Investment/Office Letting Property Market Germany 2018

LOCAL EXPERTISE – ACROSS GERMANY

INVESTMENT | OFFICE LETTING COMMERCIAL PROPERTY MARKET GERMANY’S TOP 7 CITIES 2018/Q1-4

WWW.GERMANPROPERTYPARTNERS.DE LOKALELOCAL EXPERTISE KOMPETENZ – ACROSS – DEUTSCHLANDWEIT GERMANY MARKTBERICHTMARKET SURVEY INVESTMENT/BÜROVERMIETUNG INVESTMENT/OFFICE LETTING 2018/Q1-42018/Q1-2

ABOUT US GERMAN PROPERTY PARTNERS

Each of us being a leading commercial real estate company We have founded German Property Partners with the aim in its respective region, we have joined together to form a of providing our special services in all of Germany’s major Germany-wide real estate network. We are five strong real estate centres. That way, whatever your commercial partners. real estate requirements, wherever you are in Germany, you can obtain your advice from a single provider, and that In Northern Germany, Grossmann & Berger offers its real is us. Via our network and thanks to our respective market estate services out of its locations in Hamburg and Berlin, positions, we can offer you outstanding local knowledge LOCAL EXPERTISE – ACROSS GERMANY while E & G Real Estate covers Southern Germany from and preferential market access throughout Germany. its bases in Stuttgart and Munich. ANTEON Immobilien is GERMAN PROPERTY PARTNERS the firm to contact about property matters in and around The many years of service our employees have put in with Düsseldorf, while GREIF & CONTZEN Immobilien are your us, make German Property Partners a reliable partner for Dear Readers, eyes and ears in the metropolitan area of Cologne and long-term collaboration in the fields of commercial real Bonn. blackolive guarantees full market coverage in the estate and finance. Fresh superlatives were needed to describe the 2018 also on each of the top 7 locations and the sub-markets Frankfurt region. property market. At Germany’s top 7 cities the volume of within each of these. investment transactions was the highest in over ten years, totalling €36.7bn. The top 7 also continued to register We hope you find the survey an informative and illumi- Partner great demand for office space, resulting in a respectable nating read. We would be happy to hold personal talks with year-end total of 3.9m m². Too few properties to meet you and answer your specific questions about property Grossmann & Berger Anteon GREIF & CONTZEN demand remains a constraint on the market. This shortage matters. A real estate consultant with expe- Anteon is an owner-managed real This owner-managed service company is reflected both in the average vacancy rates, which have rience stretching back for over 80 estate consultancy firm that spe- has been providing consultancy, evalu- fallen to an all-time low of 3.4% in these cities, and in the Guido Nabben years, Grossmann & Berger is one of cializes in brokering office lets, invest- ation, brokering and management ser- huge proportion of space in new developments that is let Spokesman for German Property Partners the leading service providers for the ments and industrial & logistics prop- vices for commercial and residential before completion. sale and letting of commercial and resi- erties. In addition, as one of the market properties in the metropolitan region of dential real estate in Northern Germany, leaders, Anteon offers property mar- Cologne | Bonn for over 40 years, and is This market survey provides a review of the year 2018 as and is an affiliate in the HASPA-group of keting, project support and research experienced in the entire value chain of it played out on Germany’s top 7 markets. In addition to CONTENT companies. services. real estate transactions. drawing comparisons between the top 7 markets, we offer a detailed look at the investment and office letting markets Top 7 | Overview and Key figures...... 4/5 in Hamburg, Berlin, Düsseldorf, Cologne, Frankfurt, Economic environment...... 6 blackolive E & G REAL ESTATE Stuttgart and Munich. This survey includes a new section Spotlight: Coworking space...... 7 blackolive is an owner-managed real E & G is one of the leading providers of on the economic environment and one called “Spotlight” - Top 7 | Investment...... 8/9 estate consultancy firm that focuses on real estate services in South Germany in this edition we shall be shedding more light on the pro- Top 7 | Office letting...... 10/11 office letting and investment. The man- and has many years’ experience in the viders of coworking space. Hamburg...... 12/13 aging directors both have more than 26 fields of investment in commercial and Berlin...... 14/15 years of experience and stand for an in- residential properties and the com- This market survey was made possible by the partnership Düsseldorf...... 16/17 depth understanding of the market. mercial letting of office, retail, indus- between five of the leading service providers specialized in Cologne...... 18/19 trial or logistics premises. commercial properties based in north, central and south Frankfurt...... 20/21 Germany - the nationwide network German Property Stuttgart...... 22/23 Partners (GPP). Our detailed knowledge of local markets Munich...... 24/25 gives us access not only to data on the overall market, but

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OVERVIEW KEY FIGURES TOP 7 | 2018/Q1-4 TOP 7 | 2018/Q1-4

INVESTMENT OFFICE LETTING »» Strong growth boosts transactions by 22% to €36.7bn »» Take-up of office space, although considerable at »» Forward deals account for remarkable 18% 3.9m m², not on a par with the good result of 2017 »» Result betters previous record year of 2007 by almost »» Vacancy rate at new all-time low HAMBURG BERLIN €5.0bn »» Take-up spurred by new build projects with high pro- 590,000 m² (-8 %) 835,000 m² (-7 %) »» Strong 4th quarter with transactions totalling €12.0bn portion of pre-letting 27.50 €/m² (+6 %) 33.50 €/m² (+12 %) »» Average rent rises in almost every top 7 city 15.80 €/m² (+4 %) 21.30 €/m² (+9 %) 3.5 % (-0.8 pp) 1.8 % (-0.4 pp) €5.95bn (+65 %) €6.75bn (-8 %) 2.80 % (-0.1 pp) 3.00 % (-0 pp) Office letting Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7 2018/Q1-4 Take- up of space 590,000 835,000 334,600 310,000 639,400 218,000 955,000 3,882,000 [m²] Year-on-year change [%] -8 -7 -7 0 -12 -19 +9 -5 Average rent 15.80 21.30 16.10 15.00 20.00 13.90 18.65 - [net €/m²/mth] DÜSSELDORF Year-on-year change [%] +4 +9 +5 +9 -1 +1 +10 - 334,600 m² (-7 %) (+2 %) Premium rent 27.50 €/m² 27.50 33.50 27.50 23.00 43.50 23.00 36.80 - [net €/m²/mth] 16.10 €/m² (+5 %) 7.6 % (-0.8 pp) Year-on-year change [%] +6 +12 +2 +7 +9 -5 +5 - €3.84bn (+30 %) Vacant space 3.00 % (-0.4 pp) 477,200 350,000 555,000 200,000 858,600 186,000 420,000 3,046,800 [m²] Year-on-year change [%] -18 -19 -12 -29 -15 +11 -28 -17 Vacancy rate 3.5 1.8 7. 6 2.6 7. 4 2.3 1.8 3.4 [%] Year-on-year change -0.8 -0.4 -0.8 -1.0 -1.2 +0.2 -0.7 -0.7 [percentage points (pp)] COLOGNE Completions 310,000 m² (0 %) 313,000 843,000 269,000 235,000 472,000 168,600 465,000 2,222,000 FRANKFURT 2019+2020 [m²] 23.00 €/m² (+7 %) 639,400 m² (-12 %) Pre-let rate [%] 63 55 41 74 55 48 90 77 15.00 €/m² (+9 %) 2.6 % (-1.0 pp.) 43.50 €/m² (+9 %) €2.10bn (-9 %) 20.00 €/m² (-1 %) 7.4 % (-1.2 pp) Investment 3.30 % (-0.4 pp) Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Top 7 €9.69bn (+42 %) 2018/Q1-4 3.00 % (-0.3 pp) Transaction volume 5,950 6,750 3,840 2,100 9,685 2,147 6,237 36,709 [€m] Year-on-year change [%] +65 -8 +30 -9 +42 +79 +6 +22 STUTTGART MUNICH Share CBD [%] 29 25 10 48 60 10 9 31 218,000 m² (-19 %) 955,000 m² (+9 %) Share of foreign 26 60 39 26 51 39 41 44 23.00 €/m² (-5 %) 36.80 €/m² (+5 %) investors [%] 13.90 €/m² (+1 %) 18.65 €/m² (+10 %) Share of 2.3 % (-0.2 pp) 1.8 % (-0,7 pp) 19 20 12 18 27 10 7 18 forward deals [%] €2.15bn (+79 %) €6.24bn (+6 %) 3.30 % (-0,2 pp) Share of asset class 2.85 % (-0.15 pp) 55 57 63 52 86 60 68 67 Office [%] Prime yield 2.80 3.00 3.00 3.30 3.00 3.30 2.85 3.04 Office [%] Year-on-year change [pp] -0.10 0.00 -0.40 -0.40 -0.30 -0.20 -0.15 -0.22 Prime yield KEY FIGURES OFFICE LETTING/INVESTMENT: 2.70 2.90 3.00 2.90 2.90 2.80 2.40 2.80 Commercial premises [%] Take-up of space (year-on-year change) Vacancy rate (year-on-year change) Year-on-year change [pp] -0.20 0.00 -0.50 -0.30 -0.20 -0.30 -0.05 -0.22 Premium rent (year-on-year change) Transaction volume (year-on-year ch.) Prime yield 4.50 4.20 4.35 4.20 4.20 4.50 4.00 4.28 Logistics [%] Average rent (year-on-year change) Prime yield office (year-on-year ch.) Year-on-year change [pp] -0.10 -0.30 -0.40 -0.50 -0.40 0.00 -0.40 -0.30

