Hamburg, Quarters 1–3, 2014 Market Survey Commercial Office Letting Grossmann & Berger’s promise: Market transparency. Commercial Market Survey Hamburg Quarters 1–3, 2014 Office Letting Office Letting Key figures office Q 1–3 Q 1–3 2013 2014 Take-up of space in m² ......................... 325,000 .. 380,000 + 17 % Premium rent in €/m²/mth ................. 23.50 .......24.50 Average rent in €/m²/mth ..................13.80 .......14.50 Vacancy rate in % ................................. 6.5 ...........6.3 Total stock of office space in millions m² .....13.28 .......13.35 Take-up of space 2010–Q 3, 2014 Take-up of space (in 000s m², incl. owner-occupiers) Total take-up of office space was 155,000 m² in the 3rd quarter, making 600 it the strongest so far this year. Adding to the sound result returned in 10-year average (2004–2013): approx. 478,000 m² the 1st half of the year, which was partly due to the Deutsche Telekom 500 lease agreement for a large amount of space, the overall figure has ris- 400 en to 380,000 m², representing year on year growth of 17%. The share at- tributable to owner-occupiers was some 20%, i.e. about 73,000 m² of of- 300 Q3Q3Q3 fice space. In addition to three leases for over 10,000 m² the strong result 155 is, first and foremost, due to a large number of lets for over 1,000 m² and 200 2,000 m². 100 Rather like the situation in the previous quarter, some 36% of the space 506 540 430 440 380 0 taken up was registered in the 5,000 m² or more section of the market; alto- 2010 2011 2012 2013 Q3, gether 2014 has seen eleven such leases, three of them in the 3rd quarter. 2014 In terms of size, the biggest new agreement was the building start for the VBG main administrative offices (Krüsistrasse/Drosselstrasse, Barmbek) to provide the insurance company with 22,000 m² of office space. There Take-up of space Q 1–3, 2014 by size was great public interest in the two next-biggest agreements concluded in (in 000s m², incl. owner-occupiers) and no. of lettings the 3rd quarter: WPP Deutschland Holding GmbH plans to group its Ham- burg companies together in the “Zeisehallen Studios”; this new-build pro- 160 ject on a vacant lot on Friedensallee/Behringstrasse (Altona) will provide 140 some 12,600 m² of office space. And the Funke Media Group is relocating 120 the staff of Hamburger Abendblatt, a newspaper, to 10,300 m² of space in the “Burstah Offices” (Grosser Burstah 18-30). The small size categories, 100 i.e. 500 m² or less and 1,000 m² or less, accounted for about 17% of letting 80 activity, very similar to the 16% share of lets in the mid sized segment of 2,001 m² to 5,000 m². Interesting to note in this size category are the four 60 leases signed by a games developer in Bahrenfeld, which add up to about 40 13,000 m² of office space. 260 94 35 20 11 20 17% 17% 14% 16% 36% 66 64 54 61 135 At the end of the 3rd quarter, City’s take-up of space is once again far 0 up to up to up to up to over ahead of the other sub-markets for office letting, with a share of 23% 500 1,000 2,000 5,000 5,000 (85,900 m²) and 149 agreements signed. One of the biggest agreements signed for a property in the City was, apart from the Hamburger Abendblatt page 2 Commercial Market Survey Hamburg Quarters 1–3, 2014 Office Letting lease already mentioned, the Kreditech contract for 3,850 m² (LES_1, Selected top deals Q 1–3, 2014 Ludwig-Erhard-Strasse 1). Accounting for about 11% each, the next big- gest sub-markets were City South (42,200 m²) and City North (41,000 m²). 1. Telekom .................Überseering 2 ...........................ca. 32,000 m² Whereas figures for take-up of office space in City North are primarily due to the Telekom lease for 32,000 m² at Überseering 2, City South registered 2. VBG .......................Krüsistr./Drosselstr................ ca. 22,000 m² the second-highest number of agreements at 55. Among the companies 3. Marquard & Bahls .Shanghaiallee ..........................ca. 15,000 m² signing new agreements in City South during the 3rd quarter were Star 4. WPP .......................Friedensallee/Behringstr. .......ca. 12,600 m² Finanz-Software (3,300 m² at Grüner Deich 15-17) and EHA Energie-Han- dels-Gesellschaft (some 2,600 m² at the VTG Centre, Amsinckstrasse 57- 5. Funke Media .........Großer Burstah 18-30 ..............ca. 10,300 m² 61). Fourth and fifth-placed HafenCity (31,900 m²) and Barmbek (30,800 6. Jungheinrich .........Friedrich-Ebert-Damm 129......ca. 10,000 m² m²) each accounted for some 8% of office take-up. 7. KVH .......................Heidenkampsweg 99-101 .......... ca. 7,900 m² 8. Airbus ....................Hein-Saß-Weg 26 ....................... ca. 7,000 m² As in the same period last year, companies from the information and te- lecommunications sector were the most active, renting 96,500 m², which 9. Gebr. Heinemann ..Koreastr. 