.00-20.00 Grafenberg-East Kaarst € 9.00-15.00 Düsseldorf Harbour € 14.50-25.00 City-East € 9.50-14.00 Gruiten Wuppertal Neuss Erkrath Buettgen Erkrath/Hilden Unterbach Neuss Unterfeldhaus € 7.00-10.00

South Haan € 8.00-13.50

Grefrath Hilden Himmelgeist Solingen Holzheim Neuss © OpenStreetMap&contributors Kalstert

Cover page 7 Contacts Frankfurt: Weak first half of the year but encouraging expectations for the second half

At 165,500 sqm, although space take-up over the first Development of Main Indicators half of 2021 was 48% higher year-on-year, it was the second weakest first half of the year of the last 15 years. Many companies have continued to delay their leasing decisions, but tenant confidence is already returning and enquiries are on the up, even for larger areas in the >5,000 sqm size category. Meanwhile, many companies have taken the opportunity to define their future workspace strategy. They now have a significantly better un- derstanding of how they want to work in the future, and are able to plan their location, property and space re- quirements more clearly. There is a noticeable ‘flight to quality’ trend, even amongst the lettings in the first half of the year: seven of the 10 largest deals were concluded in project developments or very recently comple- expected medium-term rise in vacancy, the moderate ted buildings (within the last 12 months). The increased vacancy in combination with the limited construction dynamism in enquiries is likely to result in greater space pipeline will lead to a hike in the prime rent. take-up over the second half of the year. Despite the

Frankfurt: Office Space Market Areas with Rental Bands (€/sqm/month) Frankfurt: Office Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Oberhoechstadt/Ts. Kalbach Königstein Harheim Kronberg Oberursel Mertonviertel-Riedberg Schneidhain € 10.00-15.00 Ts. Mittelbuchen Bad Vilbel Steinbach Wachenbuchen

Altenhain Other Urban Locations (North) Bischofsheim Schwalbach Eschborn € 9.00-17.50 Maintal Bischofsheim Bad Soden Eschborn North Seckbach € 11.50-16.50 Kelkheim Doernigheim Rödelheim Hanau € 9.00-13.50 East Frankfurt am Main € 10.00-18.50 Offenbach am Main Mühlheim

West Kaiserlei € 9.50-28.00 € 8.00-16.00 Zeilsheim Oberrad Offenbach LaemWmeseternsd-pieNlordend- Hofheim Sachsenhausen am Main Other Urban Locations (South) € 11.50-17.00 Nord West Kriftel Bockenheim Lyoner Quartier Westend € 10.00-17.00 City-West € 16.00-33.00 Nordend-Ost € 13.00-18.50 Hattersheim Obertshausen City Westend- € 13.00-30.00 Süd Innenstadt Banking District Altstadt Frankfurt am € 19.00-41.50 Kelsterbach Okriftel Main Gravenbruch Airport Gallusviertel Heusenstamm Central Station Area € 16.00-25.00 Neu-Isenburg € 12.00-2R4.e00mbruecken Bahnhofsviertel Eddersheim Sachsenhausen- Nord Rodgau Flughafen Gutleutviertel Westhafen Frankfurt € 18.00-25.50 Zeppelinheim Sachsenhausen- © OpenStreetMap&Rcoanutnribhuetiomrs Dreieich Niederrad Süd

Cover page 8 Contacts Hamburg: Strong take-up in the first half of the year thanks to large deals concluded in the first quarter