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GERMANY SPOTLIGHT BUSINESS ENVIRONMENT COWORKING SPACE AND BUSINESS CENTRES

Year on year even more space was rented in 2018 by the TOP 10 OFFICE LETTINGS | TOP 7 CITIES In 2018 the German economy’s growth rate was slower Following a rise at the start of 2018, 10-year Federal bonds providers of coworking space and business centres. 2018/Q1-4 rented space Provider City Project/Property than in any of the past five years. Figures released by the fell back to 0.22% in January 2019. Mortgage rates usually Take-up in the top 7 cities was some 268,000 m², an in- [ca. m²]

Federal Statistics Office show that the gross domestic track the changes in Federal bond rates. Accordingly, crease of 28% compared with the prior year. This figure Design Cologne “DO-Haus” 13,000 product (GDP) grew 1.5% in 2018. Since Germans are still mortgage rates will not, in all likelihood, rise very much in translates into 7% of the total amount of office space Offices Schanzenstrasse/Von-Sparr-Strasse happy to spend money and the labour market is booming, 2019. Thus the cost of borrowing money for real estate re- taken up over the year. WeWork Munich Arnulfstrasse 60 12,300 the economy has not faltered too much. However, foreign mains at an all-time low. Spaces Frankfurt “Global Tower” 9,200 trade did not grow by as much as in prior years. Since the PREFERRED LOCATIONS (Regus) Neue Mainzer Strasse 32-36

3rd quarter Germany’s economic upswing has cooled IFO SURVEY OF BUSINESS CONFIDENCE IN GERMANY Providers of coworking space and business centres were WeWork Berlin “The Brighter Hub” 9,000 quite noticeably. Reasons include uncertainty caused by According to the ifo index of business confidence, Ger- most active in Berlin, where they rented 84,220 m², fol- Warschauer Platz 11-13 trade disagreements and the looming “no-deal” Brexit. many’s business managers are increasingly worried. The lowed by Frankfurt (58,200 m²) and Munich (45,500 m²). Design Berlin “Easton House” 8,500 Offices Koppenstrasse 93 index of business confidence fell by 3.0 points between However, the biggest single let was agreed in Cologne. rent24 Berlin Karl-Liebknecht-Strasse 34 7,700 LABOUR MARKET IN GERMANY August and December, dropping to 101.0. Business man- Design Offices took 13,000 m² in the city’s “DO-Haus”. This

In December 2018 the number of jobless people in Germany agers are now less satisfied with their current business segment took 93,900 m² in inner city areas and central Spaces Frankfurt “Omniturm” 6,500 sank to 2.2m, its lowest post-reunification level. The un- situation too. Expectations about what the coming fi- business districts (CBDs) of the top 7 cities, 28% less than (Regus) Großer Gallusstrasse 16-1 employment rate in December 2018 was 4.9%, down by 0.4 nancial year will bring are also far less buoyant than in the in the year before. Such figures reveal that the providers of The Office Frankfurt “Oper 46” 6,500 Group Bockenheimer Anlage 46 percentage points from the same month of 2017. Despite summer of 2018. flexible office space are now increasingly obliged to seek Design Cologne “Kaiser Hof” 5,600 the economic slowdown, the labour market has continued properties outside the centres, thus generating greater Offices Erftstrasse 19 to progress well. FORECAST GDP demand for premises in peripheral locations. Spaces Munich Mühldorfstrasse 5,000 The major economic institutions in Germany forecast (Regus) The ifo employment barometer also indicates that more growth of 1.1% to 1.8% in 2019. It seems probable that the OUTLOOK German companies wish to add to their payrolls. Having German economy’s long period of growth is not yet over, Coworking space and business centre providers have PROVIDERS OF FLEXIBLE OFFICE SPACE fallen back in the prior month, the barometer rose in De- but will proceed at a slower pace. The economy is bene- exerted an enormous influence on demand for office Business centres »» Target groups: companies, self-employed persons/freelancers cember to reach 104.2 points again. fiting from a flourishing construction industry and stable premises in the top 7 cities. Rental agreements for more »» Focus on private atmosphere (individual + group offices) labour market, which is reflected in consumers’ great will- than 5,000 m² of space illustrate the massive expansion »» Providers: Regus, Contora, Dussmann, etc. INTEREST RATES ingness to spend money. Uncertainties are created by the policies pursued by these companies. Design Offices, Coworking space »» Target groups: companies, self-employed persons/ The European Central Bank continues, for the moment, to lack of clarity about how Great Britain plans to leave the WeWork and Spaces (Regus) are the fastest growing freelancers, startups pursue a zero-interest policy. Experts do not expect to see EU and by the trade war between the USA and China. players in the sector. Companies seeking offices find an al- »» Focus on communication and collaboration, open spaces a rise in the base rate before the beginning of 2020. It is ready limited choice shrinking further as a result of leases »» Providers: Beehive, Places, etc. Hyprid model: mix of business centre and coworking highly probable that interest rates in the USA will be raised signed by operators of coworking space and business »» Target group: mix of the target groups for business as planned. centres. centres and coworking space, corporates »» Mix of open space, individual + group offices »» Providers: Design Offices, WeWork, rent24, Spaces, Mindspace, etc.

Unemployed Unemployment rate Registered job offers Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Business situation Share CBD 6.9% 6.7% Business climate 104.7 4,100 Take-up of space 35 % 6.4% 6.1% Business expectations 0.46 5.7% 0.49 Employment barometer 18,000 0.57 104.2 62% 0.66 4.9% 0.73 27,400 84,220 0.78 101.0

31,000 9 7. 3 50 % 53 % 86 % 19 % 2.95 2.90 2.80 2.69 2.53 2.21 45,500 303030828282 210 268 58,200 111111 999 2013 2014 2015 2016 2017 2018/12 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Source: Destatis, Bundesagentur für Arbeit Source: ifo Institut Source: German Property Partners (GPP) Source: German Property Partners (GPP)

Berlin Frankfurt München Köln Hamburg Düsseldorf Stuttgart 6 7

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INVESTMENT TOP 7 | 2018/Q1-4

