BREMEN PROPERTY MARKET REPORT

Transcription

1 2014 BREMEN PROPERTY MARKET REPORT OFFICE LOGISTICS RETAIL RESIDENTIAL INVESTMENT

2 Foreword The Bremen property market is still in excellent shape, dynamic yet remarkably stable. Ample evidence of that is provided once again by the facts and figures collated for you by experts and published here in our 2014 Property Market Report. In a nutshell, Bremen has successfully asserted its position among leading cities of similar size. Although the market for office space is showing a slight decline in take-up, there is a significant increase in third-party rentals with growing interest in properties located in office centres such as Airport City and Überseestadt. Supply side availability is increasing further, with vacancy rates still remaining low. Photo: Björn Behrens The situation is also good in the field of logistics properties a lively market with low vacancy rates and attractive rents. Bremen Freight Village (GVZ) has been able to bolster its national and international importance; the available stock of indoor logistics space has now exceeded the record mark of 1.3 million mc. There is enormous movement in the investment area. The current forecast of around 384 million Euro in 2014 means that the prior-year figure will be significantly exceeded. The mood in Bremen s city centre is positive and upbeat; with new brands outlets and providers, as well as forward-looking projects such as the plaza in front of the main station and in the Ansgaritor district, the city centre is enhancing its attractiveness. You can read more about these topics on the following pages if there is anything else you wish to know, just get in touch with us. The city of Bremen wishes you a warm welcome to this interesting property location! Andreas Heyer CEO WFB Wirtschaftsförderung Bremen GmbH (Bremeninvest)

3 Contents Stadthaus Bahnhofstraße New office and commercial building of KPS Grundstücks GmbH & Co. KG in Bremen s city centre The office market in Take-up Construction Price levels 6 11 The logistics market in Take-up Industrial estates Price levels Bremen as a centre for retail trade in Structure Locations Price levels The residential market in Population trends Price levels Forecasts Investment Market Report 1 Transactions ROIs Price levels Sources: B bulwiengesa AG; C LSA Logistik Service Agentur GmbH

4 The office market in 2014 Take-up Construction Price levels Principal Customs Office Project development in Überseestadt by STRABAG Real Estate GmbH The 3.4 % vacancy rate is well below the average for B-category cities

5 The office market 9 Stable but changing demand side Büroimmobilien Veterinary Clinic Albright Deutschland GmbH DFKI New building for Kleintierklinik Bremen GmbH in Oberneuland Office Park WQ1 Project development by H. Siedentopf (GmbH & Co. KG) in Überseestadt New head office of Albright Deutschland GmbH in Überseestadt New building of the German Research Centre for Artificial Intelligence in the Bremen Technology Park More third-party rentals fewer owner-occupiers The Bremen market for office space* is very dynamic and cyclical in nature. Take-up in peak years, like , could exceed 100,000 mc. The figure for 2013 was still high, at 94,500 mc. That success is due in large measure to companies that have launched major new construction projects, one example in 2013 being the Bremer Landesbank. Such owner-occupiers have played a key role in ranking Bremen well ahead of comparable second-tier cities for the past ten years, with an average take-up of 94,000 mc per annum. That lead has been shortened somewhat, however. By mid-july 2014, 39,500 mc in take-up had been achieved, compared to 66,000 mc in the same period in the year before. The reason for that decrease is the small percentage of owner-occupiers. In contrast, however, the number of new tenancies has risen. At just under 38,000 mc in the first half-year, the level set in 2013 has already been exceeded. 69,000 mc by the end of the year is a realistic estimate. Demand tends to be traditionally stronger for somewhat smaller properties up to 500 mc in area, or 500 1,000 mc. Another trend has manifested itself the first half of 2014: the biggest share of take-up, at around 60 % or 23,500 mc, was achieved in the 1,000 5,000 mc category. Although offices with more than 5,000 mc in area account for 13 % of take-up, there has only been one instance so far this year, so they are still the exception. Rented office space in Bremen, , in m² * * Forecast Total rented area in various large cities, 2014, in m² BREMEN LEIPZIG* ESSEN* HANNOVER* STUTTGART* * Average forecast for past five years 79,500 73, ,000 94,500 69,000 69,000 91, , , ,200 A total of 55,000 m² is under construction, around 90 % are already rented out Higher take-up in peripheral locations Due to the low demand for offices in the smaller categories up to 1,000 mc, the market for office properties is currently shifting away from the city centre, where there are currently only a few large areas of modern office space available, towards more peripheral locations. Office centres such as Airport City and Überseestadt, in particular, have benefitted from this trend. In mid-2014, as much as 40% of take-up was generated in peripheral areas. Überseestadt alone accounted for another 27.8 %. The office space available there is attractive, and links to the city centre are perfect. * All figures in mc are mc total rented area Sectoral structure of rented office space in 2014, in m² ASSOCIATIONS, MUNICIPALITY, UNIVERSITY TRANSPORT, PRODUCTION, TRADE OTHER SECTORS SERVICE PROVIDERS TO INDUSTRY COMMUNICATION AND INFORMATION TECHNOLOGY INSURANCES, BANKS, FINANCIAL SERVICES 20,000 19,000 14,000 7,500 6,000 2,500

