Take-up in the top six German office leasing markets* totalled approximately 1.7 million sq m between January and September 2024, which is 22% below the 10-year average, according to Savills. Take-up for Q3 totalled 651,380 sq m, representing an increase of 10% year on year.

Take-up for the whole of 2024 is likely to come in modestly above last year's figure. Since the vacancy rate is expected to rise further, average rents in particular are likely to remain under pressure. Prime rents are likely to rise further by the end of the year, although growth could be limited going forward.

Jan-Niklas Rotberg, Head of Office Agency Germany for Savills, says: “Take-up in Q3 is higher than last year but remains below the long-term average. The new lettings market has not registered any growth in long-term comparison but has also not witnessed any further decline. This below-average take-up is attributable to the fact that, not only has the number of transactions declined but also the transaction size. Hence, there are fewer lettings being completed and also less space is being leased.”

Antonia Wecke, Senior Research Consultant at Savills Germany, says: “The average leasing size in the first three quarters of 2024 was 860 sq m, which is below the 10-year average of 940 sq m. This is partly attributable to the low level of activity for leases above 10,000 sq m.” 14 leases above 10,000 sq m completed between January and September 2024, seven more than in the corresponding period last year but still below the long-term average of 22 transactions (2014-2022, Q1-Q3).

“Landlords are increasingly courting major occupiers in order to successfully let or relet their space. Such owners prefer to let contiguous space to an anchor tenant in order to avoid fragmentation of the space and the associated additional costs,” says Rotberg. “Whether this strategy will come off for all owners remains to be seen. Alternatively, owners could consider offering smaller units, accepting the fragmentation in order to avoid possible vacancies,” says Wecke.

Prime rents rose by 2.3% compared with the previous quarter, which is principally attributable to the rise in construction costs. Going forward, however, growth may be limited.  Average rents are already coming under pressure, falling by 1% compared with the previous quarter. At the same time, the vacancy rate in the top six cities rose by a further 40 basis points to reach an average of 6.3%.

* Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich

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Market in Minutes: Top 6 Office Markets Germany