2018 was a new record year in terms of property invest- INVESTORS AND VENDORS ments in Germany’s top 7 cities, with a total transaction International investors accounted for about half (44%) of TOP 10 TRANSACTIONS | TOP 7 LOCATIONS | 2018/Q1-4 volume of €36.7bn. This result bettered the previous the volume sold in 2018. Year on year their share of the Purchase record year of 2007 by almost €5.0bn. market fell by around 6 percentage points. Accounting for City Project/Property Vendor Buyer price 60% and 51% respectively, this segment was most active [ca. €m] TRANSACTION VOLUME in Berlin and Frankfurt. Six of the ten biggest transactions “Omniturm” Tishman Speyer Properties Frankfurt Commerz Real for Hausinvest 700 The transaction volume at four of Germany’s top 7 cities were completed by international players. Investors from Große Gallusstrasse 16-18 Deutschland GmbH showed double-digit growth rates. Stuttgart saw the Asian countries were much in evidence in Frankfurt. greatest increase with a 79% rise (€2.1bn) followed by “Trianon” Igis Asset Management / Frankfurt NorthStar Realty Europe Corp. 650 Hamburg (+ 65%, €5.95bn), Frankfurt (+42%, €9.7bn) and YIELDS Mainzer Landstrasse 16-24 Hanan Financial Investment Düsseldorf (+30%, €3.8bn). Frankfurt was the front runner The top 7 prime yields on office properties slipped back by “Eurotower” in terms of volume traded. In the 4th quarter alone, com- 0.22 percentage points to 3.04%. In this sector the lowest Frankfurt Fubon Life Insurance IVG Institutional Funds (IVG IF) 530 Kaiserstrasse 29 mercial properties changed hands for a total of €12.0bn. prime yield was registered in Hamburg, at 2.80%, the Forward deals accounted for a remarkable 18% of the highest in Cologne and Stuttgart at 3.30%. Yields shrank Administrative building Wealthcap Frankfurt Aroundtown 500 total volume traded. Year on year their volume doubled most in Cologne and Düsseldorf, where returns fell by 0.40 Gutleutstrasse 116-124 HFS Deutschland to €6.6bn. Currently the market features a large number percentage points. Commercial buildings and logistics of properties in which space has already been let before properties also saw yields declining further year on year. Management company for “Springer Quartier” (Sections MOMENI / Hamburg professionals’ pensions, 400 completion. Investors are especially interested in these A+B) Kaiser-Wilhelm-Strasse Black Horse Investments Hannover properties, causing the number of forward deals to rise OUTLOOK Triuva Kapitalverwaltungsge- Joint Venture between PGIM appreciably during 2018. The number of people in employment rose to record levels “Junghof Plaza” Frankfurt sellschaft mbH for providers Real Estate and FGI Frankfurter 400 in 2018 and the economy is proving stable. In view of this, Junghofstrasse 14-16 of professional pensions Gewerbeimmobilien Comprising 67% of the volume traded in 2018, office prop- the outlook for the market in commercial property in- Joint Venture between Korean erties remained the most sought-after asset class. Year vestment is set to remain healthy in 2019. However, as “OSKAR” Swiss Life / Bayerische Ver- Munich pensionsfunds and Hines Inte- 390 Oskar-von-Miller-Ring 20 sorgungskammer on year the proportion of portfolio sales on the market the supply of real estate is shrinking, no-one believes that rests Limited Partnership fell from 23% to 16%. Amounting to a share virtually un- quite such a good result will be returned in 2019 as in 2018. changed against 2017 (29%), 31% of the volume traded was Overall we expect to see a year of solid investment activity “Gallileo” Capital and Commercial Trust Fund managed by Triuva for Frankfurt 356 located in the central business districts (CBDs) or inner similar to 2016/2017 and a closing transactions figure of Gallusanlage 7/Kaiserstrasse (CCT) South Korean investor cities. around €29.0bn. “Allianz Campus” Hines Interests Limited Stuttgart Officefirst (Blackstone Group) 340 Reinsburgstrasse Partnership

“Hanseviertel” CBRE Global Investors for Hamburg Allianz Versicherung AG > 300 Große Bleichen 36 Europafonds

Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich Other 3% Q4Q4Q4 Specialist funds Logistics 5-year average (2014-2018): 12.0 Munich 3,703 Undeveloped land 2% ca. € 29.4bn Forecast 5% Open-end retail funds (real estate) Retail 29.0 Frankfurt 1,747 8% Commercial Asset managers Berlin 1,638 premises 8%

Listed property investment companies-AGs/REITs Hamburg 881 Hotel 8% 3.30 Asset managers Office Düsseldorf 755 67% 3.00 2.85 Project developers 2.80 22.0 29.3 28.8 30.0 36.7 Stuttgart 624

2014 2015 2016 2017 2018 2019 Specialist funds 2013 2014 2015 2016 2017 2018/Q4 Cologne 400 Hamburg Berlin Düsseldorf Köln Frankfurt Stuttgart München Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING TOP 7 | 2018/ Q1-4

Although 2018 ended with a very respectable figure of AVAILABLE AND VACANT SPACE 3.9m m², the top 7 cities reported slightly less office The average vacancy rate across the top 7 cities fell to TOP OFFICE LETTINGS >10,000 m² | TOP 7 LOCATIONS | 2018/Q1-4 space taken up than in the outstanding year of 2017. a record low of 3.4%. By the end of the year Berlin and Rented space Munich had the lowest rates with a mere 1.8% of space City Project/Property Tenant/Owner-occupier [ca. m²] TAKE-UP OF SPACE standing empty. Year on year all top 7 cities report further At the close of the year 2018 a very satisfactory result was shrinkage of the vacancy rate. The biggest contraction Bregenzer/Steiermärker Strasse Robert Bosch GmbH Stuttgart 50,000 announced for Germany’s top 7 office letting markets. was 1.2 percentage points in Frankfurt, although its va- (Project development) (owner-occupier, construction start) The take-up of space was 3.9m m² and thus 5% less than cancy rate of 7.4% was the highest of all 7 cities apart from the excellent result of the prior year. Take-up in the 4th Düsseldorf. “Beiersdorf headquarters” Beiersdorf AG Hamburg 45,000 quarter totalled 1.1m m². An aggravated shortage of prop- Troplowitzstrasse (owner-occupier, construction start) erties and less space standing empty contributed to the Taking all top 7 cities together, scheduled building com- “Campus One” slight fall. pletions will add 2.2m m² of office space in the years Munich Wirecard AG 40,500 Einsteinring 30 2019/2020. Berlin takes the lion’s share of building activity; Once again Munich led the way in terms of take-up here 843,000 m² of office space is due for completion by “iCampus” Munich Serviceplan Gruppe 40,000 (955,000 m², +9%), well ahead of Berlin (835,000 m², -7%) 2020. In Munich and Frankfurt the amount is about half Friedenstrasse /Grafinger Strasse and Frankfurt (639,400 m², -12%). With office take-up that of Berlin. Across the board, pre-letting rates are over of 310,000 m² Cologne equalled its result for the prior 50%. The rate is highest in Munich, where 90% of space is “Cielo” Frankfurt Commerzbank AG 36,100 year. There was a slight year on year decline in take-up in pre-let. This situation reflects the huge demand for office Theodor-Heuss-Allee 100-104 Hamburg (590,000 m², -8%) and Düsseldorf (334,600 m², premises. -7%). “Heinrich Campus” Düsseldorf Deloitte GmbH (Accountants/Auditors) 35,500 OUTLOOK Heinrich-Erhardt-Strasse 61 RENTS The domestic economy remains on a firm footing in As in the past, the highest premium rents were paid in Germany, wages and employment rates are rising. It will Berlin Hildegard-Knef-Platz 2 Vattenfall GmbH 29,000 Frankfurt at €43.50/m²/month, an increase of 9%. Rates not be possible to provide all potential customers with the rose more steeply in Berlin than in the other six cities, in- space they need in 2019 due to the shortage of properties creasing by 12% to €33.50/m²/month. Only in Stuttgart did and the sky-high levels of off plan letting in new build de- “Kustermannpark” Munich HR Department of Bavarian state capital Munich 25,000 the premium rent fall, dropping 5% to €23.00/m²/month. velopments. Against such a backdrop, one has to reckon Balanstrasse 55-59 Most average rents also increased, remaining relatively with lower total take-up in 2019 than in 2018. An acute “Section 43” unchanged only in Stuttgart (+1%) and Frankfurt (-1%). lack of suitable premises may lead to further rent rises in Frankfurt Frankfurter Allgemeine Zeitung GmbH (FAZ) 24,000 Europa-Allee 92 Here the front-runner was Berlin with average rates of some cities. €21.30/m²/month, ahead of Frankfurt (€20.00/m²/month) IT and Communications Technology Department Munich Agnes-Pockels-Bogen 1 23,000 and Munich (€18.65/m²/month). of Bavarian state capital Munich

Hamburg Berlin Düsseldorf Cologne Frankfurt Stuttgart Munich 126 Number of projects 5-year average (2014-2018): 116 114 112 ca. 3.6m m² Forecast Public administration/Social services providers Q4Q4Q4 Berlin 195,300 104 1.11.11.1 3.6 Public administration/Social services providers Munich 155,000 51 % 808080 Financial Services Frankfurt 120,700 73 % 7. 6 % 7. 4 % Industry Stuttgart 76,000

Internet/Media/Telecommunications Hamburg 71,600 3.5% 2.6% Law firms/Tax accountants Düsseldorf 70,300 2.3% 2.9 3.5 3.9 44.1 .14.1 3.9 1.8% 927 983 946 919 1,303 1,462

2014 2015 2016 2017 2018 2019 Public facilities, associations and federations 2013 2014 2015 2016 2017 2018/Q4 2015 2016 2017 2018 2019 2020 Cologne 65,000 Hamburg Berlin Düsseldorf Köln Frankfurt Stuttgart München Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING HAMBURG

