German Cities Suffer as Take-up Plunges

LONDON-Total office take-up in the nine main German office centres of Berlin, Dsseldorf, Essen, Frankfurt, Hamburg, Cologne, Leipzig, Munich and Stuttgart reached 12.5 million sf in the first half of 2002, down by a third on the 18.7 million achieved in the same period of 2001.

But Mller managing director Peter Rösler said: “Following the exceptional rises in the boom year of 2000 and the good results of last year, this strong decline was only to be expected.”

The Munich office market–previously one of the tightest in Europe–was the hardest hit, with a 60% drop in take-up, reflecting its dependence on the IT and electronics sectors. And Germany’s financial capital Frankfurt saw a 41% fall.

However smaller markets with a broad business base fared better: Cologne bucked the trend with a 50% surge in take-up to over one million sf and the capital Berlin saw a slight increase with 2 million sf taken up in the six months.

In line with the declining take-up, there has been a surge in total vacancies space with just under 50 million sf available in the major cities, up 43% in a year. Accordingly, top rents eased in the first half of this year.

But Rösler remains optimistic. “Against this background, we expect the space turnover for 2002 as a whole to be between 25 and 30 percent down on last year’s figure”, forecasts Rösler. “With demand recovering slowly and the supply side reacting by halting the realisation of a large number of projects for the time being, we do not anticipate any crisis in the office property markets of the kind experienced in the mid-90s,” he said. “In the medium term, the markets will normalise, with somewhat higher vacancy rates than in the recent past and slightly lower take-up than in the boom years. By international standards, though, the German office markets are still extremely stable and healthy.”