Facts and Figures Office market Frankfurt am Main H1 2021 “An investment in knowledge pays the best interest.‘‘ Quote from Benjamin Franklin If you require any further information, please do not hesitate to contact us. We can put you in touch with our specialists who are always happy to provide you with expert support. We look forward to hearing from you! Dr. Konrad Kanzler Head of Research +49 (0) 69 - 970 505-614 [email protected] Andreas Wende Managing Partner +49 (0) 69 - 970 505-171 [email protected] Martin Angersbach Director Business Development Office Germany +49 (0) 69 - 970 505-122 [email protected] Lenny Lemler Director Investment +49 (0) 69 - 970 505-174 [email protected] Market Environment Population development Frankfurt a. M. At the start of 2021, the labour market Inhabitants 2020: 758,847 in Frankfurt am Main was still firmly in 780,000 the grip of the coronavirus pandemic 760,000 740,000 with related economic and social re- 720,000 strictions. However, there are increas- 700,000 ing signs that the situation is beginning 680,000 to ease. Business confidence has re- 660,000 640,000 turned in some areas as new infection 620,000 rates remain low and steps are being 600,000 taken to open society and the econo- 2013 2014 2015 2016 2017 2018 2019 2020 Source: City of Frankfurt a. M. Frankfurt of City Source: my. The unemployment rate in Frankfurt am Main stood at 6.6 % at the end of June 2021, which is 0.6 %-points be- Purchasing power per capita Germany and Frankfurt a. M. low the previous year’s figure and 0.7 %-points below this year’s peak in Jan- Purchasing power per capita Germany Purchasing power per capita Frankfurt a. M. 30,000 uary/February. The number of people Purchasing power per capita 2021: Germany € 23,637 / Frankfurt € 26,379 subject to social insurance contribu- 25,000 tions was 2,300 higher than the low 20,000 point in June 2020 according to the last 15,000 available figures on 31 December 2020. 10,000 ting GmbH e The latest business survey conducted 5,000 by the Frankfurt Chamber of Industry GeoMark 0 : GfK and Commerce (IHK) in early summer 2014 2015 2016 2017 2018 2019 2020 2021 Source 2021 also points to a general improve- ment in business sentiment. Company assessments of both the current busi- Unemployment / employees subject to social insur. contribution ness situation and future expectations Employees Frankfurt a. M. thereof tertiary sector are once again largely positive. Howev- Unemployment rate Germany Unemployment rate Frankfurt a. M. er, views are somewhat divided de- 700,000 7.5 pending on the industry sector. For 600,000 7.0 example, sentiment is particularly posi- 500,000 6.5 tive in industry and the finance, credit EmploymentAgency 400,000 6.0 , and insurance sector. In contrast, the 300,000 5.5 hospitality industry, tour operators, 200,000 5.0 events industry, stationary retail and 100,000 4.5 personal service providers were still State Statistical OfficeHesse 0 4.0 : 2014 2015 2016 2017 2018 2019 2020 Jun 21 heavily affected by the pandemic at the Source time of the survey. The business climate index for the typi- Consumer price index Germany and Hesse cally office-based finance, credit and insurance sector returned to pre-crisis CPI Germany (base year: 2015) CPI Hesse (base year: 2015) levels in early summer 2021. As a re- 115 CPI May 2021: Germany 108.7 / Hesse 107.7 sult, employment and planned invest- 110 ment levels are expected to increase. 105 Although not quite as good, business 100 service providers, which are also im- 95 portant for the office property market, gave largely positive assessments of 90 both the current situation and pro- Federal Statistical Office 85 : 2014 2015 2016 2017 2018 2019 2020 May 21 spects for the first time since the begin- Source ning of the pandemic. Thus, most companies in this sector also plan to recruit staff. Market Data Take -up, vacancy, prime rent, average rent, prolongation Vacancy (in thousand) Take-up (in thousand) Prolongation after market screening (in thousand) Average take-up 10 years (in thousand) Prime rent (in €/sqm) Average rent (in €/sqm) 2,500 50.00 45.50 46.00 46.00 43.20 45.00 40.30 39.00 39.20 39.00 2,000 