640,000 m² was the record result returned in 2017, and it AVAILABLE AND VACANT SPACE could not be matched the following year. In the year 2018, No improvement on the market for office space in Hamburg 590,000 m² of space was was let or taken up by own- was discernible by the close of the year. Although the va- er-occupiers and thus some 8% less than in 2017. Most of cancy rate fell no further than the prior quarter’s 3.5%, the this reduction is attributable to the shortage of available shortage of available space in some areas continued to properties curtail take-up activity. At the end of the 4th quarter some 477,000 m² of office space was available at short notice, TAKE-UP OF SPACE 100,000 m² less than a year ago. Those occupiers of large suites of offices who decided on new locations in 2018 were increasingly likely to select OUTLOOK premises off plan. Of 15 agreements signed for more than Many new build projects due for completion as of 2021 will 5,000 m², eight related to new build developments. Overall start to take more concrete shape during the course of the in 2018 firms requiring over 5,000 m² of office space ac- year, so that several large volume agreements may be ex- counted for about 27% of total take-up. Beiersdorf was pected. Overall, in view of the current availability of prop- INVESTMENT the front runner in this field, with the start of construction erties, a decline in take-up to 550,000 m² is expected. for their new 45,000 m² headquarters (Troplowitzstrasse, HAMBURG Eimsbüttel). As in the prior year, City ranked ahead of all other sub-markets in 2018. Some 127,700 m² or about 22% 170 transactions were reported on the investment market OUTLOOK of the total take-up was transacted in Hamburg’s central for commercial properties in Hamburg in 2018, setting a In 2019 there will still be demand for suitable investment sub-market. One reason for the high volume recorded TOP 3 SUB-MARKETS (take-up of space / average rent) new record total of €5.95bn and overshooting the prior properties in Hamburg. The good market environment, on- in City was the successful letting of office space in the year’s mark by 65%. going low interest rates and the stability of the German “Tower am Michel” (Ludwig-Erhard-Strasse 22), which was CITY / 127,700 m² / €20.20/m²/month economy are likely to ensure that business remains brisk in built some years ago. CITY SOUTH / 98,600 m² / €13.00/m²/month INVESTMENT PROPERTIES the year just started. However, the year 2019 is not expected HAMBURG EAST / 63,000 m² / 13.90/m²/month A large number of transactions for over €100m each are to repeat the exceptional performance of 2018 and experts RENTS behind this exceptional year, unlike any experienced before reckon with a total transaction volume of between €4.0bn Year on year there has been a strong rise in both premium TOP 3 CONTRACTS in Hamburg. 16 sales in all, totalling €2.7bn, fell into this and €4.5bn. and average rents which have climbed to new record category. In 2018 the biggest transaction posted was the levels. By the end of 2018 the premium rent had reached 1. BEIERSDORF AG (OWNER-OCCUPIER, CONSTRUCTION START) sale of the “Springer Quartier” (Kaiser-Wilhelm-Strasse, €27.50/m²/month. During the same period average rents Troplowitzstrasse / ca. 45,000 m² City) for which some €400m was paid in the 1st quarter. across the whole of Hamburg rose to €15.80/m²/month. 2. POSTBANK The market was mainly dominated by single property Numerous rental agreements in new builds or buildings “Ipanema”, Überseering 28 / ca. 13,800 m² sales, which accounted for 73% of total transactions. with as-new space lay behind this growth. 3. AKQUINET AG Forward deals amounting to €1.1bn comprised 19% of Bramfelder Chaussee 106-112 / ca. 12,000 m² the total volume of transactions. This result is double the figure seen last year. Hamburg | Transaction volume Hamburg | Take-up of space Hamburg | Premium and average rent 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) INVESTORS AND VENDORS In 2018 national investors featured most prominently on the Premium rent 27.50 market for investment in commercial properties in Hamburg. 5-year average (2014-2018): ca. 569,000 m² 26.00 26.00 A mere 26% (€1.6m) of the investment trades originated Q4 Forecast Q4Q4 Q4Q4Q4 25.00 2.0 160 550 24.50 abroad, mainly in the USA and Great Britain. Listed property 5-year average (2014-2018): 550 24.00 investment AGs/REITS were the most active group of buyers ca. € 4.3bn Forecast in 2018, accounting for 15% of the total volume (€881m). Two 4.5 types of investor were most in evidence as vendors. Private equity funds/opportunity funds were behind 27% of the Average rent total traded (€1.62bn). Here the primary reason was Black- 15.80 15.50 15.20 stone’s sale of its Officefirst portfolio. Developers formed 14.50 14.50 the second largest group of vendors in 2018, with a share 14.00 close to 27% (€1.58bn). They are benefiting from the current 3.73.73.74.0 4.5 3.6 6.0 525 540 550 640 590 high levels of demand for rental offices in new builds and the 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 resultant early pre-letting agreements, which in turn leads to buildings being sold prior to completion. Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING BERLIN

Year on year take-up of office space in Berlin contracted Berlin therefore has almost no space left to rent, which by 7%, although the final total of 835,000 m² was still the makes life very difficult for companies that wish to move fourth-highest posted over the past ten years. A shortage premises or expand their offices. Many firms that need of available properties rather than a lack of demand ham- larger amounts of space are turning to new build devel- pered the market. opments. The result is a trend towards increased volumes of completions coupled with a high level of off plan let- TAKE-UP OF SPACE tings. Scheduled completions in 2019 total 338,500 m² of By the end of the year 37 agreements had been concluded which 67% is pre-let, and in 2020 the projected figure is for more than 5,000 m² of space and 15 for more than 504,500 m² (46% pre-let). The last time over 500,000 m² of 10,000 m², including the Vattenfall lease (about 29,000 m², new office space came onto the market was 1998. Hildegard-Knef-Platz 2, Periphery South) and a contract signed by Berlin Real Estate Management for the Berlin OUTLOOK Landeskriminalamt (Office of Berlin State Criminal Police) This tight market for space and consequent pressure on for some 26,600 m² (Ringbahnstrasse 126-134, Periphery rents is not set to ease in the immediate future. In 2019 INVESTMENT South). For the first time, the most popular sub-market take-up is expected to total some 790,000 m² because so was Charlottenburg with a share of some 15%, followed little space is available on the market. BERLIN by Periphery South (about 14%) and Mitte (about 11%). Once again neither Mitte nor Mitte 1a was one of the top The volume of investment transactions in commercial INVESTORS AND VENDORS 2 sub-markets, thus underlining the shift in take-up loca- properties fell by 8% year on year to a total for 2018 of Among property buyers, fund managers took the lion’s tions. Accounting for 27% of total take-up of space, and TOP 3 SUB-MARKETS (take-up of space / average rent) €6.75bn. Nevertheless, it is the third-highest figure seen share, closing 2018 with 24% of the total. Fund managers repeating the prior year’s pattern, the biggest single group in the past ten years. dominated the selling side of the equation too, accounting of new occupiers were public administrative offices, asso- CHARLOTTENBURG / 116,900 m² / €19.50/m²/month for 19% of the traded volume. The proportion of interna- ciations and social facilities. PERIPHERY-SOUTH / 112,200 m² / €15.30/m²/month INVESTMENT PROPERTIES tional investors fell slightly from 73% to 60%. MITTE / 83,000 m² / €25.30/m²/month Some 110 commercial properties were sold in Berlin during RENTS 2018. In one of the three biggest agreements announced OUTLOOK Within the space of a year the average rent rose by 9% sur- TOP 3 CONTRACTS in Berlin, Aroundtown paid Park Hotels & Resorts some The volume of transactions forecast for 2019 is around passing last year’s record to set a new one at €21.30/m²/ €297m for the “Hilton Berlin” (Gendarmenmarkt). In ad- €5.5bn, because no-one expects to see the same level of month. The premium rent grew by 12% and its new level of 1. VATTENFALL GMBH dition, the “Zalando Campus” (Valeska-Gert-Strasse 2) big-ticket trades as 2018. €33.50/m²/month was last seen in the early 1990s. Hildegard-Knef-Platz 2 / ca. 29,000 m² was sold again; this time L’Etoile Properties and a South 2. BERLIN REAL ESTATE MANAGEMENT Korean pension fund managed by Capstone were paid AVAILABLE AND VACANT SPACE Ringbahnstrasse 126-134 / ca. 26,000 m² €235m by a Hines-managed Luxembourg fund. The third- Empty space stood at a record low of 1.8% or 350,000 m², 3. FEDERAL AGENCY FOR REAL ESTATE MANAGEMENT biggest transaction concerned a shopping centre, “Das which was 19% below the level noted in the prior year. “Spreestern”, Salzufer 5 / ca. 15,000 m² Schloss” (Schloss Strasse 34), sold by HFS Immobilien- fonds 10 to Deka Immobilien. Berlin | Transaction volume Berlin | Take-up of space Berlin | Premium and average rent As in previous years office properties were the dominant 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) asset class on the market, accounting for a share of 57% 33.50

(about €3.9bn); retail followed with 18% of the market 5-year average (2014-2018): 30.00 (about €1.2bn) and hotels with about 8% (€522m). ca. 799,000 m² Forecast Q4Q4Q4 5-year average (2014-2018): 27.50 305 790 ca. € 6.2bn Q4 The proportion of portfolio sales dropped appreciably from 2.7 Premium rent Forecast 24.00 5.5 Average rent 32% to 18%. Forward deals comprised 20% of the market 22.00 22.50 in 2018, slightly up from 17% in the prior year. 21.30 19.50

