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| Munich leads German office market with mixed outlook for 2009 Savills Germany has released its Q4 research for 2008 covering the office markets of Germany's major cities: Berlin, Frankfurt, Hamburg and Munich. The new research shows that although 2008 was a strong year overall in all four cities, the German market, with the exception of Munich, is starting to see signs of a slow down in Q4 2008. Lydia Brissy, associate at Savills, comments: "Berlin and Hamburg are both expected to see a continued reduction in take-up in 2009 with Munich anticipated to have a marked downturn in take-up and a slight drop in prime rents. Otherwise predictions are especially hard to make given the uncertainty inherent in the current market." The highest level of take-up for 2008 was in Munich with 770,000 sq m, although the biggest year-on-year increase was in Hamburg which had 5.5% higher take-up than in 2007. Berlin experienced the biggest decrease in take-up with a reduction of 18% on the previous year. The Berlin market had 632,000 sq m of take-up with Hamburg and Frankfurt following on with 504,000 sq m and 501, 000 sq m respectively. Vacancy rates across the major German cities are fairly similar with the exception of Frankfurt which currently has a vacancy rate of 15%, approximately double the rates of the other cities. Berlin has a 7.7% vacancy rate, Hamburg 6.8%, and Munich 7.2%. The highest average rents continue to be achieved in Frankfurt at €18/sq m/month. Munich recorded average rents of €14.20/sqm/month, Hamburg received €13.40/sq m/month and Berlin had the lowest average with €12.02/sq m/month. Berlin's low average rents can be misleading however as it should be noted that this figure represents a 5.8% increase on 2007 and is up from only €10.20/sqm/month in 2006. Frankfurt also posted the highest prime rents of the four cities with €38.50/sq m/month representing a 5% increase on the previous year a situation which appears to now have peaked. Munich has the next highest prime rents at €31.00/sq m/month followed by Hamburg at €24.80/sq m/month and Berlin at €22.81. In Berlin, almost half of the more than 1, 200 signed contracts were for less than 250 sq m. Less than 2% of all transactions in the capital related to units of more than 3, 000 sq m. The Frankfurt office market was dominated by letting deals of more than 1, 000 sq m. In the last quarter, however, such transactions became rare. In Hamburg, demand for smaller units prevailed in 2008 with over two thirds of all lettings relating to office space of less than 1,000 sq m. In Q4, Hamburg only had one letting transaction exceeding 10,000 sq m. For Munich, although only around 3% of all leasing deals were in excess of 5,000 sq m, more than 30% of the total absorption rate was achieved through these transactions. write your comments about the article :: © 2009 Construction News :: home page |