6 10 The office market The office market 11 Shifts between sectors One striking aspect of demand is the mix of industries involved, which tends to reflect the various cycles in the market for office space. Whereas banks and health services were obilienthe main industries seeking office space last year, the first half of 2014 was dominated by the public sector. If national associations like the ADAC or the ADFC are included in the latter group, the figure rises to more than 35 % compared to 8.3 % the year before. The second-biggest group, at 30 % pace in Bremen, of 2010 total 2014, take-up, in m² is the logistics and transport industry that is so important for Bremen. The remainder is evenly distributed among all the 79,500 other industries, but at much lower levels. 73,500 Construction activity on the rise again 2013 saw another strong increase in the volume of new 100,000 construction in Bremen. More than twice as much office space, in excess of 26,000 mc, was completed than in the 94,500 year before. Just under 9,000 mc in redeveloped properties also became available again. This trend is ongoing. In 2014, new construction and 69,000 redevelopment resulted in a total of 55,000 mc of modern office space being created and just under 90 % of that total is already rented. Lighthouse projects include reconstruction of the former Bremer Bank head a in various large office cities, 2014, and the in m² Weinkontor. New construction is mainly concentrated in the Überseestadt. The biggest projects to be completed in 2014 are 69,000 the new principal customs house, Luv and Lee on the Weserkaje, and the WQ1 complex. The volume of completed new buildings is expected to be high in 2015 as well, at 53,000 mc. A total of 36,000 mc are 107,000 currently planned or already under construction including Lofthaus 3 and the modernisation of the ADAC Weser-Ems 137,600 headquarters. 219,200 Vacancy rate remains low Bremen has the lowest vacancy rates among second-tier ast five years German cities. The average vacancy rate in B-category cities in 2013 was 6.2 %, whereas the figure for the Hanseatic city of Bremen traditionally ranges between 3 % and 5 %. ure of rented office space in 2014, in m² A project development strategy that entails delaying construction of new office 20,000 space until sufficient space has been NICIPALITY, UNIVERSITY rented in advance, is the main factor behind these low rates. UCTION, TRADE 91,300 19,000 14,000 In 2013 and 2014, around 11,000 mc in office space was placed on the market without tenancy agreements being signed up front. That excess space could not be completely absorbed due to decrease in demand in That has led to an absolute vacancy level of 119,500 mc in the city as a whole, which equates to a moderate increase of 0.1 % to 3.4 %. The situation varies among the various local districts. Airport City, for example, has seen a significant drop in vacancy rates. Tenants have been found for a substantial amount of office space, while no new office space has been added there since In Überseestadt it is different: construction work has resulted in 4,400 mc of new, still unrented property being placed on the market, bringing the total volume of vacant property to 5,100 mc. In contrast, the vacancy situation in the city centre and surrounding areas is mainly attributable to the lack of large, contiguous and modern office space. It can be assumed that the vacancy rate in the years ahead will remain stable on the whole, or that it will rise slightly. Despite that, it will remain at a low level in comparison with other cities in Germany. Development of construction activity, , in m² * * Forecast Of which no longer available Of which available (vacant) 59,000 23,700 13,850 35,926 54,621 Total Peak rents in Überseestadt The combination of high take-up and little new construction led to moderate increases in rents in all locations in 2013, above all in the prime segment. Trends in 2014 show a contrasting and varied picture. Peak rents fell by 0.35 Euro / mc to Euro / mc because take-up in the city centre was only slight. Average rents rose a little, in contrast, by 0.25 Euro / mc to 8.50 Euro / mc. Despite the low take-up, peak rents in the city centre periphery increased to a current level of 9.00 Euro / mc, with average rents remaining unchanged at 7.40 Euro / mc. Rents in Überseestadt show a more positive trend. Peak rents this year are level with those in the city centre, at around Euro /mc. Average rents are stable at a comparatively high level of Euro / mc. One main factor driving price increases is the demand for large modern properties, which can mainly be met at present by Überseestadt. In some cases, peak rents of up to Euro / mc may even be charged. Due to the high take-up in 2014, there have also been rent increases in the peripheral areas of the city, where peak rents increased by 0.50 Euro / mc to 8.00 Euro / mc, and average rents by 0.30 Euro / mc to 6.50 Euro / mc. Outlook for 2015 Stable demand is also anticipated for Take-up will depend strongly on new construction by owner-occupiers. It can also be assumed that Überseestadt will remain a popular location. However, a number of projects will also produce a stronger and renewed focus on the city centre, the city centre periphery and Airport City vacancy levels in the city of Bremen compared to other German cities, in m² LEIPZIG* BREMEN ESSEN* HANNOVER* STUTTGART* * Average forecast for past five years 547, , , , ,200 Distribution of vacant properties among Bremen s office locations, 2014, in m² ÜBERSEESTADT TECHNOLOGY PARK / UNIVERSITY AIRPORT CITY OUTSKIRTS PERIPHERIE CITY CENTRE Size structure of take-up, 2014, in m² UP TO 500 M² UP TO M² UP TO M² OVER M² (15,0%) (3,4%) (4,7%) (5,7%) (4,6%) 5,100 11,000 12,800 21,500 25,500 43,600 15,000 6,500 42,500 5,000 S TO INDUSTRY ND INFORMATION TECHNOLOGY S, FINANCIAL SERVICES 7,500 6,000 2,500

