According Savills, the lack of available office space in Germany has pushed average market rents up in the six markets surveyed* by 4.2% from €13.97 per sq m to €14.55 per sq m in Q3. In addition, prime rents in these areas have increased on average by 1.3% year-on-year in Q3 2014 from €27.37 per sq m to €27.72 per sq m. However, the firm warns that due to the lack of stock, take up year to date was down 8.3% from 2.1 million sq m to 1.9 million sq m.

Marcus Mornhart, managing director and head of office agency at Savills Germany, comments: “Whilst the lack of available stock has helped to push rents up it had a negative impact on take up in Q3 which dipped to its lowest levels since 2009 at 614,000 sq m. There are a number of large requirements in the market but occupiers are struggling to find space that meets their criteria, especially in central locations. In some cases tenants are choosing to extend their existing leases rather than move.

“We expect prime rents could increase by a further 1% by year end and predict stable development next year.”

Savills reports that Hamburg was the only city in the survey which recorded an increase in take-up during Q3 at +14% with -32%, -4%, and -1% in Dusseldorf, Munich and Berlin respectively and -21% in both Frankfurt and Cologne.

Marcus continues: “Due to the requirements currently in the market there is a chance that we could see improved take up in the fourth quarter, which could help boost take-up numbers. However, we do believe it will be slightly below the 2.7 million sq m originally predicted.”

Savills states that the vacancy rate continues to drop across Germany, standing at only 7.7% at the end of Q3 14, which is down 50 basis points from 8.2 in Q3 2013.

Matthias Pink, associate director of research at Savills Germany, adds: “With the strong demand and lack of available stock we have seen some speculative development take place, albeit at a much slower rate needed to meet current demand.”

German office markets Q1 – Q3 2014 (JPG)