Take-up in Hamburg's office letting market remained strong in the first quarter of 2019 thanks to a booming labour market and strong economy, according to Colliers International.
In the first three months a total of 137,400 m2 of offices were let, a 35% increase on the same period in the previous year. Colliers said it expected the year-end figure for 2019 to be around 550,000 m2, only slightly below the five-year average of 559,700 m2.
Project developments accounted for a growing share of new lets, including three of the four largest lettings in the city. 'We are seeing a trend driven by the "war for talent" in which location and modern workplace concepts are becoming increasingly important for companies,' said Gordon Beracz, head of office letting Hamburg at Colliers.
'Furthermore, project developments are increasingly being considered when choosing a location. This is also due to the fact that large contiguous office space – particularly in the CBD – is scarce.'
Information and telecoms companies accounted for 24% of the market, renting a total of 32,300 m2, with manufacturing companies taking the second largest share of 18% or 24,100 m2 in total. No office space was let to business centres or coworking providers in Q1, but further leases are expected later in the year.
The project volume for 2019 is around 121,000 m2, with a further 193,000 m2 of projects in the pipeline for 2020. The pre-letting quota for pipeline developments has increased to 78% in 2019 and 57% in 2020.
Beracz also warned that the vacancy rate was on course to reach a 'critical' level of below 3.0% by the end of the year if current trends continue. Vacancies have been falling steadily since 2011 and accelerated in 2018, when the overall rate fell by 90 basis points to 3.4%. 'As a result, the characteristics of a letters' market are becoming ever more pronounced, requiring swift action and decision-making by prospective tenants,' he said.
In the city's submarkets, HafenCity outperformed the city centre, taking a market share of 36%. This was due in large part to XING occupying the 21,600 m2 Unilever building in HafenCity. Unilever is relocating to the inner-city project development Neue Burg 1, which has an area of around 6,500 m2.
The growth of project developments helped push prime rents up by around 8% to €28 per m2 year-on-year, while average rents rose by 4% to €16 per m2. 'Even in refurbished properties or existing real estate, significant rent rises can be seen,' said Beracz.