7 The logistics market in 2014 Take-up Industrial estates Price levels 1,468 ha of area for logistics operations

8 The logistics market in Brose Fahrzeugteile GmbH & Co. KG New building in the Hansalinie industrial estate for Brose Fahrzeugteile GmbH & Co. KG Mercedes-Benz Commercial Vehicles Centre New Commercial Vehicles head office for the Weser-Ems branch of Mercedes- Benz in the Hansalinie industrial estate More than 2.4 million m² of indoor logistics space Druck + Pack Service GmbH & Co. KG New company headquarters in the Bremen Industry Park Reiner Brach GmbH & Co. KG New RB Lab test laboratory of Reiner Brach GmbH & Co. KG in the Bremen Industry Park, with adjoining mechanical workshop Foto: WFB / Jens Lehmkühler Bremen amidst the global goods flow Around one quarter of national foreign trade is handled via the German seaports. The State of Bremen is a crucial hub in that regard as an international interface for landbased and maritime transport, as a maritime service centre and as an industrial centre in the heart of northern Europe. Infrastructural advantages engender a wide variety of value-creation possibilities, protect the value of enterprises and offer an excellent platform for industry, trade and services. The market for logistics properties in Bremen is accordingly lively. Colossal amounts of freight arrive at the terminals in Bremerhaven and are subsequently processed in Bremen s highly efficient logistics centres. In the city of Bremen, the logistics industry has a combined workforce in excess of 25,000, and includes more than 1,000 enterprises. To these are added more than 70,000 employees in logistics-related fields. Many global players operate from here. They include major logistics companies such as Metro / MGL, Fiege, Dachser, DHL, DB Cargo, TTS, Hellmann, Kühne + Nagel, Schenker, Röhlig and the BLG Logistics Group, all of which are based in Bremen. Major trading companies such as Metro, Bauhaus, AB-InBev, Kellogg and Tchibo operate logistics centres in Bremen. Major production companies such as Daimler, Airbus, Melitta, OHB, Saturn Petcare and Kaefer are also strong driving forces for Bremen s role as a centre for logistics. They are joined by universities, universities of applied sciences, research institutes, consultancies and seaport operations, all of which provide attractive potential for innovation. As a location, Bremen also provides enormous networking density. The five logistics centres (the GVZ freight village, Hansalinie and Bremer-Kreuz industrial estates, Überseestadt and Industriehäfen) form an excellent infrastructural network for companies in logistics-related fields. The industrial estates are interlinked via their own motorway access roads and lead directly to all the national and international transport networks. More than 2.4 million mc in indoor logistics space The occupancy figures mirror Bremen s substantial force as a centre for logistics. The city of Bremen currently offers an area of 1,468 hectares for logistics activities. The total amount of logistics properties has grown in 2014 to 2,477,250 mc. That equates to an increase of around 700,000 mc since the first complete survey in Bremen s excellent locational qualities are also strengthened by the fact that around a quarter of all logistics properties is no older than ten years. The current amount of property of interest for investors is just under 1.5 million mc which means it can offer logistics facilities each having at least 8,000 mc in space, a clear height of at least 6.5 m and which were built after Around 50%, or more than 2.4 million mc of all indoor logistics space in the metropolitan region of Northwest Germany can be found in the city of Bremen. Logistikimmobilien Indoor space compared to other German cities, 2014, in millions of m² HAMBURG REGION RUHR DISTRICT FRANKFURT-AM-MAIN REGION BERLIN REGION MUNICIPALITY OF BREMEN (INCL. GVZ) MUNICH REGION GVZ BREMEN (ALONE) DÜSSELDORF REGION