The prime net yield on office properties remained un- 16.10 changed year on year at an all-time low of a mere 3.00%. 14.90 13.20 Commercial buildings produced a yield of only 2.90%. 12.30

4.04 . 07. 87.85.05 . 07.7.3 37.3 6.8 630 810 820 900 835

2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4

Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING DÜSSELDORF

2018 closed with take-up of office space in Düsseldorf 2018 and planned completions totalling 269,000 m² in totalling 334,600 m². This figure is 7% below the prior 2019 and 2020. year’s when 358,700 m² of space was let. OUTLOOK TAKE-UP OF SPACE Clients are still seeking large premises and the signs are During the period under review the biggest rental agreement that the Düsseldorf office letting market will start the year was signed by Deloitte GmbH for offices in the “Heinrich 2019 well and a year-end total of 380,000 m² to 400,000 m² Campus” (about 35,500 m², Heinrich-Erhardt-Strasse 61, may be expected - especially as scheduled completions Kennedydamm/Derendorf); the second largest let was to should add more space than in 2018. In view of consid- NRW Bank in “Herzogterrassen” (7,735 m², Herzogstrasse erable demand for space, it is quite possible that the 15, City) followed by IT.NRW (7,337 m², Kennedydamm premium rent will rise to €28.00/m²/month. 15-17, Kennedydamm/Derendorf). By the end of the year law firms/tax consultants/auditors had emerged as the biggest group of new tenants, taking some 70,300 m² of INVESTMENT offices, followed by industrial and trading companies with about 39,800 m² and firms in the construction and real DÜSSELDORF estate sector which rented around 35,200 m² of space.

A new record was set on the market for investments in OUTLOOK RENTS commercial properties in Düsseldorf. Properties valued Demand will remain high but fewer properties are likely As a result, above all, of lettings in newly built properties or TOP 3 SUB-MARKETS (take-up of space / average rent) at some €3.8m were traded in 2018. The volume of trans- to come onto the market. Therefore the outlook for the off plan agreements, the average rent rose to €16.10/m²/ actions was thus 30% above the figure for the prior year, property investment business in Düsseldorf is basically month, a year on year increase of about 5%. At the close KENNEDYDAMM/DERENDORF / 80,200 m² / €19.50/m²/month in which turnover of €3.0bn already marked a new high. positive but with no reason for euphoria. Since the year of the year the premium rent was €27.50/m²/month. This is CITY / 71,800 m² / €17.00/m²/month has started with a well-filled pipeline of trades, 2019 is a year on year rise of 2%. Primary causes of this increase AIRPORT CITY/NORTH / 47,000 m² / €15.70/m²/month INVESTMENT PROPERTIES forecast to close with a transaction total of €3.0bn, on a were lets in development projects in the Königsallee/ Three transactions at prices in excess of €200m con- par with 2017. Bankenviertel sub-market. TOP 3 CONTRACTS tributed over €700m to this record total; these were the sale of the Metro headquarters (Metro-Strasse), of IKB AVAILABLE AND VACANT SPACE 1. DELOITTE GMBH (ACCOUNTANTS/AUDITORS) headquarters (Wilhelm-Bötzkes-Strasse 1/Uerdinger Empty space stood at a record low of 550,000 m² or 7.6% “Heinrich Campus”, Heinrich-Erhardt-Strasse 61 / ca. 35,500 m² Strasse 88-92) and the Stadttor office block (Stadttor 1). of total stock. Year on year vacancies dropped by 12%. 2. NRW BANK A total of some 90 transactions was posted for 2018. However, during the same period the stock of office space “Herzogterrassen”, Herzogstrasse 15 / ca. 7,735 m² also fell by 3% to the current figure of 7,320,000 m². This 3. IT. NRW As in the past, office buildings remained the most popular was offset by 103,000 m² of newly completed offices in Kennedydamm 15-17 / ca. 7,337 m² asset class, accounting for 63% of the trading volume and a total of some €2.4bn. Retail properties were the next most-traded assets, with 9% of the market (€345m), Düsseldorf | Transaction volume Düsseldorf | Take-up of space Düsseldorf | Premium and average rent followed by hotels with 8% (€324m). Portfolio sales con- 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) tributed 25% to the final result.

Forecast Premium rent 27.50 27.00 27.50 At the close of the year prime net yields on both office and Q4 5-year average (2014-2018): 390 26.50 ca. 336,420 m² 26.00 26.00 retail properties were 3.0% (prior year: 3.40% and 3.50% 1.1 5-year average (2014-2018): Forecast Q4Q4Q4 ca. € 2.8bn 575757 respectively). Over the past twelve months prime net yields 3.0 on logistics properties slipped from 4.75% to the current 4.35%. Average rent 16.10 INVESTORS AND VENDORS 15.25 15.35 14.90 14.40 The most prominent vendors were project developers, 13.80 whose turnover of €1.1bn translated into 30% of the market. Asset managers were the biggest buyers on the 1.91.91.92.72.72.7 2.6 3.0 3.8 238 420 331 359 335 market, investing €755m or about a fifth of the total traded 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 in 2018. International investors accounted for 39% of the market during the period under review. Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING COLOGNE

In 2018 total turnover of space was some 310,000 m². This AVAILABLE AND VACANT SPACE result equals that of 2017. The market was chiefly marked Only about 200,000 m² of office space remains empty, by shrinking amounts of empty space and rising rents. equivalent to some 2.6% of the total stock. In the city centre alone, vacancies have shrunk by nearly 40,000 m², or 37%. TAKE-UP OF SPACE Only some 50,000 m² of office space was completed in Due to the shortage of space in existing buildings many 2018. In 2019 the total is likely to be 140,000 m², however firms requiring large amounts of space opted for new build less than 20% of this space is still available to rent. developments. Two of the biggest rental agreements were signed for premises located in the “I/D Cologne” devel- OUTLOOK opment district in Mühlheim sub-market, where Design Because the economy has slowed and very little space is Offices took 13,000 m² (“DO-Haus”, Schanzenstrasse / Von available at short notice, the take-up of space in 2019 is Sparr-Strasse, Mühlheim) and Siemens some 10,000 m² likely to be lower than it was last year. Overall, annual total (“Haus am Platz”, Schanzenstrasse/Von-Sparr-Strasse, take-up of 280,000 m² seems a probable result. Mühlheim). In the banking district the tax and finance INVESTMENT office of North Rhine-Westphalia (Oberfinanzdirection) rented some 10,600 m² in the “Dominium”, a premium COLOGNE office block at Unter Sachsenhausen 17-27.

In 2018 the volume of investment transactions in com- Overseas investors secured a little over a quarter of the Government departments and various associations ac- mercial properties in Cologne totalled some €2.1bn. This volume traded. counted for around 21% of overall take-up, renting several TOP 3 SUB-MARKETS (take-up of space / average rent) result was the second highest seen for many years and, large and a number of smaller office suites. Providers of due to a lower number of available properties, was only OUTLOOK coworking space and business centres rented 31,000 m² CBD NORTH / 50,000 m² / €16.00/m²/month about €200m short of the record set in 2017. Investors continue to wish to buy into real estate and there and thus increased their share of turnover from 4% in 2017 COLOGNE NORTH / 30,000 m² / €12.90/m²/month is an ongoing lack of alternative investments. As long as in- to around 10% last year. COLOGNE RING ROAD / 21,000 m² / €15.20/m²/month INVESTMENT PROPERTIES terest rates and loan terms remain so reasonable, prop- One of the biggest transactions was the sale of de- erties that come onto the market in the next few months RENTS TOP 3 CONTRACTS partment store Kaufhof (Hohe Strasse 43-51, corner of will be in great demand and investors will be willing to Landlords were well placed to demand higher rentals. The Schildergasse) to Signa. The purchase price was thought spend money on them. If the right properties are available average weighted rent rose by about 9% during the year to 1. DESIGN OFFICES GMBH to be over €150m. This big-ticket purchase was the major on the market, it may be possible to close the year with a around €15.00/m²/month. The average rent rose by 7% to “DO-Haus”, Schanzenstrasse / ca. 13,000 m² reason why retail properties accounted for 13% of the total result of some €2.0bn. €23.00/m²/month. The top rent paid was about €25.00/m²/ 2. TAX AND FINANCE OFFICE OF NORTH RHINE-WESTPHALIA traded. Several hotel facilities were sold, for example the month. “Dominium”, Unter Sachsenhausen 17-27 / ca. 10,600 m² “Maritim” (Heumarkt 20) and accordingly this segment of 3. SIEMENS AG the market comprised about 20% of investment trades. “Haus am Platz”, Schanzenstrasse / ca. 10,100 m² Office properties made up around 52% of the investment tally, topping the list by a relatively low margin. Cologne | Transaction volume Cologne | Take-up of space Cologne | Premium and average rent Year on year prime net yields have slipped further back. In 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) the case of commercial buildings and offices, however, the decline has slowed over the course of the year. The prime Premium rent 23.00 net yield on commercial buildings was 2.90%, and fell to 5-year average (2014-2018): Forecast ca. € 1.9bn Q4Q4Q4 21.50 21.50 2,0 21.25 21.25 21.25 3.30% on offices. Yields on these two classes of asset are 0.6 5-year average (2014-2018): tending towards convergence. The biggest decline was ca. 322,000 m² noted for logistics properties, which slipped from 4.70% in Q4Q4Q4 Forecast 100 the 4th quarter of 2017 to a current rate of 4.20%. 280 Average rent 15.00 14.10 INVESTORS AND VENDORS 13.70 Specialist funds were the most active group of buyers, ac- 12.70 12.70 12.40 counting for about 19% of investment trading. Developers were the largest group of vendors, comprising about 23% 1.31.31.31.91.91.9 1.81.81.8 2.3 2 .12.1.1 260 290 440 310 310 of the market. Several developers were able to benefit 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 from investors’ considerable willingness to enter into forward deals, which comprised some 18% of the total. Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING FRANKFURT

