According to Savills, the top six office markets in Germany: Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich, have continued their recovery in Q2 2022 amid weakening economic activity and significant uncertainty surrounding future developments. With a collective take-up volume of around 940,000 sq m, this was the strongest second quarter of the last ten years.

Jan-Niklas Rotberg, Head of Office Agency, Savills Germany, says: “Many companies who had deferred leasing decisions owing to the pandemic finally returned to the market. However, it is becoming increasingly apparent that their demands have changed, which is creating a division in the market. On the one hand, there is a growing proportion of office space which is no longer suitable while, on the other hand, there is a shortage of modern space in sought-after locations.”

Both vacancy rates and rents continued to rise in the second quarter. The average vacancy rate across the six markets rose by 10 basis points compared with the previous quarter to 4.7% while both prime and average rents rose by around 3%, and in some cases by double digits, over the same period.

Matthias Pink, Head of Research, Savills Germany, says: “Office vacancy rates have risen by almost half since the beginning of the pandemic. However, this has not resulted in declining rents. Instead, rents have risen over the same period, with prime rents increasing by 7% and average rents by as much as 10%.

“For owners of more basic offices in sought-after locations, it is likely to become increasingly worthwhile to invest in this space.”

While companies are making higher demands in terms of office space, their requirements in quantitative terms are shrinking. “Large occupiers are typically planning on less than 20 sq m per employee for their office space. In some cases, the figures are even lower. Against this backdrop, we expect occupancy of office space, which has remained stable at 24 sq m in recent years, to decline successively over the coming years. Offices are becoming smarter but they will also become smaller,” predicts Rotberg.

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Market in Minutes: German Top-6-Office Markets