9 The logistics market in large storage volume. Rental prices have increased slightly on average to 3.14 Euro / mc (2013: 3.10 Euro / mc) in particular due to new areas being continuously added to the market. High-quality properties command rents of 4 Euro / mc and more per month (excluding heating and operating costs). Around 60 % of properties generate between 2 and 3 Euro / mc or less. Very moderate land prices are still the main reason for the relatively low rents found in Bremen. Averaging at 45 Euro / mc, they are about 50 % lower than the equivalent figures in Hamburg. Outlook for 2015 Constant construction activity in recent years forms the basis for further site development. In the GVZ freight village alone, around 38 ha are been made available for building, and another 77 ha are available for new inward investment or for expansion by existing companies. Vacancy rates are barely measureable and are stagnating at a low level. The revitalisation of existing properties, especially in areas close to the harbours, is producing interesting propositions for the export-oriented capital goods industry, especially. As a comparison, the entire region around Frankfurt am Main has approx. 3.4 million mc in total logistics space. This is all the more astonishing in that the figures obtained for the Bremen logistics market relate exclusively to logistics areas in the city of Bremen. There is a fundamental difference here from the calculations of competitor cities. Similar locations, such as Hamburg, Frankfurt, Berlin, Düsseldorf or Munich, also include their surrounding regions as part of their urban space. The figures for Bremen do not include the logistics properties on the sites of industrial and commercial companies such as AB-InBev, Daimler and ArcelorMittal, as long as these are used by the respective plant and are not available to the property market on account of their specialised functions in some cases. Such properties are only included in statistics when they are operated by logistics service providers as a result of outsourcing. Shares in take-up, user contracts and vacancy rates Latest figures show a take-up of 214,750 mc. New user contracts have been concluded for sixteen properties (2013: 23). Of that total, four have an area of 20,000 mc and more, and a further four provide between 10,000 and 20,000 mc. On the demand side, one striking aspect is that production processes are being increasingly transplanted to logistics properties. In addition to online commerce, the light industrial production segment has become an essential component of local market development in Bremen. Compared to last year, the vacancy rate has increased by 0.1 % to 1.57 % and thus remains at a very low level. A total of 39,000 mc (2013: 35,500 mc) are currently available. Rental prices increasing slightly Suitable properties are available in Bremen not only for high value-added processes, but also for products involving Bremen Freight Village (GVZ): Success story with enormous sustainability The Bremen Freight Village (GVZ), receiver of many awards and accolades, is a multimodal cluster located between Indoor space compared to other German cities, 2014, in millions of m² the airport and the seaport. The amount of indoor logistics space in the GVZ has exceeded the 1.3-million-mC-mark for the first time and 3.80 now amounts to 1,308,100 mc. With HAMBURG REGION its highly efficient link to the European overland transport network (rail and truck), 3.70the site offers ideal conditions for RUHR DISTRICT logistics-related companies. Logistikimmobilien Lear Corporation GmbH, Lorel GmbH FRANKFURT-AM-MAIN REGION New buildings for the automotive industry in the Hansalinie industrial estate BERLIN REGION MUNICIPALITY OF BREMEN (INCL. GVZ) MUNICH REGION GVZ BREMEN (ALONE) DÜSSELDORF REGION Photo: WFB / Studio B 3.40 Visible site development work for additional logistics space, or development of sites within the short term are clear evidence of future perspectives and planned growth. Local 2.90 logistics companies are the main drivers of this growth. Vacancy rates are close to zero. A number of smaller properties 2.48 are currently being marketed Hemelinger Hafen, Hansalinie and Bremer Kreuz: concentrated logistics 1.30 power Around 20% of all logistics properties in Bremen are operated in the Hemelinger 1.25 Hafen, Hansalinie and Bremer Kreuz industrial estates along the A1 motorway. The Hansalinie industrial estate is characterised by its proximity to the Bremer Kreuz (A 27) and Dreieck Stuhr (A 28) motorway intersections and can be well reached from the entire north European economic zone. The production logistics companies with a strong local presence and specialised in automotive logistics also profit from the direct link to the A 1 via the motorway intersection and from the proximity of the Mercedes-Benz plant in Bremen. These industrial estates are characterised by investments in new buildings, in existing properties and in the revitalisation of older facilities. Bremen is well equipped, therefore, for the competition between locations for national and international enterprises. Distribution of indoor space, 2014, in m² OTHER SITES (0 M²) ÜBERSEESTADT (5.000 M²) BREMER KREUZ (5.000 M²) HANSALINIE/HEMELINGER HAFEN (7.000 M²) INDUSTRIEHÄFEN ( M²) GVZ (0 M²) Rented area Vacant property Take-up in Bremen, 2013/ 2014, in m² TAKE-UP FROM NEW CONSTRUCTION / REVITALISATION TAKE-UP FROM CHANGE OF USERS TOTAL TAKE-UP , , , , ,000 1,308, , , , , , ,750

