German commercial real estate markets were quite busy in the final quarter of 2018. Now the year-end figures are also available and one thing is very clear: a spectacular year is behind us.
But see for yourself:
- TOP 7 Take-up of space (total): 3,835,730 sqm
Germany's top 7 office markets achieved very robust results in 2018. With a total office take-up of 3.83 million sqm, turnover was approx. 8 % below the record level previous year, but the 10-year average could still be clearly exceeded.
- TOP 7 Vacancy (average): 3.88 %
Over the past 12 months, the vacancy rate in all top 7 markets has fallen by 0.82 percentage points and averaged 3.88 % at the end of the year.
- TOP 7 Prime rents (average): 31.04 €/sqm
Due to the still very strong demand for office space and a further decline in office space, top office rents have risen further in all markets. The average rent in the top 7 markets is approx. 31.04 €/sqm, an increase of approx. 6 % compared to the previous year.
- Transaction volume commercial: € 60.58 billion
The commercial investment market has had a spectacular year. Absolute record volume, Yields at historical lows and record number of large transactions. A total volume of € 60.58 billion was achieved and the result of the previous year was again exceeded by 6 %. We do not expect a quantitative repetition of large-volume transactions, so that the volume could settle at around € 55 billion in 2019.
- TOP 7 Prime yield (net, average): 3.06 %
The continuing supply shortage and high competition in the core segment are causing prime office yields in the top 7 markets to fall to an average of 3.06 %. Compared to the previous year, this represents a decline of 24 basis points.
Even if it is perhaps somewhat surprising in this situation, at least when reading the Breaking News on Brexit, the statements at the various New Year receptions on "readjusting the risk parameters in the investment models" or the call for "opportunities" among fund managers, there will be no structural market upheaval in 2019 either. For 2019, we expect a similarly strong dynamic, supported by a lack of investment alternatives and a sustained zero interest rate level until at least summer 2019.