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Berlin: Office Letting | Investment Q1 2021

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Office Letting
 
Berlin posted 193,000 sqm of office take-up in Q1 2021. The result reflects just shy of a 60% increase compared to the weak previous-year result and exceeds the 10-year average by 23%. A number of large-scale leases signed for over 10,000 sqm and totalling at almost 80,000 sqm dominated market activity. The vacancy rate continued to rise slightly as expected, settling in at a still very low 2.0%, up 80 bps yoy. Although some companies are starting to offer space for sublet, subletting activity has yet to play a significant role on the market. We are seeing changes in Berlin office rents resulting from the effects of the Covid-19 pandemic for the first time. Prime rents were down less than 1% at the end of March 2020 to a current €39.70 per sqm. Average rents are currently posting €28.00 per sqm, up 3% compared to March 2020. Compared to year-end 2020, prime rents have fallen 3.5% with average rents down 2.5%. Despite the Covid19 pandemic, the Berlin market got off to a strong start moving into 2021 with substantial deals being signed. Based on current activity, 800,000 sqm in take-up is a realistic annual result for 2021.

 

Investment

The Berlin commercial real estate market experienced a quiet first quarter with a transaction volume of €1.1bn. The lack of large-volume deals as well as prolonged analyses before buying assets contributed to the calm market environment. Office properties were the most sought-after asset class, especially in secondary and city margins submarkets. Prime yields remained stable quarter-on-quarter. National investors dominated the market activity and dominated the buyside with 73%. International investors are expected to return to the market in the course of the year. The hope of a rapid vaccination progress and a swift normalisation meets a well-stocked deal pipeline, which will allow for a much more dynamic transaction activity in the upcoming months. Previous year‘s result of €8.5 bn will be met in any case, so that a year-end result of €9bn seems realistic.


Berlin

Berlin: Office Letting | Investment Q1 2021

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Susanne Kiese

Head of Market Intelligence & Foresight | Düsseldorf

Duesseldorf

Susanne joined Colliers International Holding GmbH in February 2016 as Head of Research Germany. Before, she worked as a Senior Research Analyst for Hypothekenbank Frankfurt / Eurohypo, a specialist bank for real estate and public finance for almost 12 years. Susanne was also Research Analyst with Deutsche Gesellschaft für Offene Immobilienfonds (DEGI) GmbH, the property related investment company of Allianz Dresdner Property Group (now part of Aberdeen). 

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