10 Bremen as a centre for retail trade in 2014 Stucture Locations Price levels Jack & Jones The biggest store so far in Sögestraße A retail centrality index of shows that Bremen has a high inflow of purchasing power

11 Bremen as a centre for retail trade in Tradition with a future Holtorf delicatessen and colonial goods store since 1874 The listed shop interior on Ostertorsteinweg ZARA View of the redesigned facade in Obernstraße Tamaris The new store in Obernstraße BoConcept Bremen Modern Danish furniture design in the street called Wegesende A magnet for the region Bremen can look back at a long and proud tradition as a commercial city. Many historical buildings provide visible evidence of that tradition. In the inner city, they create an atmosphere that turns modern shopping into a unique experience from the maritime Schlachte boulevard along the river, to the dignified Marktplatz and the romantic Schnoor district. Shopping in Bremen is popular not only among customers from the region, but also among tourists from all over Germany and from other countries. The city also has many modern shopping centres outside the centre, e. g. the Weserpark or the Waterfront. They enhance the product diversity on offer to customers and the attractiveness of the city for investors. Due to the structure of its retail sector and its position, the city of Bremen is the most popular retail centre for more than a million people in the Northwest of Germany. The city centre as trendsetter With more than 136,000 mc in retail space, the city centre bounded by the River Weser and Am Wall is the main shopping area in Bremen s retail landscape. It can be easily reached by commuters, tourists and customers from surrounding areas on foot from the main railway station, by tram from the airport or by car. shops such as the exclusive jeweller Die Platinschmiede, the long-standing Bremen fashion store Stiesing, or Café Stecker, where shoppers can rest their legs. Quality upgrades at prime sites The prime, 1A -rated sites in Bremen s city centre include Sögestraße, Obernstraße, the Lloyd-Passage shopping arcade parallel to the latter and Hutfilterstraße as its extension, not to mention the Katharinen and Domshof shopping arcades. Recent years have seen a significant rejuvenation of retail outlets in Sögestraße with Snipes and Jack & Jones now counting among its tenants. Obernstraße has also gone through a qualitative upgrade. Where the SWB utilities company used to run a shop, the profile of the location has now been enhanced by Tamaris, the well-known shoe make, and L Occitane, the perfume store chain. They are supported by H&M, the Swedish clothes store, which has increased its retail space in the Bremer Carree by around 1,000 mc compared to the new ZARA outlet with 3,500 mc The city centre is holding its own against the various malls in more peripheral locations. Vacant properties in prime locations have never been an issue, and nowadays are rare even for B -rated and secondary locations. Well-known national and international brand outlets add to the good reputation and economic stability of the entire city centre with names like Anson s, H&M, Jack & Jones, Saturn and ZARA. They form an attractive mixture with smaller, owner-managed Retail locations in Bremen s city centre 1A-sites 1B-sites City centre 7 Large retail stores in Bremen s city centre Galeria Kaufhof / Saturn C&A H&M A peak pedestrian frequency of 4,529 per hour is ample proof of the city centre s attractiveness Key figures for Bremen s retail trade, 2013 / 2014 Purchasing power index (retail-relevant), ,0 Sales index, ,5 Retail centrality index, ,1 Retail-relevant purchasing power 2013 (in m) Anson s ZARA Thalia Peek & Cloppenburg Karstadt Sales, 2013 (in m) Karstadt sports

