Office Market Profile Rhine-Neckar | 4th quarter 2019 Published in February 2020 Rhine -Neckar Development of Main Indicators High level of activity on both the letting and investment markets The real estate investment and off ice letting market in the Rhine-Neckar metropolitan region (Mannheim, Heidelberg and Ludwigshafen) turned out positive in 2019, the highest ever transaction volume and the third best letting perfor- mance ever. The highest ever transaction volume and the third best letting performance ever. The take-up of 158,000 sqm in the Rhein-Neckar metropoli- formance was in Heidelberg with 69,000 sqm. The city on the tan region was the third best performance of the last 10 River Neckar registered its highest ever take-up, which was years, and was a signifi cant increase of more than a fi ft h double the previous year’s total and overtook traditionally compared to the previous year and approx. 20% above the fi rst placed Mannheim for the fi rst time. average from the period 2014 - 2018. Whilst Mannheim’s take-up of around 68,000 sqm was similar to the previous The upswing was mainly due to four large-scale lettings with year’s total and Ludwigshafen (around 21,000 sqm) was a combined total of around 46,000 sqm, including around down on the previous year but still above the 20,000 sqm 28,000 sqm let to the Stadtwerke city works department and mark for the second time in succession, the stand-out per- another letting to Verivox in the SkyAngle off ice building, Mannheim: Off ice Space Market Areas with Rental Bands (€/sqm/month) Off ice Market Overview Rhine-Neckar | 4th quarter 2019 2 Heidelberg: Office Space Market Areas with Rental Bands (€/sqm/month) Ludwigshafen: Office Space Market Areas with Rental Bands (€/sqm/month) Office Market Overview Rhine-Neckar | 4th quarter 2019 3 both dating from the strong fi rst quarter. We expect another rent is even higher in Heidelberg (€14.30/sqm/month). above-average performance of around 150,000 sqm over the Whilst the prime rent of €18.50/sqm/month in Mannheim coming year, thanks to a number of large-scale remained stable compared to the previous year, prime rents enquiries in the market. rose by 20 Cent in Heidelberg to €16.70 and in Ludwigshafen by 50 Cent to €14.50/sqm/month respectively. There was around 115,000 sqm off ice space under construction in Mannheim at the end of 2019 and in excess of 80,000 sqm in On the regional investment market, the off ice transaction Heidelberg. Most of the much requested and urgently need- volume was around €1.11 billion, the highest level ever re- ed space will come onto the market in 2020. The year will corded and double the previous year’s performance. This is see a year-on-year quadrupling of new-build completions in well above the long-term averages at around 77% above the Mannheim to 80,000 sqm and new-build space in Heidelberg 5-year average and two-and-a-half times the 10-year average. will double to around 50,000 sqm. A similar level of comple- The largest transaction of the year was the purchase of the tions is expected for 2021. Many inquiries have been served planned off ice and hotel building No. 1, right next to Mannhe- much better than in the past, which means that much of the im station at a price of around €100 million. In addition to this new space has already been absorbed. The new comple- mixed-use complex, the top fi ve deals included a retail prop- tions are likely to push the vacancy rate up in both Mannhe- erty, the asset class living and two off ice properties. im and Heidelberg. The vacancy rate at the end of 2019 was 4.6% in Mannheim, 2.8% in Heidelberg and 1.3% in Ludwig- Prime off ice yields remain under pressure across the Rhein- shafen. The regional vacancy rate across the entire market Neckar metropolitan region, even if they are still at signifi - area fell to 3.4%. cantly higher levels than, for example, in the Big 7 cities. This continues to make the markets in the Rhein-Neckar re- In the context of higher rental prices achieved for new let- gion very attractive. Yields have fallen by 10 bps in Mannheim tings, not least in the area around Mannheim central railway (now 4.1%) and Heidelberg (now 4.6%) and by 30 bps in Lud- station, the weighted average rent rose by over 8% year-on- wigshafen (now 5.6%). year to its current level of €14.06/sqm/month. The average Off ice Market Data 2018 2019 % Off ice Space Take-up incl. Owner Occupier (sqm) 130,000 158,000 21.5 Vacancy incl. Space for subletting (in sqm) 114,000 136,800 16.4 Vacancy Rate incl. Space for subletting (in %) 2.9 3.4 17.2 Prime Off ice Rent (€/sqm/month) 18.50 18.50 0.0 Completions (in sqm) 65,800 66,300 0.8 Off ice Space Stock (in Mill. sqm) 3.97 4.03 1.7 The Rhine-Neckar market area includes the cities of Ludwigshafen, Mannheim and Heidelberg, including Walldorf and Wiesloch, as well as parts of Leimen. Off ice Market Overview Rhine-Neckar | 4th quarter 2019 4 Contacts Contact Rhine-Neckar Stephan Leimbach Helge Scheunemann Konstantinos Krikelis Head of Office Leasing Germany Head of Research Germany Director Office Leasing Team Rhine-Neckar +49 (0) 69 2003 1245 +49 (0) 40 350011 225 Mannheim [email protected] [email protected] +49 (0) 621 3 999 8-331 [email protected] jll.de Information regarding JLL and our services jll.de/research All research reports on current market figures and special topics jll.de/immo Commercial real estate properties for sale or to let througout Germany Copyright © JONES LANG LASALLE SE, 2020. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them. Office Market Overview Rhine-Neckar | 4th quarter 2019 5.