3 .................................ca. 6,000 m² translates into 25% of total office take-up. As an established media lo- 10. Serviceplan...........Steinhöft 9 .................................ca. 4,300 m² cation, Hamburg is attracting more and more companies offering asso- ciated online and internet services. In the current market environment they are growing disproportionately fast and thus need large amounts of space. Trailing some way behind, trade & gastronomy (54,700 m²) follows Premium and average rents with 14%, neck and neck with consultancies/services to business (53,200 2010–Q 3, 2014 (net in €/m²/mth) m²). One representative of the latter is the advertising group WPP, which, as previously mentioned, signed a lease in Altona. Insurance companies 25.00 premium rent (42,500 m²) also reached a double-digit share of the total at 12%. 22.50 23.00 23.50 24.00 24.00 24.50 Rents 20.00 Year on year the premium rent for office space in Hamburg has risen by 17.50 one euro. At the end of the 3rd quarter the premium rent in Hamburg (top 13.00 14.50 14.00 14.00 14.50 price segment with a market share of three per cent of lettings in the past 15.00 twelve months) stood at 24.50 €/m²/month. The average rent, weighted by average rent 12.50 space taken, rose by a further 20 cents to reach 14.50 €/m²/month. This is its highest level since the prior quarter and the year 2011. The current 10.00 rise in average rents is a reflection of steadily growing demand for large, 2010 2011 2012 2013 Q3, contiguous suites of new-build office space at correspondingly high rents. 2014 In Hamburg about 900,000 m² of office space is available for rent at short notice. At the end of the 1st half year the vacancy rate was 6.8%, inclu- ding sub-let space (6.5% excluding sub-let space) and thus 0.3 percent- Vacant space 2010–Q 3, 2014 (in 000s m²) age points lower than the prior year’s figure. and vacancy rate (in %) 1,400 12% Availability and vacancies 1,200 10% Out of some 13.3m sqm of office space in Hamburg, some 840,000 m² are 9.8% available for rent within a short period of time. The vacancy rate has been 1,000 8% falling since 2010 and by the end of the 3rd quarter it had reached a new 8.0% 800 7.4% low of 6.3%, including sub-let space (6.0% without sub-let space). Com- 7.0% 6% 6.3% pared with the same period last year it has thus fallen by a further 0.3 per- 600 centage points. The 36 projects due for completion in the years 2014/2015 4% 400 are expected to add around 253,000 m² of office space to the market. Contracts have already been signed for 62.5% of the total (158,000 m²). 2% 200 The freely available amount of new-build space thus adds up to a mere 1,271 1,046 970 932 840 95,000 m². 0 0% 2010 2011 2012 2013 Q3, 2014 page 3 Commercial Market Survey Hamburg Quarters 1–3, 2014 Office Letting Outlook The German economy grew more strongly than expected, especially dur- ing the 1st quarter of the year, but by the end of the 3rd quarter the outlook had clouded over quite noticeably. The Hamburg World Economy Institute (HWWI) identifies various reasons for this shift, including the relatively weak growth in the eurozone and a fairly stagnant export industry. Ongo- ing conflicts in Ukraine and the Middle East are holding back the overall willingness to invest. In view of the new situation, the institute has revised its forecast for economic growth in Germany downwards. For 2014 it now expects the real gross product to grow by 1.6% (prior quarter: 2.2%). Since the experts expect the world economy to revive soon, they predict growth of 2.0% for the year 2015. They also forecast that overall the labour market will continue to make good progress and that Germany’s jobless rate will average 6.3%. The less rosy economic outlook was also reflected in the ifo index of busi- Take-up of space Q 1–3, 2014 ness confidence among members of the service industry. In September by industry (in %) the climate slipped from 20.1 to 18.9 index points.