12 22 Bremen as a centre for retail trade in 2014 Bremen as a centre for retail trade in In late summer 2014, a retail outlet of Gerry Weber, the German fashion dressmakers, will open in Obernstraße. A shop previously used by a specialist shoe shop and covering more than 550 mc will be extensively modernised. Smaller, more exclusive shops can be found in the Katharinen-Passage or adjoining Domshof-Passage, two city-centre shopping arcades. Retailers are still able to position themselves successfully with their well-diversified range of products in order to compete for customers and their loyalty. An important step in that direction is also achieved by the new lease of property to Van Laack and the extension of retail space by Lacoste both well-known brands for exclusive men s and women s fashion. B -rated and secondary locations also benefitting Schüsselkorb, Knochenhauerstraße and Am Wall are three locations, immediately adjoining prime locations, that have shown encouraging development in recent years. Newly opened shops, such as the Brasserie Chú Ba or the BoConcept furniture store, are having a positive impact on Knochenhauerstraße, for example, and are generating higher pedestrian frequencies there. Pedestrian frequency in Bremen s city centre: Obernstraße 5,000 4,000 3,000 Am Wall, a street that has always been known for its upmarket stores, attracts its discerning clientèle with brands like Ligne Roset, SØR, Bang & Olufsen, as well as various owner-managed stores such as Harms am Wall. They are joined in 2014 by Windsor, a top-class fashion store chain that will blend harmoniously with the retail outlets already present. Pedestrian frequencies (Saturday, ) HANSEATENHOF SÖGESTRASSE UNTERE SÖGESTRASSE HUTFILTERSTRASSE OBERNSTRASSE 9 10 am am am 12 1 pm 1 2 pm 2 3 pm 3 4 pm 4 5 pm 5 6 pm 12,966 Einzelhandelsstandort 29,896 21,923 25,975 28,658 Pedestrian frequency in Bremen s city centre: Sögestraße 5,000 4,000 3, pm City-Center to unleash new potential Demand from local, national and international retailers for suitable shop premises is significantly greater in Bremen than the available amount of retail space. To respond to that discrepancy, a new multifunctional City-Center is to be created within the Ansgari district in the middle of the inner city. In a Europe-wide architecture competition, the concept submitted by Sonae Sierra, the Portuguese shopping centre specialist, was unanimously recommended. The jury decided in favour of around 23,000 mc additional retail space, combined with 6,000 mc for new apartments and 11,000 mc for offices and trades. Pedestrian frequencies in Bremen s inner city provide corroboration for this ambitious project. The peak figure in this year s survey was more than 4,500 people per hour strolling down Sögestraße. Similar figures were obtained for the entire city centre, which means that pedestrian frequencies have stabilised at the level reached in previous years. Passantenfrequenzen (Samstag, ) 7 8 pm HANSEATENHOF SÖGESTRASSE UNTERE SÖGESTRASSE HUTFILTERSTRASSE OBERNSTRASSE Popular areas beyond the city centre Retail shops are not confined to the city centre, of course. The Quarter, for example, is Bremen s equivalent to the trendy districts of Berlin, Hamburg or Munich and is located just a few minutes walk away from the marketplace. The vivacious, unconventional charm of the Quarter is renowned far beyond the city limits. Visitor frequency is accordingly high in the many different shops, cafés and restaurants along and near Ostertorsteinweg and Vor dem Steintor. plaza in front of the main station, and other building projects in Bremen s inner city, the City-Center complex will make an important contribution to urban development as a whole. To that extent, it is no exaggeration to speak of new departures in the offing. Committed houseowners and businesspeople in Bremen s city centre will continue to play an active role in supporting and shaping this development the best example being the Sögestrasse Business Improvement District. It successful work to raise the quality of the inner city was recognised in 2013 when it was awarded the BID Award of the German Chamber of Industry and Trade. Trends in retail rents in the city centre, in per m² , , , , , Peak rent Average rent , ,000 1, am 11 am 12 am 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm Pedestrian frequency in Bremen s city centre: Hutfilterstraße 5,000 4,000 3,000 2,000 1, am 11 am 12 am 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm 2,000 1, am 11 am 12 am 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm Pedestrian frequency in Bremen s city centre: Hanseatenhof 5,000 4,000 3,000 2,000 1, am 11 am 12 am 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm 9 10h 10 11h 11 12h 12 13h 13 14h 14 15h That said, 15 16h retail stores located 18 19h around the periphery of the city centre 16 17h are characteristic 19 20h features of Bremen. In contrast to many other cities where large shopping malls are usually 17 18h located on greenfield sites in surrounding municipalities, similar facilities have been created within Bremen s city boundaries. Customers appreciate being able to get to such shopping malls and specialised stores quickly and easily. And what customers like is also a worthwhile proposition for investors. There are numerous opportunities for lucrative investments well away from prime locations. Outlook for 2015 Bremen s city centre boasts a level of quality that allows it to assert itself, in the future as well, against competing retail locations on the periphery and in surrounding areas of the city. The new City-Center is expected to provide another strong boost with its unique combination of residential apartments, offices and shops in the middle of the city. And that is by no means all: in conjunction with the redesigned Trends in retail rents in the local districts, in per m² , , , , , ,00 Peak rent Average rent Thursday Saturday

