FRANKFURT-The city’s office market, one of the most important in the country, is stagnant at about 14% vacant, with professional employment only expected to grow a little more than 1,000 jobs per year for the next five years, according to a recent study by locally-based Helaba Landesbank Hessen-Thueringen. However, this state is preferable to the alternative, the researchers state, because financing for sales is almost non-existent, and there’s another two million square feet-plus planned for the market.

With a market of about 12 million square feet, the city is not considered more than medium-sized. However, the south Hesse region, with Frankfurt, produces nearly a quarter of the economic output in the state. Frankfurt ranks fourth, behind Hamburg, Berlin and Munich (all much larger cities) in the terms of GDP share in the country.

The city wasn’t hit too hard by the recession, the study says, and thus didn’t have much of an unemployment problem. However, in the coming few years, weak demand and office completions will compete against the desired loosening of debt and rental rate increases, according to the researchers.

“Against the backdrop of a securitization and syndication market still unable to function properly, as well as higher equity capital requirements and increasing refinancing volumes, together with the withdrawal of foreign real estate financiers from the German market and only a limited number of German banks capable and willing to take on a limited part in a financing themselves, there are still risks for the future supply of lending in commercial real estate financing in Germany,” said Johann Berger, vice chairman of Helaba’s board of managing directors and responsible for real estate, in a statement.

He said current German market participants concentrate almost exclusively on first-class properties in prime sites. “The run on core real estate has led once again to declines in initial yields,” Berger said. He also chastised national investors about pulling away from the global markets. “Domestic market players, who in reaction to the crisis concentrate exclusive on the German market, could be missing out on better chances outside our national borders,” Berger said.