Drivers Jonas sees 'grey' office market emerging in Frankfurt

The vacancy rate in the Frankfurt market rose to 17.4% by the end of 2009 and is likely to increase further as a result of the consolidation currently being witnessed in the finance and bank sector in the wake of the global financial crisis. That is one of the key conclusions of the seventh annual Frankfurt Crane Survey published by Drivers Jonas.

The property broker's German office said office turnover fell to just 40,000 m² compared to the previous year. This marks the second year of falling demand for office accommodation after four consecutive years of rising take-up. In addition, an additional 210,000 m² of new office space was brought to the market last year amid decreasing demand.

Henry Robinson, head of Drivers Jonas Germany, commented: 'We anticipate the emergence of a ‘grey’ market, similar to that after the burst of the dot.com bubble. This will be due to financial sector tenants with office space to sublet competing with owners of office space to rent. Hence we do not anticipate at any time soon upwards pressure on prime office rents.'

With occupational property markets usually lagging behind the wider economy by 18-24 months and the banks - which form the backbone of the Frankfurt market - having been ravaged it is likely that the situation will remain gloomy for at least the coming 12 months, and probably longer.