13 The residential market in 2014 Population trends Price levels Forecasts A dynamic market with good prospects The residential market in Stadtterrassen Inner-city living, created in the Stephani district by Justus Grosse Projektentwicklung GmbH The average rent for newly-built apartments is 9.80 / m² Bremen s growing population At the end of 2012, the city had 546,451 inhabitants. Net in-migration increased the population to approx. 548,500 inhabitants in Demand for housing in Bremen is accordingly high. It is further intensified by the trend throughout Germany towards smaller and therefore more households. Rising rents and property prices Besides those districts with traditionally strong demand for housing, namely Schwachhausen, Horn-Lehe and Oberneuland, it is above all the newly-built areas that are increasing in popularity: the city-centre riverside locations, in Überseestadt and on the Stadtwerder island. Condominiums are especially sought-after: between 2009 and 2012, the number of such sales increased by 42 %. However, this growth in demand from owner-occupiers and investors has led to scarcities on the housing market. Property prices are rising as a consequence, to as much as 4,100 Euro / mc for a newly-built apartment in That signifies a price hike of 47 % in just five years. The average square-metre price is now around 28 % higher. Rents for newly-built apartments have stabilised in recent years, in contrast, at a maximum of Euro / mc and an average of 9.80 Euro / mc. Compared to 2009, that means an increase in peak rents and average rents of 17 % and 19 %, respectively. The increase has been less in the case of existing properties, where prices gravitate around the 7.20 Euro / mc mark, like last year. Only top-tier rents have increased, albeit slightly, since 2009 to a current level of Euro / mc. These trends are also mirrored in the market for multi-apartment buildings, where existing properties currently cost up to 18 times the annual rent. In 2009, the multiple was still as low as 15. Outlook for 2015 The Bremen housing market will continue to develop dynamically. Rising purchase prices and rents can be assumed, both for newly-built and existing housing. Large-scale housing projects will boost the market, for example the Mühlenviertel in Horn-Lehe, where 340 new housing units are currently under construction. The Neue Hulsberg district Wohnimmobilien is another example, with 1,600 housing units being built in an integrated urban district. Trends in peak rents in Bremen (new buildings), in per m² 2009 ( 8.20) 2010 ( 8.50) 2011 ( 9.00) 2012 ( 9.50) 2013 ( 9.50) 2014* ( 9.80) * Forecast 2009 ( 2.200) 2010 ( 2.300) 2011 ( 2.400) 2012 ( 2.500) 2013 ( 2.700) 2014* ( 2.800) Trends in peak purchase prices in Bremen (new buildings), in per m² * Forecast 2,800 3,000 3,300 3,600 3,900 4,100