Space take-up in the Hamburg office letting market, Development of Main Indicators including both lettings and owner-occupation, was 235,600 sqm over the first half of 2021. This is a 34% increase compared to the same period the previous year. There were 231 transactions. The strong start to the year is mainly due to three large-scale deals of areas in the >10,000 sqm size category from the first quarter. The average transaction size in the first half of 2021 was 1,051 sqm, which is a 27% increase on the same period the previous year (828 sqm). Just under 43% of the take-up volume was registered in three sectors: the most active sector was business services providers with 16%, followed closely by industrial companies with 15% and the public sector with 12%. The most popular submarkets were the City Centre (19% of total 560,000 sqm of office space under construction. The take-up) and Altona-Ottensen-Bahrenfeld (18%). There prime rent has remained stable at €31.00/sqm/month. was a 34,000 sqm increase in the volume of vacancies The weighted average rent is €17.56/sqm/month. over the last three months. As at 30th June 2021, total vacancy was around 474,400 sqm, equating to a va cancy rate of 3.1%. This includes some 67,700 sqm of space available for subletting. There is currently over

Hamburg: Office Space Market Areas with Rental Bands (€/sqm/month) Hamburg: Office Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Schnelsen

Puetjen Niendorf Flughafen Hamburg FuhlsbHaümttbeulrg Ohlsdorf

Airport / Groß Borstel € 9.00-13.50 Halstenbek Bramfeld Groß Borstel Eidelstedt Alsterdorf Steilshoop Hamburg North-East Farmsen-Be€r n9.e00-12.50 Rahlstedt Schenefeld Hamburg-West City Nord € 9.00-12.50 € 9.50-15.00

Lurup Lokstedt Barmbek / Bramfeld Winterhude € 10.00-15.50 Stellingen Eppendorf / HarvestEephupdeen /d Roortfherbaum € 12.50-22.00 Barmbek-Nord

Winterhude / Uhlenhorst Tonndorf € 10.00-14.50 Dulsberg Wandsbek Eimsbüttel Iserbrook Barmbek-Süd Eim€s 1b0ü.0tt0e-1l 4.50 Harvestehude Wandsbek Osdorf € 10.00-14.50 Jenfeld Bahrenfeld Uhlenhorst

Eilbek Barsbüttel Rotherbaum Marienthal Altona-Ottensen-BahrenfeldAltona-Nord Groß Flottbek € 12.00-17.50 East of Alster / St. Georg St. Pauli € 12.50-21.50 Ste€r n1s3.c0h0a-2n2z.5e0 Nienstedten St. Pauli City Centre St. Georg Altona- City Süd (Outer Zone) Ottensen € 14.50-31.00 Othmarschen Altstadt € 9.00-12.50 Horn City Süd (Core Area) Harbour fringe Billbrook / Billwerder / Billstedt Hamburg-Altstadt € 10.50-16.00 € 13.50-22.50 € 6.00-12.50 Billstedt HaHfeanfeCnCitiyty Hammerbrook € 16.00-26.00 Finkenwerder Harburg - south of the river Elbe € 9.00-14.50 Steinwerder Rothenburgsort Bergedorf Kleiner € 9.00-15.00 © OpenStreetMap&contributors Waltershof Grasbrook Hamburg Billbrook

Cover page 9 Contacts Cologne: Significant increase in mid-year take-up

There was a take-up of around 146,000 sqm in the Development of Main Indicators Cologne office letting market in the first half of 2021, a rise of 50% compared to the first half of 2020. The year- on-year increase was noticeable across most size categories. The main reason for the favourable performance was lettings to the public sector which accounted for a total of 52,000 sqm. Worthy of particular mention are two large-scale transactions from the first quarter, both in the Ehrenfeld/Braunsfeld submarket: a letting of 15,600 sqm to the Cologne central customs office in the FORUM and 11,400 sqm to the Bundesanstalt für Immo- bilienaufgaben (BIMA, Institute for Federal Real Estate) in the OVUM. The volume of vacancies has risen mode- rately over the last 12 months, but the current vacancy rate of 3.1% is still at a very low level. Just 23% of va- term. 42,000 sqm of new office space was completed cant space is of Grade-A fit-out quality. But this type of over the first six months, but this is already 90% let. The space is precisely what many occupiers are looking for. prime rent remained stable at €26.00/sqm/month at As the pandemic experience has meant that the office mid-year. By contrast, the weighted average rent rose is now in stiffer competition with alternative places to by 6% over the last six months to its current highest- work (e.g. WFH), it is likely that companies will increa- ever level of €17.28/sqm/month. singly focus on top-quality space over the medium

