Above-average turnover of 349,000 m² | Vacancy rate continues to fall | Top lease price stable
With a lease volume of 349,000 m², the office space market in Munich has experienced a strong first half of the year. This figure represents a 10% increase on the previous year's result (first half year 2013: 318,000 m²) and is significantly above the ten-year average of 276,000 m². Following a spirited start to the year with 163,000 m² of newly leased space, the market continued its upward trend and recorded a turnover of 186,000 m² in the second quarter. Around 8,300 m² of this is attributable to owner-occupiers.
In 2014, the office space market in Munich remains stable and is exhibiting its traditional breadth. Leases in all size categories have contributed to the good half-year results, including large-scale leases for areas in excess of 10,000 m². According to international real estate consultants Cushman & Wakefield (C&W), the second quarter has seen a marked increase in the market activity for contracts with a lease area of between 1,000 m² and 3,000 m² in particular. The number of contracts in this segment has risen considerably. Over the full half-year, they contributed around 105,000 m² to the overall lease figures, representing a market share of 30%.
The supply of available space fell slightly again in the second quarter, with the vacancy rate standing at 6.7 % at the end of June. From a total stock of 20.2 million m² office space, around 1.36 million m² is currently available for leasing on a short-term basis. The vacancy rate has therefore fallen by 85,000 m² since summer 2013. “We are registering a shortage in supply in Munich city centre in particular, especially in the segment for spaces in excess of 1.000 m²,” explained Hubert Keyl, Head of Office Space Leasing at Cushman & Wakefield in Munich.
Around 110,000 m² new office space was completed in the first half of 2014, including 88north in the second quarter, which provides an area of around 40,000 m². Around 355.000 m² is currently under construction. A completion volume of around 90,000 m² is forecast for the second half year, with over 85% leased in advance as of summer 2014.
The top lease price recorded in the Munich market remains at EUR 32.50 per m²/month, but was already subject to upward pressure in June, making a further increase likely in the second half of the year. “We have not discerned an upward trend in lease prices in all locations,” says Hubert Keyl. “We are, however, seeing a reduction in the size of incentive packages in attractive locations. In the city centre in particular, lessors have almost entirely ceased offering incentives.”
The office lease market in Munich is set to remain on course in the second half of the year. An overall result in excess of the 600,000 m² recorded for the previous year of 2013 is expected.