A shortage of prime central office space has pushed the average prime rent across Germany’s top six markets to €27.70 per m2, the highest level since 2001, according to a new report by Savills.

A shortage of prime central office space has pushed the average prime rent across Germany’s top six markets to €27.70 per m2, the highest level since 2001, according to a new report by Savills.

Excluding Hamburg, all the other markets (Berlin, Cologne, Düsseldorf, Frankfurt, and Munich) recorded rising prime rents over the past 12 months, in most cases of over 5%.

The high average prime rental level was reached despite a decrease in take-up across Germany’s six major office markets, which totaled 2.78 million m2 in 2013, 10% less than in 2012. This resilience in rents is partly a result of a continued below-average completion volume in 2013.

In total 860,000 m2 of office space was delivered throughout these six markets in 2013 and, whilst this marks a notable increase on 2012 (at circa 670,000 m2), it still comes below the five-year average figure of 1 million m2.

'Many potential occupiers are competing on the few available prime developments, which is placing upward pressure on the achievable rents for these properties,' said Marcus Mornhart, managing director and head of office agency at Savills Germany.

He added: 'The real message of 2013, however, is that the German office market took another step towards becoming a landlords’ market. In spite of a decrease in take-up the vacancy rate reduced by one percentage point to 8.0% on average across the top six markets and, particularly in central locations, tenants are facing an acute shortage of space. This has resulted in occupiers favouring decisions to renew existing leases.'

Average rents also rose, according to Savills data, particularly towards the end of the year and exceeded 2012 levels by 2.2% but overall the rental rise recorded in the prime sector did not extend to the wider market.