Although 12% less space was let in 2018 than in the prior AVAILABLE AND VACANT SPACE year, the final result of some 639,400 m² was never- The vacancy rate fell by a further 1.2 percentage points theless appreciably higher than the five-year average of to 7.4% and a growing shortage is becoming noticeable about 537,000 m². in certain locations (CBD). Very little new build space has come onto the market in recent years - a mere 88,000 m² TAKE-UP OF SPACE in 2018 - but from 2019 onwards more new buildings will The biggest let of the year concerned 36,100 m² in the be completed, adding around 170,000 m² in 2019 and over “Cielo” (Theodor-Heuss-Allee 100-104, City West) taken by 300,000 m² in 2020, although 65% (2019) and close to 50% Commerzbank in the 3rd quarter. Second place went to the (2020) of this space has been pre-let. FAZ, a newspaper, which took close to 24,000 m² off plan (Europa-Allee 92). Deloitte, a financial consultancy and ac- OUTLOOK counting firm, chose some 15,800 m² in the “Zebra” (Eu- Demand for offices in Frankfurt will remain high in 2019. ropa-Allee 91-93, City Rand). The banking district (Banken- However, in view of the shortage of available space, viertel) sub-market reported most demand (17%) followed take-up for the year will probably be between 500,000 m² INVESTMENT by City Rand (16%) where the two off-plan lets in the Eu- and 550,000 m². This in turn could lead to higher rents in ropaviertel section of this sub-market were posted. Pro- all parts of the city and a further modest reduction in the FRANKFURT viders of financial services rented more space than other amount of empty space. groups (19%) in the banking metropolis of Frankfurt. Partly In 2018 property investment transactions in Frankfurt investors were involved in a number of the top-priced due to the agreement signed by the FAZ, companies from totalled some €9.7bn; this figure is 42% higher than the transactions and their share of the total volume traded the internet/media/telecoms sector placed second (15%). TOP 3 SUB-MARKETS (take-up of space / average rent) result for 2017 and breaks the record set in 2007 (> €8.0bn). was thus more than 50%. They were closely followed by providers of construction and property services (14%) fuelled by the ongoing strength of BANKING DISTRICT / 108,500 m² / €31.20/m²/month INVESTMENT PROPERTIES OUTLOOK demand for coworking space. CITY RAND / 100,300 m² / €20.10/m²/month The biggest trade in 2018 was the sale of the “Omniturm” Considering the decimated selection of available prop- CITY / 62,800 m² / €19.10/m²/month (Grosse Gallusstrasse 16-18) for which CommerzReal paid erties, the transaction volume in 2019 will not go beyond RENTS Tishman Speyer some €700m. In a similar price category, the figure posted in 2018. Demand remains unabated, and Because all new lets involving more than 10,000 m² were TOP 3 CONTRACTS NorthStar sold the “Trianon” (Mainzer Landstrasse 16-24) in 2019 Frankfurt will remain a major investment magnet located outside the CBD, the average rent fell 1% to to IGIS/Hana Financial Investment, a South Korea con- attracting both national and international players. In the €20.00/m²/month. However, the premium rent climbed 9% 1. COMMERZBANK AG sortium, for some €650m. Largely due to the sale of many coming year investors will continue to prefer core plus and to €43.50/m²/month due to a number of rental agreements “Cielo”, Theodor-Heuss-Allee 100-104 / ca. 36,100 m² big-ticket high-rise buildings, office property assets ac- value add properties in top locations to real estate in B and for space in prime tower blocks such as the “Omniturm” 2. FRANKFURTER ALLGEMEINE ZEITUNG (FAZ) counted for 86% of the total trading volume. Seven forward C towns. and the “TaunusTurm”. Europa-Allee 92 / ca. 24,000 m² deals at prices in excess of €100m added up to over €2.7bn 3. DELOITTE GMBH (ACCOUNTANTS/AUDITORS) or 27% of the total volume traded. The fact that a greater “Zebra”, Europa-Allee 91-93 / ca. 15,800 m² proportion of properties change hands before construction work is completed is indicative of the growing shortage of available real estate. Frankfurt | Transaction volume Frankfurt | Take-up of space Frankfurt | Premium and average rent 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net)

The market share of portfolio sales, which declined from Premium rent 26% in 2016 to 12% in 2017, fell to 8% in 2018. Because 43.50 core properties accounted for 63% of the total in 2018, the 39.50 39.75 38.00 38.00 38.50 Q4 5-year average (2014-2018): Q4Q4Q4 prime net yield on office real estate dropped back 0.3 per- Forecast 3.0 ca. 537,000 m² 184 centage points to 3.00%. There was also brisk demand for 5-year average (2014-2018): 550 ca. € 6.8bn Forecast core plus and value add properties, with 50 transactions 7.07.07.0 in this sector.

Average rent INVESTORS AND VENDORS 19.50 20.30 20.00 Open property mutual funds were the buyers in the two 18.50 18.00 18.00 largest transactions, so that their share of the total volume traded was a top-ranking 18%. On the selling side, devel- 5.2 5.75.75.7 6.5 6.8 9.79.79.7 368 389 561 729 639 opers took the largest share of the market by number of 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 trades (22) and volume generated (24%); this also reflects the greater number of forward deals. International Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING STUTTGART

