Frankfurt/Main, 6 January 2017 – According to Colliers International, roughly 552,000 sqm was taken up in Frankfurt’s office market, including Eschborn and Offenbach Kaiserlei, in 2016, reflecting a significant yoy increase of roughly 42%. In a ten-year comparison, this positive result can only be topped by 2007’s all-time high.
Matthias Stanke, Managing Director at Colliers International Frankfurt, says, “Take-up was considerably higher than in the previous year. The result exceeds both the 5-year average (430,100 sqm) and 10-year average (462,200 sqm).
The largest-scale single lease was signed by Deutsche Bahn for around 40,000 sqm in the Grand Central project located on Hafenstraße. Other major leases in the segment of 10,000 sqm and more also had an impact on the market in 2016 and contributed to excellent overall results, e.g. ECB at Japan Tower and Commerzbank on Theodor-Heuss-Allee. A total of four leases were signed for more than 10,000 sqm in 2016, with only one lease signed in this segment in 2015.”
CBD in high demand
The CBD continued to generate high demand from tenants. With take-up of around 230,000 sqm, the Bankenviertel, Westend and City submarkets accounted for a 41% share in total take-up. However, peripheral submarkets such as Eschborn and Niederrad also experienced a favorable trend.
Banks followed by consulting firms were the two most active tenant groups in Frankfurt in 2016. “However, we also saw high demand from other industries. Companies from the tourism and transportation industry took up roughly 65,000 sqm in the past twelve months, while the IT industry accounted for around 62,400 sqm. These figures are an excellent indication of the popularity of Frankfurt beyond the banking and consulting sectors”, Matthias Stanke continues.
Slight drop in prime and average rent
Due to several larger-scale leases in the city-outskirt submarkets, prime rent fell by around 2.7% or €1 per sqm yoy to a current €37.50 per sqm. Average rent experienced a slight yoy decrease of around 1.6% to €18.70 per sqm, which can also be attributed to large-scale leases in the lower price segment.
Vacancy rate continues slight downward trend
The drop in vacancy that has been ongoing for years continued in 2016. The vacancy rate at year-end was 11.2%, reflecting the lowest level since 2002. Compared to 2015, the amount of available space dropped by around 69,400 sqm or 60 basis points. According to Matthias Stanke, “The trend toward converting and revitalising outdated office properties continues to result in vacancy absorption. This particularly applies to peripheral submarkets such as Niederrad and Eschborn.”
Around 70% of the 130,000 sqm of office space completed in 2016 has already been taken up by tenants or owner-occupiers. Roughly 84% of the space that is scheduled for completion in 2017 has already been preleased as well. “Larger, speculative new developments in the premium segment will not become available until 2018 and 2019, with completion of the OMNITURM project at the Metzler site and the Marieninsel project,” says Matthias Stanke.
“The significant increase in take-up and continued drop in vacancy are indicators of favorable demand for office space in Frankfurt. In 2017, we expect companies looking to expand to sign a number of leases and leasing performance to match the 10-year average. The leasing market may also benefit from companies relocating as a result of Brexit,” Matthias Stanke concludes.