Cologne s Office Space Market February 2013

Transcription

1 Cologne s Office Space Market

2 High turnover in Increasingly optimistic outlook for 2013 Despite the financial and debt crisis, the office-letting market once more produced very good results in At 270,000 square metres, the turnover has been well above the ten-year average. With economic forecasts being considerably more positive for 2013 and 2014 it seems realistic that this year could also become a successful year for office-letting. Cologne s office space market Keyfigures development and forecast 2009 to 2013 Year Devlopment 2013 Trend Employees contributing to social insurance in 000 s* Unemployment rate* Turnover in 000 s m² Existing space in million m² Vacancies in 000 s m² Vacancy rate in % Highest rent in /m² Average rent in /m² Completions in 000 s m² Greif & Contzen Research, Cologne ; Note:* as of 30 June 2

3 Strong turnover of small and medium-sized units 2012 s high turnover was mostly due to lively letting activity in the area of small to medium-sized spaces, as well as newly constructed owneroccupied buildings (e.g. University of Cologne, German Sport University Cologne). Lettings in the size group of 251 to 500 square metres had a share of 14 per cent of the total turnover, the size group of 500 to 1,000 square metres accounted for 20 per cent. Only a single letting deal of more than 10,000 square metres was recorded in 2012: The foundation stone was laid for a new 12,500 square metres students service centre to be run by the University of Cologne. In addition to 270,000 square metres of newly let space, a number of substantial letting contracts have been extended. Among those tenants are the retail group REWE with their head quarters in Cologne-Braunsfeld (24,000 m²) and Deutsche Bank with 15,000 square metres of office space in the Banking Quarter. Turnover of office space (m²) Trend and forecast 2004 to Greif & Contzen Research, Cologne After a relatively slow start of the year 2013, demand is currently on the rise again. 3

4 Selection of significant letting contracts concluded in 2012 Tenant / Location* University of Cologne, Students service centre / Innere Kanalstraße Office space (m²) 12,500 BLB NRW for German Sport University Cologne / Köln West 8,400 Pfeifer & Langen / Aachener Straße West 8,100 PSA Peugeot-Citroën / Gremberghoven 8,000 Techniker Krankenkasse / Köln Süd 7,100 REWE Group / Braunsfeld 6,500 Media Broadcast / Köln Ost 5,300 Bayer AG / Ossendorf 4,600 SoCura GmbH / Deutz 4,500 * see also Greif & Contzen Office Market Map Cologne Greif & Contzen Research, Cologne Rents remain stable Over the course of the year, average rents rose by approximately 1.3 per cent to EUR per square metre (2011: EUR 11.23). The average rent, weighted in relation to each rented unit s size, amounts to EUR per square metre. Due to large-scale leases such as the contract concluded for space in the upmarket office building maxcologne, this ratio was EUR in Lettings in upmarket properties were scarce in 2012, owing to a lack of supply. As in the year before, the highest rent was EUR per square metre. Rents are generally expected to remain stable in 2013, as the demand for centrally located state of the art office space is expected to be high. 4

5 Highest and average rents ( /m²) Trend and forecast 2004 to Greif & Contzen Research, Cologne In comparison with Germany s top office locations, as well as with other major cities within a radius of approximately 250 kilometres, the level of rental prices in Cologne is to be considered moderate. Premium rental prices in Germany s top office locations ( /m²) Frankfurt Munich Düsseldorf Hamburg Berlin Cologne Stuttgart Source: gif e.v; Greif & Contzen Research; various market reports, Cologne is a major city that attracts highly qualified professionals due to its excellent infrastructure, its cultural offerings and a generally high standard of living. These aspects combined with the quality of the space on offer result in a good price-performance ratio, thus making Cologne an attractive business location. This is illustrated by some of the most recent relocations: More than 1,000 employees of the DAX-listed 5

6 LANXESS AG are scheduled to move, from their current offices in Leverkusen, to new premises in the maxcologne in Deutz this spring. The French corporation PSA has also decided to move to Cologne: New joint national head quarters for Peugeot and Citroën are currently being built in the Airport Business Park in Gremberghoven. Furthermore, the Chinese photovoltaic producer Clenergy has moved its European central offices from Frankfurt to Westhoven. Premium rents in major cities within a radius of 250 kilometres around Cologne ( /m²) Luxembourg Frankfurt Amsterdam Düsseldorf Brussels Cologne Bonn Rotterdam Essen Dortmund Source: gif e.v; Greif & Contzen Research; various market reports, KÖLNTRIANGLE, maxcologne 6