In Stuttgart the year 2018 closed with total take-up of AVAILABLE AND VACANT SPACE office space standing at some 218,000 m². The annual By the end of the year 2018 the vacancy rate was 2.3%. result was thus 19% below the prior year and 15% lower Year on year the amount of available space rose by 11% to than the ten-year average. 186,000 m² of office premises. Remedies are not immedi- ately in sight. In 2018 new-builds added some 92,800 m² TAKE-UP OF SPACE to the total, in 2019 around 89,700 m² will be completed. Four owner-occupier agreements totalling some 67,000 m² However, only about 25,400 m² of this space (28%) will made a crucial contribution to the overall result. Stutt- come onto the market. gart-Feuerbach sub-market posted the highest take-up of space at 54,600 m², almost entirely due to the 50,000 m² OUTLOOK of space occupied by the Robert Bosch GmbH project, As in recent years, those looking for large premises have which was also the biggest contract signed in 2018 in no alternative but to choose peripheral locations. Over Stuttgart. Bad Cannstatt sub-market placed second the next three years practically no new-build space will with a total of some 34,500 m². Stuttgart city centre fol- come onto the Stuttgart City and city centre sub-markets. INVESTMENT lowed with some 28,400 m². Here the state government Take-up in 2019 will probably be on a par with 2018, of Baden-Württemberg purchased a building offering meaning turnover of between 210,000 m² and 230,000 m². STUTTGART 10,800 m² of space in Kriegbergstrasse. The biggest rental agreement was one for 8,800 m² of space in a building lo- Investments in commercial properties in Stuttgart vendors, with a 26% share of the volume of transactions, cated in Leinfelden-Echterdingen, likewise signed by the reached a new record total of €2.1bn in 2018. Year on followed by developers with a share of 20%. Compared state government of Baden-Württemberg. Industrial firms TOP 3 SUB-MARKETS (take-up of space / average rent) year the volume of transactions grew by 79% or €950m, with last year, the proportion of overseas buyers on the accounted for some 76,000 m² of take-up, more than any soaring past the previous best mark set in 2016. market has contracted a little. These investors accounted other sector of the economy. FEUERBACH/ZUFFENH. / 54,600 m² / €11.70/m²/month for some 39% in 2018. BAD CANNSTATT / 34,500 m² / €14.10/m²/month INVESTMENT PROPERTIES RENTS CITY CENTRE / 28,400 m² / €11.90/m²/month This high volume of transactions was attributable to OUTLOOK At the close of the year the premium rent in Stuttgart was the sale of the “SI Centre” in Möhringen and of the “Alte Several more big-ticket transactions involving com- €23.00/m²/month. Year on year this translates into a 5% TOP 3 CONTRACTS Bahndirektion” in the city centre during the 1st half year; mercial properties in Stuttgart are in the pipeline for 2019. drop and a return to levels posted in 2016. The average rent likewise to CommerzReal’s 3rd-quarter purchase of the However, due to the short supply of properties for sale, the for the entire city area including Leinfelden-Echterdingen 1. ROBERT BOSCH GMBH (OWNER-OCCUPIER) “Uhland Carré” in the Uhlandstrasse district and, in the final transaction volume is expected to be about €1.75bn was about €13.90/m²/month, around 1% more than the Bregenzer-/Steiermärker Strasse / ca. 50,000 m² last quarter of the year, the sale of the “Allianz Campus” and thus lower than the result for 2018. figure for 2016. 2. STATE GOV. OF BADEN-WÜRTTEMBERG (OWNER-OCCUPIER) on Reinsburgstrasse, which was acquired by Hines. These Kriegsbergstrasse 32 / ca. 10,800 m² four transactions accounted for some €820m in total. In- 3. STATE GOVERNMENT OF BADEN-WÜRTTEMBERG vestors focussed on office buildings which - partly a result Fasanenweg / ca. 8,800 m² of the sale of the “Uhland Carré” and the “Allianz Campus” - comprised some 60% of the volume traded, followed by mixed use properties with a share of about 17% of the Stuttgart | Transaction volume Stuttgart | Take-up of space Stuttgart | Premium and average rent market. Forward deals constituted around 10% of the 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) volume traded and portfolio transactions made up some 7%. Premium rent 24.30 Q4 22.80 23.00 23.00 5-year average (2014-2018): 0.8 The prime net yield on office assets was 3.30%, having 21.50 ca. € 1.6bn Forecast 5-year average (2014-2018): dropped 0.2 percentage points from its level in the prior 1.81.81.8 ca. 297,600 m² 20.00 year. The statistics show a prime net yield on commercial buildings of 2.80% and 4.50% on logistics properties. Forecast Q4Q4Q4 230 Average rent 525252 13.70 13.90 INVESTORS AND VENDORS 12.50 12.50 12.90 12.00 Comprising around 29% of the total, developers were the predominant buyers. Open property mutual funds followed with 18% of the market and specialist funds with 1.01.01.01.71.71.7 1.81.81.8 1.21.21.2 2 .12.1.1 278 290 432 270 218

15%. All other groups of investors took less than 10% of the 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 market and thus played only a minor role. Private equity/ opportunity funds comprised the single biggest group of Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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OFFICE LETTING MUNICH

Posting take-up of 955,000 m², the second highest result AVAILABLE AND VACANT SPACE since the early 2000s, Munich office market remains at Currently some 420,000 m² of office space is available giddy heights reminiscent of the New Economy era. to rent. This is equivalent to a vacancy rate of 1.8%, a year on year reduction of 0.7 percentage points. Around TAKE-UP OF SPACE 200,000 m² of new office space was completed in 2018, The biggest rental agreement of 2018 was signed by almost all of which has been let. Projected completions in Wirecard AG (40,500 m², Einsteinring 30, East Envrions) 2019 total around 300,000 m². Here too, a large proportion which opted off plan for space in “Campus One” in of space has been pre-let. Aschheim; close behind was a contract signed off plan by Serviceplan Gruppe for space in the “iCampus” on the OUTLOOK “Werksviertel” site by Munich East Station (40,000 m², Unabated high demand for office space is forecast for the Friedenstrasse/Grafinger Strasse, Centre East). Following year 2019. The trend towards renting off plan in buildings in third place, the HR department of Bavarian state capital that are a few years away from completion is set to con- Munich took 25,000 m² (Balandstrasse 55-59, Centre tinue. Due to the shortage of available space, letting ac- INVESTMENT East). Altogether 15 lets for more than 10,000 m² were re- tivity is expected to reach between 800,000 m² and MUNICH ported. 850,000 m². During the year just ended City East sub-market squeezed In 2018 the transaction volume on the market for invest- again, national and international funds, increasingly into first place with a letting volume of around 122,000 m² ments in commercial properties in Munich totalled about acting through their asset managers. Their share of trading (12%). This is not very surprising, because at present most TOP 3 SUB-MARKETS (take-up of space / average rent) €6.2bn. This is both an outstandingly good result and a amounted to around €3.5bn. new developments are being planned in this district. The year on year rise of 6%. 16 transactions with price tags second busiest sub-market was City North with take-up CITY EAST / 122,000 m² / €16.50/m²/month of €100m and higher together accounted for about 50% OUTLOOK of 111,000 m² (11%). Third place went to Centre East sub- CITY NORTH / 111,000 m² / €17.50/m²/month of total turnover. Sustained interest in commercial properties will con- market (108,000 m², 11%). Once again, the public purse ab- DOWNTOWN EAST / 108,000 m² / €22.00/m²/month tinue to encourage investors to buy Munich real estate in sorbed a larger amount of space than any other sector, but INVESTMENT PROPERTIES 2019. A dramatic worsening of the market is not to be ex- IT firms were also very keen to expand premises in 2018. TOP 3 CONTRACTS Once again the most-sought-after assets were office pected. Whether and in what manner the reduced growth properties, which made up 68% of the total market forecasts for the euro zone as a consequence of a slowing RENTS 1. WIRECARD AG (€4.3bn). Most activity was recorded in the 1st and 4th global economy and the imminent Brexit will have an effect The average rent was €18.65/m²/month in 2018, a year on “Campus One”, Einsteinring 30 / ca. 40,500 m² quarters, in each of which property trades totalled about will become clear during the course of the year. The first year rise of 10%. The premium rent increased by 5% to 2. SERVICEPLAN GRUPPE €2.0bn. Among the biggest transactions of the year were quarters of the new year are already looking to generate €36.80/m²/month. “iCampus”, Friedenstrasse/Grafinger Strasse / ca. 40,000 m² the sale of “OSKAR” (Oskar-von-Miller-Ring 20) bought a respectable trading volume. A total volume of between 3. HR DEPARTMENT OF BAVARIAN STATE CAPITAL MUNICH in the 4th quarter by a consortium of BVK and Swiss Life €5.75bn and €6.25bn is forecast for the year overall. Balanstrasse 55-59 / ca. 25,000 m² for some €390m, and the sale of “Correo Quartier” by the main station for which Credit Suisse paid Postbank around €275m. Although trailing a long way behind, hotels (€673m) Munich | Transaction volume Munich | Take-up of space Munich | Premium and average rent were the second most popular assets, followed in third 2014-2019 | in € bn 2014-2019 | in 000s m² | incl. owner-occupiers 2013-2018/Q4 | in €/m²/mth (net) place by mixed use properties (€485m). 5-year average (2014-2018): Premium rent ca. € 5.8bn 36.80 Forecast 35.25 The prime net yield on office properties was further Q4 34.45 35.00 1.9 5.8 5-year average (2014-2018): Q4Q4Q4 32.50 32.50 squeezed over the course of the year and closed at 2.85%. Forecast ca. 787,000 m² 265 It is not to be expected that yields will decline any further 825 in 2019; at least as far as core locations are concerned, the bottom has been reached. Average rent INVESTORS AND VENDORS 18.65 16.90 15.50 In 2018 capital spending on properties in Munich was di- 15.10 14.60 15.00 vided 40:60 between foreign and domestic investors. Most overseas investment capital came from the USA, 5.0 5.5 6.5 5.9 6.2 584 755 764 878 955

Great Britain and Asian countries. Samsung Asset Man- 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018/Q4 agement from South Korea bought the “Atrium” in north

Munich for around €180m. Prominent buyers were, once Source: German Property Partners (GPP) Source: German Property Partners (GPP) Source: German Property Partners (GPP)

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GLOSSARY GERMAN PROPERTY PARTNERS Across Germany Services

