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Above-average first quarter for Berlin's office space market

New lease volumes of 152,000 m²  |  Vacancy rate falls  |  Top lease price increases to EUR 22.50 per m²/month

Following a strong closing quarter in 2014, Berlin's office space market started the new year with above-average lease results. Although turnover was 5% lower than the same period in the previous year at 152,000 m² of newly leased space (first quarter 2014: 160,000 m²), it was the second strongest start to the year on record. At +12.3 % and +38.4 % respectively, the leasing volume was significantly above the five and ten-year averages.

Berlin's office space market continues to see demand from companies from all sectors. Germany's "IT and start-up Mecca" once again saw a large-scale lease taken out by an Internet company when the Rocket Internet Group leased around 22,000 m² in Berlin-Kreuzberg.

Gerald Dietzold, head of the Berlin Office Leasing department of Cushman & Wakefield (C&W) confirmed the contribution of IT companies and various start-ups to the long-term stability of the office market: “Whereas the lease agreements taken out by these companies were for shorter terms in the past, we are now commonly seeing three to five year terms for office space agreements.”

As a result of the high demand in Berlin's premium locations and following the trend apparent over the past year, the top lease price increased by 0.50 euros to 22.50 euros per m²/month.

According to further analyses conducted by real estate consultants Cushman & Wakefield, the office vacancy rate is continuing to fall in the German capital. From a total stock of 17.8 million m² office space, around 1.06 million m² is currently available on a short-term basis. This corresponds to a vacancy rate of 6.0% (first quarter 2014: 6.4%), which gives Berlin the lowest vacancy rate among the top 5 German cities.

The existing space in the market area was joined by a further 42,900 m² new office space in the first quarter. The space currently under construction confirms the increase in building activity: around 361,300 m² will be completed over the coming years, of which 186,000 m² is planned for completion this year. The majority of this space has already been leased in advance.

“We expect further large-scale agreements to be concluded across all sectors by late summer,” said Dietzold.

Based on the dynamism in the Berlin market and the good general economic conditions, further stable development above the long-term average is also expected for 2015.