Office sub-letting rises in Frankfurt as crisis starts to hit

The rental market in Germany´s financial hub Frankfurt is starting to show the first signs of fallout from the economic crisis, according to property consultant NAI apollo.

In a new analysis on the office rental market in the city, NAI apollo said hedge funds, private equity companies and foreign banks in particular, have reduced or will still reduce the number of staff in Frankfurt. Other sectors could also become increasingly affected the longer the economic crisis continues, the report warned.

As a result, the companies concerned are trying to sublet office premises, which usually still have residual terms of three to four years, as quickly as possible. As a result, pressure on rents has increased in recent weeks. It is not uncommon to see two different rents for the same building; that of the sub-lessor and that of the landlord, the adviser said.

According to Andreas Krone, CEO NAI apollo: 'During the last few months we have experienced cases where the price difference can amount to an average of 30% even for new buildings.' In total 15% of vacant properties in Frankfurt are currently being marketed as sub-let properties, according to the analysis.

'However, the largest obstacle to rentals of sub-let property continues to be the modification and renovations costs, which the sub-lessor must take into account for the sub-tenant', according to Krone.