40.00 38.00 38.00 36.50 36.00 35.00 1,960 sqm 1,960 1,500 30.00 1,760 sqm 1,760 25.00 22.30 22.80 22.40 1,520 sqm 1,520 21.70 20.50 20.50 20.50 20.50 20.70 20.00 19.50 19.30 1,000 20.00 1,340 sqm 1,340 1,316 sqm 1,316 1,251 sqm 1,251 1,246 sqm 1,246 15.00 979 sqm 979 951 sqm 951 500 sqm 814 10.00 743 sqm 743 693 sqm 693 210 sqm 210 5.00 128 sqm 128 97 sqm 97 88 sqm 88 74 sqm 74 50 sqm 50 46 sqm 46 45 sqm 45 515 sqm 515 sqm 452 sqm 369 sqm 172 472 sqm 472 sqm 427 sqm 394 sqm 541 sqm 712 sqm 622 sqm 574 sqm 329 0 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 2021 apollo : NAI Source The Frankfurt office market gained momentum in the second quarter of 2021, along with a decline in new COVID-19 infections, a rising vaccination rate and related steps to reopen society and the economy. Compa- nies have become increasingly active and are more confident about the future. Accordingly, office space take-up by tenants and owner-occupiers in Frankfurt amounted to 171,800 sqm in the first six months of 2021. The second quarter accounted for 95,600 sqm, while 76,200 sqm was recorded in the first three months. This indicates that the market recovery picked up speed in the last few months. As a result, take-up in the first half of the year was about 50 % higher than the previous year’s figure of around 116,000 sqm. However, the result is still well below the long-term average. For example, the average take-up figure for the past ten years is 18 % higher. The second quarter is positioned in the lower end of the scale compared to recent years (average per second quarter from 2011 – 2020: 110,000 sqm). As new lettings rise, the influence on take-up of lease extensions following an active market search has de- clined somewhat. Within the first six months, lease extensions accounted for around 45,000 sqm in total. Take-up according to location H1 2021 Total: 171,800 sqm 56,600 sqm 60,000 66Deals 50,000 40,000 26,100 sqm 30,000 22 Deals 18,200 sqm 16,900 sqm 14,900 sqm 20,000 45 Deals 23 Deals 25 Deals 12,700 sqm 7,300 sqm 5,100 sqm 3,200 sqm 2,100 sqm 800 sqm 4,000 sqm 3,900 sqm 0 sqm 10,000 11 Deals 31 Deals 5 Deals 5 Deals 9 Deals 1 Deal 10 Deals 3 Deals 0 Deals 0 Bahnhofsviertel Westend Bankenlage City West Stadtmitte Messe / Europav. Westhafen Nordend Bockenheim Eschborn Niederrad Lyoner OF-Kaiserlei Mertonviertel Other locations : NAI apollo Quartier Source Market Data Take-up according to unit size H1 2021 Take-up has increased year-on-year in almost all size categories. While deals Total 171,800 sqm 80,000 below 1,000 sqm increased by 16 % to 71,000 sqm 225 Deals 70,000 71,000 sqm, growth rates in the cate- 60,000 gories above 1,000 sqm were at times 50,000 much higher. For example, take-up in 30,500 sqm 35,000 sqm 40,000 2 Deals the “1,000 – 2,500 sqm“ and “>10,000 22 Deals 25,400 sqm 30,000 4 Deals sqm” categories more than doubled to 20,000 9,900 sqm 30,500 sqm and 35,000 sqm respec- 10,000 3 Deals tively. A total of 25,400 sqm was regis- 0 : NAI apollo < 1,000 sqm 1,000 - 2,500 sqm 2,501 - 5,000 sqm 5,001 - 10,000 sqm > 10,000 sqm tered in the “5,001 – 10,000 sqm” Source segment. Here, not a single deal was registered in the same period of the previous year. Take-up according to rents H1 2021 Nestlé was responsible for the biggest Total: 153,500 sqm* office letting in the first six months. The 56,500 sqm 60,000 87 Deals company leased about 20,000 sqm in 43,900 sqm 50,000 the “Kreisler” project (Baseler Stras- 32 Deals se/Gutleutstrasse) in the second quar- 40,000 ter. Next was an owner-occupier pro- 30,000 19,400 sqm ject of Siemens in Gateway Gardens, 51 Deals 16,100 sqm 20,000 which was included in the first-quarter 45 Deals 11,000 sqm 6,600 sqm 22 Deals figures. Siemens itself will occupy 10,000 16 Deals 15,000 sqm of the 35,000 sqm build- : NAI apollo 0 < €10 €10 < 15 €15 < 20 €20 < 25 €25 < 30 ≥ €30 Source ing. *lettings only, no owner occupiers The biggest lettings also influenced how take-up was distributed among Take-up according to space quality H1 2021 the different industries. The “industrial production and processing trade” sec- tor was ranked in first place with 17.2 % 62,600 sqm or a 36.4 % share.