Cologne: Office Space Market Areas with Rental Bands (€/sqm/month) Cologne: Office Space Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Schwarzbroich Auweiler Hardt Pulheim

Bergisch Gladbach Ossendorf/Nippes Bergisch € 6.50-14.50 Gladbach Other Locations Widdersdorf € 6.00-12.00

Brauweiler Köln Bensberg

Ehrenfeld/Braunsfeld € 7.50-16.50 Peripherie West City Centre Kalk/Mülheim € 7.00-13.00 Deutz/Messe € 7.00-16.50 € 9.50-26.00 Köln € 9.50-23.00 Buschbell

Marsdorf Lindenthal/Sülz € 8.00-15.00 Rath Frechen Forsbach Rhinebank-West € 13.00-26.00 Bayenthal/Marienburg € 9.00-16.50

Gleuel Porz/Gremberghoven Rösrath € 8.50-14.00

Hürth Berrenrath Rodenkirchen Rambruecken Konraderhoehe € 7.00-15.00

Flughafen © OpenStreetMap&contributors Meschenich Köln/Bonn Wahn Troisdorf

Cover page 10 Contacts Munich: Munich is banking on a strong second half of the year

There was take-up of 231,800 sqm in the Munich office Development of Main Indicators letting market over the first half of 2021, a fall of 30% compared to the same period the previous year. As in the first quarter, there were few large-volume trans actions registered in the period April to June. There was just one letting in the >10,000 sqm size category, the year’s largest deal comprising some 14,600 sqm. The East submarket heads the locational statistics (42,500 sqm), followed closely by the Westend (39,000 sqm) and City-Centre (37,000 sqm). The most active sector was manufacturing companies with 44,000 sqm, followed closely by business services providers with 41,000 sqm, whilst the IT sector was well behind in third place with 33,000 sqm. The vacancy rate rose to 4.2%; however, in four of Munich’s 16 sub- the time of completion. The prime rent remained sta- markets, the vacancy rate is still at 2.0% or below. The ble at €41.00/sqm/month and it is expected to stay at highest vacancy rate is 9.0% in the Periphery North this level until the end of 2021. The weighted average submarket and the lowest is 0.9% in Neuperlach. A rent across the whole market rose by €0.39/sqm/month total of 159,000 sqm of office space was completed in compared to the previous quarter to its current level the Munich market area in the first half of the year, of of €21.29/sqm/month. which around 43% was still available on the market at

Munich: Office Space Market Areas with Rental Bands (€/sqm/month) Munich: Office Space Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Rothschwaige Karlsfeld Ismaning Oberschleißheim Neu-Esting Periphery-North € 10.00-16.00

Olching North € 14.00-21.00

Gröbenzell Olympiapark € 14.00-22.00 Kirchheim b. München Eichenau Poing West North-Schwabing Grub Puchheim € 15.50-23.50 € 16.50-26.00 Heimstetten

Arabellapark € 17.50-23.50 München Bogenhausen Periphery-East Parsdorf € 20.00-30.00 Riem € 10.00-16.00 Westend City Centre Moosfeld/Riem Ottendichl € 16.50-25.00 € 22.50-41.00 € 10.00-17.00 Germering East Gräfelfing € 15.50-30.00

Periphery-West Martinsried € 10.00-14.50 Haar Planegg Vaterstetten South Neuperlach € 12.00-21.00 € 12.00-17.50

Stockdorf

München Periphery-South € 9.50-14.50 Neubiberg Gauting Unterbrunn Unterhaching Ottobrunn © OpenStreetMap&contributors Grünwald

