According to Savills, prime rents rose by 1.1% to €27.67 per sq m on average in the six markets* monitored and average rents rose by 4.5% to €14.60 per sq m, boosted by increase demand in peripheral CBD locations.

Marcus Mornhart, head of office agency at Savills Germany, comments: “The rental growth can largely be attributed to the further reduction in supply in all German markets except Dusseldorf. Additionally, the growth we have seen in average rents is largely due to companies being forced to move out of the CBD and into periphery locations as a result of a lack of high quality space.”

Savills reports that the most significant decrease of supply was recorded in Hamburg where it dropped by 70 basis points year-on-year to 6.5%. Berlin continues to show by far the lowest supply rate of 4.5% compared 7.7% on average for the other six markets.

The firm states that despite the rental growth, take up remains down with 2.7 million sq m transacted in the six major German office markets, 2.7% less than the 2.8 million sq m recorded in 2013. Take up in Hamburg and Berlin was positive at 20% and 12% respectively, while Munich, Frankfurt and Düsseldorf saw a decreases of - 4%, -16% and -31% respectively. 

Marcus continues: “Rather than relocating many companies opted to renew their existing lease, due to both a lack of suitable alternatives or for cost-saving reasons. To achieve these cost savings, we have seen occupiers focus on space optimisation rather than reducing the rent per square meter.”
                                                                                                           Matthias Pink, associate director of research at Savills Germany, adds: “While there are approximately 0.9 million sq m of new offices set for completion in the next year, we do not expect this will boost supply numbers and it will be quickly absorbed by the market and therefore we expect supply to continue to decrease in 2015.”

Click here to view the rates of change in German office markets 2014.

*The survey covered office markets in Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich.