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Hamburg's office market achieves above-average lease results in 2014

Turnover volume of 502,000 m² in 2014 | Vacancy rate continues to fall | Top lease price stable

The office market in Hamburg recorded good results for the past year. The total turnover volume for office space was 502,000 m² in 2014 (including owner-occupiers), representing a solid increase of 16% over the previous year's figure of 434,000 m². From a long-term perspective, the results are 11% above the five-year average of 454,000 m² and 7% above then ten-year average of 468,600 m². Around 120,000 m² is attributable to the final quarter.

According to international commercial real estate consultancy Cushman & Wakefield (C&W), the good results over the past year can be traced back to large-scale projects by owner-occupiers and advance lease agreements. The largest deal in 2014 was the advance leasing of 32,000 m² office space to Telekom in the City North submarket. The largest agreement concluded in the fourth quarter (for 14,000 m²) was likewise in the City North submarket. In total, agreements for spaces in excess of 10,000 m² generated around 122,000 m², corresponding to a share of around 24% of the turnover volume.

On the basis of two deals in excess of 10,000 m², the City North submarket accounted for around 10% of the total turnover, moving it up to third place in the submarket rankings. It now lies directly beneath the core City South area, which holds a share of 13%. The top position is held by the City submarket with a share of 21%. The HafenCity, which was almost neck-and-neck with the City submarket during the first half of the year due to projects by owner-occupiers, subsided again in the second half of the year.

As of the end of 2014, the total office space available in Hamburg's office market is 14.4 million m², with around 1.1 million m² available at short notice. The vacancy rate continued to fall during the course of 2014: from a figure of 7.9% at the end of 2013, the vacancy rate stood at 7.4% at the end of 2014.

Almost 124,000 m² office space was completed during 2014, representing a significant fall of 30% compared to the completion figures for 2013. With around 303,000 m² under construction, the current activity is above average for Hamburg. A completion volume of around 150,000 m² office space is expected for 2015. Around 35% of this can be attributed to projects by owner-occupiers, such as the new Marquard & Bahls building or the extension of Heinemann, both in the HafenCity. Around 37% of the new office space under construction in 2015 that will be available on the free market has been leased in advance.
Considering the above, the availability of new and high-quality space remains limited. Although this places lease prices in the submarkets under slight pressure, they are currently maintaining the level from the previous quarter. The top lease price, which was recorded in the City submarket, remains at EUR 24.00 per m²/month at the end of the year.

The above-average results for 2014 were boosted by large-scale advance lease agreements and projects by owner-occupiers. “It will be difficult for 2015 to match these figures,” said Till Haubrich from the Hamburg Office Leasing team at C&W. “However, the signs are encouraging. Based on the solid economic strengths of Hamburg as a city, we expect a lease result at the level of the ten-year average.”