Hamburg, Berlin, July 17, 2024 -. As part of an online press conference on the office real estate market, speakers Tobias Dichtl, Co-Head of Market Intelligence & Foresight at Colliers, Felix Meyen, Managing Director of HIH Invest, and Jens Hogekamp, Managing Director of Becken Development GmbH, gave an outlook on further developments in the second half of 2024 and looked back on the first half of the year. In the first half of 2024, there were almost no major transactions on the investment market for office properties. According to Colliers, the total transaction volume in the first half of 2024 amounted to around EUR 2.2 billion. Yields are increasingly showing signs of stabilizing. The average gross yield for offices in the top 7 locations amounted to 4.9% in the first half of the year; in the second half of the year, Colliers expects only a slight increase in gross yields in the top 7 to around 5.0%. Tobias Dichtl, Co-Head of Market Intelligence & Foresight at Colliers, comments: "We are seeing a calming of the financing environment, brought about by the turnaround in interest rates and the associated stabilization of the interest rate landscape. We are thus entering a 'new normality'. Investors are gradually becoming more active, which is why we expect a slight upturn in the transaction market in the second half of 2024."

Felix Meyen, Managing Director of HIH Invest, adds to his market assessment: "We are observing capital inflows that are primarily focused on the core segment, with good ESG factors and in central locations." Jens Hogekamp, Managing Director of Becken Development GmbH, takes a similar view: "ESG-compliant, modern office space has a market. In addition to top CBD locations, sustainable and contemporary space is also in demand in established inner-city locations such as the industrial district of Obersendling in Munich." Becken recently completed the Fabrik-Office here. The office property is 70 percent let and is expected to be fully let by the end of the year.

The upward trend in prime rents in the top 7 remains unbroken and will continue in the second half of the year, according to Colliers. In the second quarter of 2024, an average increase of 4.6% was recorded in the top 7 compared to the previous year. Dichtl comments: "In particular, the ongoing market polarization in terms of building quality and location continues to drive up rents in the prime segment, while average rents are more heterogeneous." Meyen confirms this view: "In central locations, we are currently letting offices better than we predicted in our business plans two years ago. But offices in peripheral locations are coming under pressure and vacancy rates will rise there."

Working from home has a significant impact on the demand for office space. According to Colliers, around 12% less office space will be required in the medium to long term. The completion pipeline for new construction projects in the top 7 is still well filled. However, the volume will decrease from 2025 due to the decline in demand and is expected to be below the 10-year average in 2026. As a result, the previously rising vacancy rate will stagnate and, according to Collier's forecasts, level off at around 8% from 2026. Meyen comments: "It is a fact that larger users are currently reducing their space, but overall the office asset class is currently being excessively penalized, which also offers opportunities to enter the market. I expect a moderate development for office real estate overall, but definitely not a crisis."

The changing demand for office space also has an impact on the fit-out criteria. Hogekamp comments on this aspect: "A sustainable property and a flexible floor plan are basic requirements for letting in order to convince potential users. In addition, factors such as good, varied architecture, roof terraces or outdoor areas and spatial flexibility through different ceiling heights and increased load-bearing capacity, for example, are increasingly in demand in order to accommodate other uses such as laboratories. High-quality fit-out features are crucial for the letting process." According to Hogekamp, in addition to community areas and a barista bar for all tenants, this also includes a bicycle elevator to the in-house bicycle cellar with changing rooms and showers as well as e-charging stations for cars and e-bikes in the Munich Fabrik project.