7 Vacancies continue to decrease There are currently around 580,000 square metres of vacant office space and a total stock of approximately 7.6 million square metres. Thus, the current vacancy rate is at 7.6 per cent. With demand expected to remain stable and a low supply of space in newly constructed buildings, it appears realistic for vacancies to be reduced to 560,000 square metres within the next few months. This would translate into a vacancy rate of 7.4 per cent for Cologne s office space market. Office space vacancy rate Trend and forecast 2004 to ,0% 9,5% 9,0% 8,5% 8,0% 7,5% 7,0% 6,5% 6,0% 5,5% 5,0% 8,6% 8,3% 8,2% 8,1% 8,0% 8,0% 7,7% 7,6% 7,6% 7,4% Greif & Contzen Research, Cologne High turnover in Cologne s outskirts There has been an unusually high turnover in a number of locations in Cologne s outskirts in In the office locations Aachener Straße West, Ehrenfeld, Gremberghoven, Köln Ost and Ossendorf letting results have been considerably better than during the previous five years. Seven of the ten biggest letting deals of 2012 were concluded in the outskirts. About 27,500 square metres of newly let office space were registered in Ossendorf in The average for the previous five years had been 9,000 square metres. Ten of the contracts concluded for office space in Ossendorf were for spaces of more than 1,000 square metres (e.g. Bayer AG 4,600 m² and Kellendonk Elektronik 1,500 m²). 7

8 Low supply of state of the art office space The supply of state of the art office space that is available at short notice is particularly limited. Around 80,000 square metres of newly constructed office space were completed in 2012 and 100,000 square metres are scheduled for completion in Just as in the previous year, however, a large share of this space is either being built for the purpose of owneroccupation (e.g. RheinEnergie, University of Cologne) or has already been let (KölnCubus, PSA Peugeot-Citroën headquarters). Approximately 170,000 square metres of office space are currently under construction, 90,000 of which are still available, yet only 40,000 will be ready for occupancy within this year. There are still excellent opportunities for refurbishing existing properties in attractive locations. Completion of office premises (m²) Trend and forecast 2004 to Greif & Contzen Research, Cologne Significant building activities in 2013 In the city centre numerous projects are being planned in locations that are considered in Cologne s urban master plan. Two major construction projects will contribute to a substantial improvement of Breslauer Platz: Neue Direktion Köln on Konrad-Adenauer-Ufer and Coeur Cologne. The construction of Campus West is going to fill in one of the most prominent vacant sites on Cologne s Rheinuferstraße on the bank of the Rhine. 8

9 Property / Location Start of construction Rental space (m²) maxcologne (Deutz) 2010 approx. 45,000 Gerling Quartier (Innenstadt Nord) 2011 approx. 45,000 RheinEnergie premises (Neuehrenfeld) 2010 approx. 45,000 Neue Direktion Köln (Rheinufer Nord) 2013 approx. 26,000 Campus West (Rheinufer Süd) 2013* approx. 17,000 Coeur Cologne (Innenstadt Nord) 2013* approx. 12,000 KölnCubus (Köln Ost) 2012 approx. 10,500 Torhaus (Deutz) 2013* approx. 10,000 Gürzenich Quartier (Innenstadt Süd) 2013* approx. 9,500 PSA Peugeot-Citroën (Gremberghoven) 2012 approx. 8,000 Waidmarkt (Innenstadt Süd) 2011 approx. 7,000 Direct4U premises (Köln Ost) 2013* approx. 6,000 Former BDI-Building (Rheinufer Süd) 2013* approx. 5,000 DOCK 6-10 (Rheinauhafen) 2012 approx. 4,000 *planned Greif & Contzen Research, Cologne Entwicklungsgesellschaft Gürzenichquartier mbh Co.KG Coeur Cologne Allianz Real Estate Germany GmbH Deutz: a vibrant business location The strength of a location s market dynamics can be determined by taking into account the turnover and the supply of available space, the benchmark rent, as well as sales and development activities. As an office location Deutz continues to be the location with the strongest market dynamics. Innenstadt Nord, MediaPark and Rheinauhafen are also among Cologne s submarkets that feature particularly strong market dynamics. 9

10 MesseCity (120,000 m²) in Deutz and Gerling Quartier in Innenstadt Nord are presently Cologne s two biggest property developments. The highest average turnover for the past five years has been achieved in Innenstadt Nord (27,000 m²), followed up by Deutz (19,000 m²) and Köln Süd (19,000 m²), as well as Kölner Ringe (18,000 m²). Cologne s office locations with the most vacancies are Kölner Ringe (74,000 m²), Köln Süd (56,000 m²), Köln West (51,000 m²) and Innenstadt Nord (44,000 m²). Completed office space that could be occupied within three months is considered vacant. The supply of available office space consists of vacancies, space under construction and a certain amount of space that is still in the planning stage. The areas in Cologne that possess the greatest amounts of available space are Deutz, Innenstadt Nord and Kölner Ringe. MesseCity HHVision (Strabag / ECE) 10

