Demand for flexible workspace continues to grow across Germany, up 47% year-on-year, following an ongoing shift to agile working practices, according to global workspace innovation firm The Instant Group’s newly released German flexible market review.
The rapid increase in demand in the flexible office market is being driven by Hanover, Hamburg, Dusseldorf, Stuttgart and Leipzig. Leipzig, located an hour by train from Berlin, is emerging as a new business hotspot as it sees a 196% year-on-year increase in demand for flex space.
Across Germany there has been an 11% increase in flex supply, with supply in Germany’s secondary cities failing to keep pace with the rapid increase in demand. The imbalance between supply and demand, coupled with inflationary pressures and spiralling energy costs, is pushing up prices in cities across the country.
Stuttgart has seen cost per ft2 of office space jump 13% on the year to €101, while Frankfurt and Leipzig have both seen 9% increases to €90 and €74 respectively.
Demand in these cities is expected to continue as companies compete for graduate talent and look to rationalise office footprints in the face of recessionary pressures, with rates forecast to grow by up to 10% in 2023.
To date the markets of Stuttgart, Frankfurt and Leipzig have struggled to keep pace with diversification in the office sector and increased demand for flexible workspace. Without substantial inward investment to support growth and boost flexible workspace provision, rates are set to continue rising.
Marco Gross, director, client solutions, EMEA, The Instant Group, said: 'Companies have been monitoring working patterns post-pandemic to understand how the return to work will affect their office requirements.
'These assessments of working patterns, coupled with increasing inflationary pressures and the prospect of a recession, is resulting in an increased adoption of flexible workspace by large corporates to ensure office portfolios are agile and to help mitigate risk.
'A lack of supply in Germany’s secondary cities is driving up rates for flexible workspace and without investment in new quality flexible workspace, these rate rises will continue into 2023 and beyond.
'In the current environment, operators need to emphasise the added value workspaces provide to occupiers, emphasising sustainability credentials and social spaces. There is also a clear opportunity here for landlords who are yet to incorporate an element of flex into their portfolios given the pressure on supply.'
