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Frankfurt's office space markets starts second half year with solid lease performance

Letting volume of 177,000m² in first half – Vacancy rate continues to fall – Prime rent stable

The office space market in Frankfurt is stable in summer 2015. Around 177,000 m² office space was newly let during the first six months (including owner occupiers), of which 89,000 m² can be attributed to the second quarter. In total, this represents a take-up figure around 15% above that of the previous year. An analysis of recent years, however, shows that lease activity is still below average, with both the five and ten-year averages indicating a lease volume of around 208,000 m² over the first half year. The current result lies around 15% below this figure.

Compared to the previous quarter, which was shaped largely by the 32,000 m² owner-occupier transaction by Deutsche Vermögensberatung (DVAG), the solid second quarter was founded on a wide spectrum of new lettings. Although the past three months did not see any leases signed for spaces in excess of 10,000 m², agreements for between 5,000 m² and 10,000 m² were concluded successfully for the first time this year. This included a 5,700 m² leasing by Management Circle and 5,000 m²
by Frankfurt's Treasury and Tax Office “The office space market in Frankfurt is currently stable and diverse,” said Marco Mallucci, head of the Office Agency department at Cushman & Wakefield in Frankfurt. “Letting activity has picked up significantly in the segment between 1,000 m² and 3,000 m² in particular. Compared to the previous quarter, we saw an increase take-up of 47% in this segment. To date, a total of 21 leases have been concluded for spaces of this size. This not only represents an above-average market contribution of 20%, but also serves as an indicator for the increased looking forward to the second half of the years with confidence.”

The vacancy rate in the Frankfurt market area has fallen once again. There is currently 1.30 million m² of space available for immediate occupancy. Based on a total office space stock of 12.16 million m², this corresponds to a vacancy rate of 10.7% (Q2 2015: 11.7%).

The volume of completed new developments for the first half of 2015 amounted to 57,800 m², including the 24,000 m² St Martin Tower. There is currently around 155,800 m² of space under construction, of which around 67,000 m² is expected to be completed during the course of the current year.

Prime rents remain at EUR 37 per m²/month and are expected to stay at this level over the remaining course of the year.

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