The corona crisis reached the office market in a very short time. As several international brokers unanimously reported on Monday, significantly less office space was rented in the first quarter compared to the same period in the previous year, depending on the report, between a quarter and just under a third. At the end of the year, office real estate business was still considered a profitable alternative to the residential property market due to the low vacancy rate and stable demand.
“The lockdown is leaving its mark,” reports consulting firm JLL. The market in Berlin is also affected, but is still doing quite well in comparison: In the first quarter, leases for office properties covering an area of 172 are together. 000 square meters have been signed – this corresponds to a decrease of more than a quarter compared to the same period in the previous year.
In no other major German city had more office space been leased in the past year than in Berlin: almost a million square meters . The above-average strong growth of the economy compared to the rest of the world had boosted demand. There are almost no spaces left in the capital. According to JLL, the vacancy rate is 1.9 percent.
Big minus not only in Berlin
But now “countless companies are planning expansion plans, restructuring or changing locations first back or even one, ”writes the broker Aengevelt. In Berlin, the record year was followed by one with falling demand. The crisis would result in “cost-saving space reductions, increasing numbers of corporate insolvencies”. In addition, the “successfully tested home office solutions and digital meetings” will continue to dampen demand for office space in the future.
The rental of office space in Stuttgart has more than halved (minus 61 percent) and Cologne (minus 60 percent). Also in Hamburg (minus 45 percent) and Frankfurt am Main (minus 35 percent) the office markets collapse above average.
Rents still high
The lull in demand has not yet affected rents. It is still too early for this, the commercial leases were negotiated and agreed in many cases before the start of the corona crisis: “Most of the ongoing leasing processes continue, but hardly any new processes are currently being started,” wrote the broker Savills. However, since many companies are struggling with losses due to the pandemic, “falling effective rents can be expected,” write the market analysts.
In addition, because of the travel restrictions, international investors are hardly in Berlin and the others for the time being German metropolises will sign new leases. According to Colliers' brokers, the “share of international investors” fell significantly in the first quarter. Many are “engaged in crisis management in their home markets,” says the international broker.