11 Overview of submarkets Location Available space (m²) ¹ Vacant space (m²) Average annual turnover (m²) ² Benchmark rent ( /m²) ³ City centre Banking Quarter 15,000 14,000 14, MediaPark 25,000 25,000 11, Rheinauhafen 15,000 11,000 14, Kölner Ringe 90,000 74,000 18, Deutz 170,000 29,000 19, Innenstadt Nord 120,000 44,000 27, Innenstadt Süd 30,000 17,000 9, Rheinufer Nord 28,000 6,000 4, Rheinufer Süd 19,000 19,000 6, Sub total 512, , ,000 Districts on the left bank of the Rhine Innere Kanalstraße 4,000 4,000 6, Ehrenfeld 44,000 36,000 15, Braunsfeld 53,000 23,000 12, Ossendorf 41,000 41,000 14, Aachener Straße West 8,000 8,000 5, Köln Nord 31,000 26,000 15, Köln West 51,000 51,000 10, Köln Süd 58,000 56,000 19, Sub total 290, ,000 96,000 Districts on the right bank of the Rhine Gremberghoven 33,000 33,000 17, Mülheim 26,000 26,000 8, Köln Ost 51,000 38,000 13, Sub total 110,000 97,000 38,000 Total 912, , ,000 ¹ available space includes vacancies, space under construction and a certain amount of space that is still in the planning stage ² five-year average ³ in individual cases considerably higher or lower rent prices have been agreed upon 11

12 Balanced mix of industries Once more the well-balanced mix of industries of Cologne s economy has been reflected in 2012 s demand for office space. As a result the letting turnover has shown stable and reliable development. Office space turnover 2012 according to industry sectors Associations 5% Health 7% Finance 3% Retail 4% Real Estate 2% Construction 0,5% Transport, Logistics 0,5% Education 17,5% Service 14% Consulting 7% Insurance 7% IT, Software 10,5% Media 11% Manufacturing 11% Greif & Contzen Research, Cologne Positive business expectations by regional economy A recent business survey conducted by Cologne s Chamber of Commerce and Industry found the Business Climate Indicator to have risen by 11 per cent. Local businesses perception of the current business situation is slightly more positive than it was last autumn, while their business expectations have improved significantly. Companies across all industries expect exports to rise due to an improved global economic climate and a calming down of the situation in the eurozone. In particular the demand from emerging nations, as well as from China and North America is expected to increase. This positive outlook is further supported by stable domestic demand and a high level of consumer confidence. While companies generally continue to be relatively reluctant about planning investments, the number of companies that are willing to invest has increased. Employment plans are also more expansive than they were when the last survey was conducted last autumn. One fifth of the businesses in Cologne s Chamber of Commerce and Industry district are planning further recruitment. 12

13 Increased employment levels With around 10,000 additional employees that are subject to social insurance contributions, employment has once more risen considerably in The German employment agency (Agentur für Arbeit) expects Cologne s job market to remain robust in At 9.6 per cent the unemployment rate for Cologne was slightly higher than in the previous year, however, this is considered to be mostly due to the fact that individuals taking part in activities arranged by the employment agency to improve their employability, are now included in the statistics. Employees contributing to social insurance in Cologne Trend und forecast 2004 to Source: Landesdatenbank NRW, Agentur für Arbeit, as of 30 June of each year Pick-up of economic growth possible The German economy grew by 0.7 per cent in A strain was put on the economic situation by the eurozone crisis and a reluctance to invest that resulted from it. Growth forecasts by the leading institutes for economic research for 2013 still deviate strongly between 0.3 and 0.9 per cent. In January Germany s most important business barometer, the Ifo Business Climate Index, rose for the third month in a row. Both the current business situation and forecasts for future business development have improved yet again. Three consecutive increases of the Index are considered to be an indicator of an economic turnaround. As early as 2014, a decline of economic uncertainty, rising salaries and employment levels as well as an upturn of the global economy could even lead to 13

14 significant growth rates of more than two per cent. The outlook for the office space market, therefore, appears to be increasingly brightening. Rheinauhafen 14

15 Should you have any queries, please contact: Florian Schmidt, Head of Office Rental Division GREIF & CONTZEN Immobilienmakler GmbH Pferdmengesstraße 42, Köln Tel: Fax: Frank Pönisch, Managing Director GREIF & CONTZEN Beratungsgesellschaft mbh Pferdmengesstraße 42, Köln Tel: Fax: Greif & Contzen Beratungsgesellschaft mbh, All rights reserved. These documents are our intellectual property and subject to our copyright. They are intended solely for the recipient. Any form of reproduction, amendments or distribution to third parties, in whole or in part, requires our prior explicit agreement in writing. Where we do not hold the copyright, on the grounds of third-party-copyright, we refer to the copyright of the third party. 15