Cover page 11 Contacts Stuttgart: Weakest six months since records began

The take-up of just 17,000 sqm over the second quarter Development of Main Indicators was the weakest level since JLL’s quarterly office market statistics in Stuttgart began in 2008. Occupiers are still cautious when making decisions relating to leasing and owner-occupation. However, this means that there is now a demand backlog, as those decisions will have to be made at some point. The cautious behaviour has resulted in a reduced full-year forecast of just 120,000 sqm. Even if the knot unties itself in the second half of the year, many deals will not be signed until the following year. In any event, whatever enquiries there are in the market tend to be focused on the central locations and top-class space; demand is limited for properties in peri- pheral locations. However, the low level of take-up is also due to scarcity on the supply side: even a low space does not include any available space in the highly take-up in the next six months is likely to further reduce sought-after CityCentre submarket. Whilst the vacancy the already low vacancy to below the bottom line and level will move sideways over the medium term, it is pipeline projects not yet under construction are unlikely expected that prime rents will rise. to be (speculatively) started during the Corona pandemic. It is expected that a further 12,000 sqm of space will come onto the market by the end of the year, but that

Stuttgart: Office Space Market Areas with Rental Bands (€/sqm/month) Stuttgart: Office Market Areas with Rental Bands (€/sqm/month) JLL Research 2021/Q2 Schoeckingen Neuwirtshaus Remseck Neustadt am Neckar Rems-Murr-Kreis Korb Hirschlanden Zuffenhausen Korntal-Münchingen € 10.00-16.50

Ditzingen Waiblingen Kleinheppach Stuttgart Beinstein Hoefingen Weilimdorf Gebersheim Bad Cannstatt Fellbach Remshalden Rutesheim € 11.00-16.50 € 11.00-19.00 Feuerbach Weinstadt € 13.50-19.50 Kernen im Stuttgart-North Remstal Gerlingen € 15.00-20.00 Leonberg Stuttgart Stetten im Remstal Schnait Struempfelbach City Stuttgart-West Stuttgart-East € 15.50-25.50 € 15.00-20.00 € 10.50-18.00 Unter-Obertürkheim/Wangen-Hedelfingen € 10.50-16.50 Warmbronn Stuttgart-South € 10.50-17.00

Magstadt Degerloch € 10.50-20.00 Esslingen Hoffeld am Neckar

Vaihingen-Möhringen Ostfildern € 13.50-20.00 Kemnat Plieningen Sindelfingen Fasanenhof € 11.50-18.00 € 9.00-11.00 Plochingen

Dagersheim Leinfelden-Echterdingen Denkendorf Wernau Böblingen (Neckar) Leinfelden-Echterdingen Flughafen Neuhausen € 11.00-19.00 Stuttgart auf den Wendlingen © OpenStreetMap&contributors Bernhausen Fildern am Neckar

Cover page 12 Contacts Konstantin Kortmann Stephan Leimbach Helge Scheunemann Head of Leasing & Agency Germany Head of Office Leasing Germany Head of Research Germany +49 (0) 69 2003 1390 +49 (0) 69 2003 1245 +49 (0) 40 350011 225 [email protected] [email protected] [email protected]

Gerald Dietzold Miguel Rodriguez Thielen Suat Kurt Senior Team Leader Office Leasing Senior Team Leader Office Leasing Senior Team Leader Office Leasing Berlin Düsseldorf Frankfurt +49 (0) 30 203980 144 +49 (0) 221 2775 44 +49 (0) 69 2003 1347 [email protected] [email protected] [email protected]

André Hoffmann Alexandra Hager Fritz Maier-Hartmann Senior Team Leader Office Leasing Senior Team Leader Office Leasing Senior Team Leader Office Leasing Hamburg Köln München +49 (0) 40 350011 352 +49 (0) 221 2775 16 +49 (0) 89 290088 139 [email protected] [email protected] [email protected]

Sebastian Treier Senior Team Leader Office Leasing Stuttgart +49 (0) 711 900370 36 [email protected]

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