The office market in Berlin ended the first half of 2015 with its second strongest result in the past decade, with around 327,000 m² of office space leased over the last six months. Of this, around 175,000 m² or 54% can be attributed to the second quarter alone, fulfilling and building on the promise of the record-breaking first quarter (152,000 m²).
A comparison of the take up over the past six months with the average of recent years highlights the potential in the Berlin office space market which has been realised: at +14 % and +32 % above both the five and ten-year averages respectively. As various large-scale lettings are already in the pipeline for the second half of the year, a full-year result exceeding that of last year (651,000 m²) is highly likely.
Over the past six months, four large-scale agreements in excess of 10,000 m² were concluded in Berlin's office space market, in addition to numerous small and medium-sized transactions, with the share held by lettings of office spaces below 5,000 m² dominating market activity (75%).
According to analyses from Cushman & Wakefield (C&W), the Internet- related sectors have developed into a significant supporting pillar of the office lease market, thanks in large part to the large number of start-ups in this area. “The scene is maturing,” confirmed Gerald Dietzold, head of the Berlin Office Letting department at C&W: “In addition to the usual lease conditions for the office market, companies are now choosing more central locations and are willing to pay higher rents.”
The arrival of summer saw prime rents, recorded in Berlin's premium locations of Potsdamer/Leipziger Platz and Mitte 1A, remain at the level of EUR 22.50 per m²/month. According to further analyses by real estate consultants Cushman & Wakefield, the rent ranges in the remaining submarkets also remained unchanged from quarter to quarter.
The vacancy rate for office space in the German capital continued the trend of the past twelve months by falling yet again in the second quarter.
From a total stock of 17.8 million m² of office space, around 1.03 million m² is currently available for immediate entry. This corresponds to a vacancy rate of 5.8% and a fall of 9.9% in the registered vacancy volume. This figure gives Berlin the lowest vacancy rate among the top German cities.
Building activity in Berlin has picked up compared to twelve months ago. Compared to the figure of around 305,000 m² under construction in summer 2014, the current level of 380,000m² represents an increase of almost a quarter. By the end of June 2015, around 59,500 m² new office space had been completed, of which the majority (72%) had been let in advance.
“All things considered, there is a good chance that market activity in the Berlin area will continue to soar,” said Dietzold on the prospects for the remainder of the year. “The demand is certainly there.”