14 2014 Investment Market Report Transactions ROIs Price levels 2014 Investment Market Report Attention-grabbers for new and potential investors 27 Weser Tower This impressive high-rise office building in Überseestadt changed owners in 2014 Wohnimmobilien Growth and change in the investment market By mid-2014, total investments in Bremen real estate had already reached the sum of million Euro (2013: million). Two major transactions, each involving more than 50 million Euro, were responsible for this upswing. Outlook for 2015 Total annual investments of million Euro are a realistic forecast for 2014, depending on how the economy as a whole Investmentmarkt develops. A significant increase or postponement of market shares is not to be expected in 2015, either. With Mio. The investment market is dominated in 2014 by the retail Trends in peak rents in Bremen (new properties buildings), in segment. per m² Two large properties changed owners, namely the Karstadt department store in the city centre and the Walle-Center By the end of the year, retail property sales will reach an estimated market share of 43.8 % 2009 ( 8.20) (168.4 million Euro) ( 8.50) 2011 ( 9.00) 2012 ( 9.50) 2013 ( 9.50) The investment market also documents Bremen s continuing importance as a centre for logistics. Logistics properties have a forecast market share of 24.2 % (93.1 million Euro). These include the sale of the Panattoni property in the GVZ Freight Village and the I-Park in Hemelingen. Just under 23 % (90 million Euro) of total investments are 2014* ( 9.80) expected to be in office properties. Despite a slight decline, * Forecast there is still strong demand for this particular asset class. The best example is the sale of the Weser Tower in Überseestadt. Trends in peak purchase prices in Bremen (new buildings), in per m² Internationally attractive 2, ( 2.200) The interest of investors is also focused in 2014 on the periphery and on Bremen s office centres. Whereas it is logistics properties that are strongly in demand in peripheral 3, ( 2.300) locations, new office buildings are attractive investments because of the exclusive 3,300quality of their locations ( 2.400) 2012 ( 2.500) 2013 ( 2.700) 2014* ( 2.800) * Forecast in transactions, the investment market is growing substantially Photo: Frank Pusch ,600 A striking feature of the market is the strong and continued interest shown by international investors and specialised investment funds. 3,900 Logistics properties, especially, make Bremen an attractive proposition for them. More than 40 % of investments are from foreign countries. 4,100 Stable to slightly receding ROIs Persistently low interest rate levels are making real estate increasingly important as an investment, and causing investors to look beyond larger, hard-fought cities such as Hamburg or Munich for interesting opportunities. In Bremen, a fast-growing market encounters a supply side that is limited in size, but still relatively inexpensive. ROIs are therefore relatively stable, or slightly in decline, at approx. 6.3% to 6.2%. Transaction volumes by type of property, 2014, in million RETAIL PROPERTIES OFFICES, OFFICE/COMMERCIAL BUILDINGS LOGISTICS PROPERTIES OTHER TYPES OF PROPERTY Transaction volumes by location, 2014, in million CITY CENTRE CITY CENTRE PERIPHERY OFFICE LOCATIONS PERIPHERY LEIPZIG* BREMEN ESSEN* HANNOVER* STUTTGART* * Forecast Initial net ROIs for office properties in a national comparison, 2014, in %

15 2014 Date: 09/2014 Design: Büro 7 visuelle Kommunikation, Bremen Photos: Jonas Ginter Text: Guido Strotkötter Bremeninvest is a brand of WFB Bremen Economic Development Kontorhaus am Markt Langenstraße 2 4 (Entrance Stintbrücke 1) Bremen / Germany Phone: + 49 (0) Fax: + 49 (0) mail@wfb-bremen.de