TAKE-UP OF SPACE ASSET CLASS »» Hamburg »» Real estate investments Take-up of space is the total of all space let plus that sold to, A property is allocated to an asset class according to the predom- or finished by or for an owner-occupier during the period under inant way in which space is used (at least 75%) when the contract »» Berlin »» Commercial letting review. The operative date for inclusion in the statistic is the date is signed. If at least 75% of a property is not used in one single »» Düsseldorf »» Corporate real estate management (CREM) on which the lease or purchase agreement was signed. Lease re- way, it is classified as mixed use. »» Cologne | Bonn »» Research newals are not counted as take-up. Areas are stated on the basis INDIVIDUAL PROPERTIES AND PORTFOLIO TRANSACTIONS »» Frankfurt »» Banking and financing services of the guide for calculating the rental area in commercial leases An individual property transaction means the purchase of a (MF/G). building used for commercial purposes or of a piece of land for »» Stuttgart »» Equity financing of development projects PRIME RENT development. Portfolio transactions involve the purchase of at »» Munich »» Fund and asset management The prime rent is that paid for the most expensive 3% of the least two separate properties in different locations. »» Real estate management market for new lets (not counting owner-occupiers) during the 12 PRIME YIELDS »» Real estate valuation months just ended and is stated as the median of such rents. The prime yield is the initial return attainable on a property that AVERAGE RENT has been let on normal market terms (tenants with good credit »» Agriculture and forestry real estate The average rent paid is calculated by taking the individual rents ratings), has top quality structure and fit-out and stands in one agreed in all leases signed over the past 12 months, weighting of the very best locations. It is stated as the net initial yield in per them by the amount of space rented and computing the mean cent, i.e. the ratio between the annual rental income less non- value. Figures refer to nominal net rents ex services. apportionable ancillary costs and the gross purchase price VACANCIES (net purchase price plus land acquisition tax, notary’s fees and Vacancies include all office space that is available to new tenants agency commission.) within three months. Sub-let space is counted as vacancy. TYPES OF INVESTORS AND VENDORS TRANSACTION VOLUME Investors (buyers) and vendors are differentiated using the guide The transaction volume is the sum of the purchase prices of all to reporting types of investor in commercial properties (Leitfaden commercial property sold in Germany’s top 7 markets during zur Berichterstattung über den Investmentmarkt für Gewerbeim- We draw your attention to the fact that all statements made here are non-binding. Most of the information is based on third-party reports. The sole intention of this the period under review. The date of signing determines when a mobilien, May 2014) compiled by the gif research experts. market survey is to provide general information for our clients. transaction is included in the statistics. Buy to let investments in SHARE DEAL residential properties are not included in the transaction volume. A share deal is the acquisition of shares in a real estate or Grossmann & Berger GmbH • Immobiliendienstleister • Bleichenbrücke 9 (Bleichenhof) • D-20354 Hamburg property firm. The primary motive for the investment is purchase Phone: +49 (0)40 / 350 80 2 - 0 • Fax: +49 (0)40 / 350 80 2 - 36 • [email protected] • www.grossmann-berger.de of the property. The size of the shareholding acquired is irrelevant Managing directors: Holger Michaelis, Andreas Rehberg, Lars Seidel, Axel Steinbrinker to its inclusion as property transaction. Chairman of the Supervisory Board: Frank Brockmann • Entered in the commercial register: Hamburg B 25866 Supervisory authority: Borough Council Hamburg-Mitte, Department of Consumer Protection, Commerce and the Environment, Klosterwall 2, 20095 Hamburg VAT identification number pursuant to Section 27a German Turnover Tax law: DE 118 556 939

Anteon Immobilien GmbH & Co. KG • Ernst-Schneider-Platz 1 • D-40212 Düsseldorf SERVICES Phone: +49 (0)211 / 58 58 89 - 0 • Fax: +49 (0)211 / 58 58 89 - 88 • [email protected] Managing partners: Guido Nabben, Heiko Piekarski, Jens Reich, Dirk Schäfer, Marius Varro GERMAN PROPERTY PARTNERS Trading licence: a licence pursuant to Section 34 c of the German Industrial Code/GewO was granted with no restrictions by the Municipal Government of the State Capital Düsseldorf, Department 32, Tel.: +49 (0)211 / 89 - 23 223. • ANTEON Immobilien GmbH & Co. KG • Registered office in Düsseldorf, entered in the Commer- cial Register of Düsseldorf under HRA 19934 • General Partner ANTEON Verwaltungsgesellschaft mbH, registered office in Düsseldorf, entered in the Commercial Register of Düsseldorf under HRB 58418 Naturally enough, when doing real estate business in Due to the banking background of two of our partners, we VAT identification number pursuant to Section 27a German Turnover Tax law: DE 259 465 200 Germany, you would like to work with a partner who can are familiar with the workings of the financial industry. We provide you with expert professional support in all issues are also well placed to assist you in your search for office, Greif & Contzen Immobilien GmbH • Pferdmengesstrasse 42 • D-50968 Köln Phone: +49 (0)221 / 93 77 93 - 0 • Fax: +49 (0)221 / 93 77 93 - 77 • [email protected] relating to commercial property. retail, industrial, warehousing and logistics premises, as Managing directors: Mr Theodor J. Greif, Rainer Krauß well as special uses, in the process bringing to bear our in- Amtsgericht (lower court) Registered in: Cologne, Company Register no. 11414 Our spectrum of services covers both real estate invest- depth local knowledge and outstanding regional contacts. Supervisory authority: City of Cologne, Ordnungsamt, P.O. Box 103564, 50475 Köln VAT identification number pursuant to Section 27a German Turnover Tax law: DE 123 055 006 ments and commercial letting. We are conversant with all risk classes and types of property. For investors we offer In addition, we offer you corporate real estate man- blackolive advisors GmbH • Reuterweg 18 • D-60323 Frankfurt a Germany-wide service extending to the purchase and agement, as well as research tailored to your specific Phone: +49 (0)69 / 907 44 87 - 0 • Fax +49 (0)69 / 907 44 87 - 10 • [email protected] • www.blackolive.de Managing directors: Oliver Schön, Rainer Hamacher sale of office, hotel, warehousing, logistics and retail real project. Further services in the fields of finance, fund man- Trading licence: a licence pursuant to Section 34 c issued by the Ordnungsamt Frankfurt estate, as well as apartment buildings, either as individual agement, asset management and administration mean Competent supervisory authority: Gewerbe- und Ordnungsamt Frankfurt, Kleyerstrasse 86, 60326 Frankfurt am Main properties or in portfolios. We are also ready to support that you can obtain everything needed from us to secure Commercial register and no. of entry: Registered in Frankfurt (Amtsgericht), HRB 93813 VAT identification number pursuant to Section 27a German Turnover Tax law: DE 283 390 909 you with preparation for development projects. the effective long-term advancement of your project. E & G Real Estate GmbH • Börsenplatz 1 • D-70174 Stuttgart Phone: +49 (0)711 / 20702-700 • Fax +49 (0)711 / 20702-702 • [email protected] • www.eug-realestate.de Managing directors: Mario Caroli, Björn Holzwarth Competent supervisory authority: Amt für öffentliche Ordnung, Gewerbe- und Gaststättenbehörde, Eberhardstrasse 37, 70173 Stuttgart Commercial register and no. of entry: Registered in Stuttgart (Amtsgericht) HRB 733293 Responsible under Section 55 par. 2 of the Interstate Broadcasting Agreement (RStV): Björn Holzwarth, managing director VAT identification number pursuant to Section 27a German Turnover Tax law: DE 257 361 630

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Contact

Grossmann & Berger GmbH Anteon Immobilien GmbH & Co. KG GREIF & CONTZEN Immobilien GmbH Locations: Hamburg, Berlin Location: Düsseldorf Location: Cologne | Bonn

Bleichenbrücke 9 (Stadthöfe) Ernst-Schneider-Platz 1 Pferdmengesstrasse 42 D-20354 Hamburg D-40212 Düsseldorf D-50968 Köln Phone: +49 (0)40 / 350 80 2 - 0 Phone: +49 (0)211 / 58 58 89 - 0 Phone: +49 (0)221 / 93 77 93 - 0 Fax: +49 (0)40 / 350 80 2 - 36 Fax: +49 (0)211 / 58 58 89 - 88 Fax: +49 (0)221 / 93 77 93 - 77 Mail: [email protected] Mail: [email protected] Mail: [email protected] www.grossmann-berger.de www.anteon.de www.greif-contzen.de blackolive advisors GmbH E & G Real Estate GmbH Location: Frankfurt Locations: Stuttgart, Munich

Reuterweg 18 Börsenplatz 1 D-60323 Frankfurt D-70174 Stuttgart Phone: +49 (0)69 / 907 44 87 - 0 Phone: +49 (0)711 / 20702 - 700 Fax: +49 (0)69 / 907 44 87 - 10 Phone: +49 (0)89 / 17 95 94 - 10 Mail: [email protected] Mail: [email protected] www.blackolive.de www.eug-re.de Photo credits: Cover, page 24: E & G Real Estate GmbH; page 3: Anteon Immobilien GmbH; page 2, 8, 11, 15, 17: Fotolia; page 13, 19, 21, 23: Shutterstock 23: 21, 19, 13, page Fotolia; 17: 15, 11, 8, 2, page Immobilien GmbH; Anteon 3: page GmbH; Estate E & G Real 24: page Cover, credits: Photo