Turnover volume of 254,000 m² - Vacancy rate falls slightly - Top lease price stable - Market upturn expected for year end
To the end of September 2014, Frankfurt's office space market (incl. Eschborn and Offenbach-Kaiserlei) saw around 254,000 m² of new leases, of which 100,000 m² was recorded in the third quarter. This places the lease volume almost 19% below the previous year's result (313,000 m²) and a good 15% beneath the ten-year average (300,800 m²).
Although no contracts for areas larger than 5,000 m² were recorded in the second quarter, the third quarter saw the saw the completion of the Deutsche Bundesbank at 15,400 m² and the lease agreement for the Kreditanstalt für Wiederaufbau (KfW) at 7,300 m².
According to international real estate services organisation Cushman & Wakefield (C&W), the segment for spaces between 1,000 m² and 3,000 m² was once again a market mainstay. As in the previous quarter, fifteen contracts were concluded with a total area of 24,000 m². The market share following the first three quarters now lies at 24% (60,300 m²). The important segment for spaces below 1,000 m² has experienced a significant increase in market activity. Contracts in this segment contributed a good 50,000 m² to the turnover volume in the third quarter. The market share after three quarters is 46 % (117,000 m²).
“A number of large lease applications are also underway in the market,” said Dennis Stern, Head of the Office Space Leasing department at Cushman & Wakefield in Frankfurt. “It is highly probable that we will see a number of new lease agreements by the end of the year. The market should therefore pick up in the fourth quarter.”
The vacancy rate fell again slightly in the late summer months. At the end of September, a total of around 1.41 million m² office space was available on the market at short notice. With the total space available amounting to 12.12 million m², this corresponds to a vacancy rate of 11.6 % (Q2: 11.7%).
Investors and developers have once again actively engaged with the issue of structural vacancy. In the third quarter, around 110,000 m² office space was removed from the market, with 105,000 m² of this being repurposed for hotel or residential use. The decrease in office space in 2014 to date amounts to 275,000 m².
By the end of September 2014, 173,100 m² of office space had been completed (Q3 7,500 m²). A total of 295,100 m² is currently under construction (including the new ECB buildings), of which 130,800 m² is expected to be completed by the end of 2014.
The top-level lease price for September 2014 remains stable at EUR 37 per m²/month. A further lateral movement in the peak lease is expected for the fourth quarter.