• Take-up of almost 0.6 million sq m in Q1 23; a decrease of around 15% year on year
• Prime and average rents increased by 2% and 5% respectively
• Vacancy rate unchanged at 4.8%

While take-up levels in the top six German office markets, Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich, decreased further in the first quarter of 2023, rents continued to rise according to Savills. A take-up figure of approx. 560,000 sq m means a decline of 15% compared with the corresponding quarter last year.

Prime and average rents across all six markets rose by an average of 2% and 5% respectively over the last three months while the vacancy rate remained unchanged at 4.8%.

Jan-Niklas Rotberg, Head of Office Agency Germany at Savills, says: “The market environment remains challenging for owners and occupiers alike. Many owners, for example, are faced with rising expectations from occupiers and must fit out their space accordingly in order to remain competitive – while also paying drastically increased fit-out costs.

“Owners of lower rated space are suffering from rising vacancy rates, particularly in less attractive locations. Occupiers, in turn, are faced with rising rents and service charge costs and many are still coming to terms with the transformation of the post-Covid working environment, which includes establishing their future office space requirements.”

That rents are still rising is likely due to the continued focus of many occupiers on high-quality space, particularly in attractive locations.

“For many major companies, there is hardly any alternative to new-build space. The fact that it is, for the most part, only such space that has sustainability certification also plays a role and can even be decisive,” says Rotberg. Relocating to a better location often goes hand in hand with a reduction in space, according to Savills observations, since the space requirements of many occupiers have decreased owing to remote working.

Rotberg says: “Occupiers will pay significantly higher rents per square metre after moving to a better location. However, owing to the reduction in space, they may well manage with their previous budget for space costs.”

Major companies in particular also no longer only use traditional offices to cover their office space requirements. They often complement this with the use of flexible workspace options according to Savills.

Find out more: Market in Minutes: German Top 6 Office Markets