MARKET REPORT 2017/2018. Accelerating success. Office and Investment Market Cologne

Transcription

1 MARKET REPORT /2018 Accelerating success. Office and Investment Market Cologne

2 Market Overview Office Leasing TOP 7 BERLIN DÜSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH STUTTGART STOCK OF OFFICE SPACE in million sq m OFFICE SPACE TAKE-UP 4,156, , , , , , , ,400 in sq m Change year-on-year in % OFFICE SPACE TAKE-UP 3,167, , , , , , , ,600 (for the entire year) 10-year Ø PRIME RENT in /sq m AVERAGE RENT in /sq m VACANT OFFICE SPACE in sq m 3,652, , ,400 1,104, , , , ,600 VACANCY RATE in % Change year-on-year in basis points The data for Berlin, Düsseldorf, Hamburg and Cologne are related to the respective city area. The data for Frankfurt, Munich and Stuttgart are related to each of the respective markets on the whole. Investment GERMANY TOP 7 BERLIN DÜSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH STUTTGART TRANSACTION VOLUME 57,289 29,954 7,522 2,740 6,912 3,410 2,000 6,170 1,200 in million Change versus prior year in % TRANSACTION VOLUME (for the entire year) 10-year Ø PRIME YIELD OFFICES in % PRIME YIELD HIGHSTREET RETAIL in % PRIME YIELD INDUSTRIAL & LOGISTICS in % 33,667 18,490 4,090 1,538 3,790 2,912 1,110 4, * *) Refers to the defined logistics market areas 2

3 City Facts COLOGNE Population in 1,000 1,082 Employees Paying Social Se cu rity Contributions in 1,000 Fast Facts OFFICE LEASING COLOGNE Change vs. prior year Office Space Take-up 302,000 sq m % Leasing Take-up 274,000 sq m % Prime Rent 21.50/sq m 2.2 % Average Rent 12.90/sq m 8.9 % Vacancy Rate 4.0 % -100 bp* Office Space Stock 7.85 m sq m 0.2 % Achieved Rents 553 Unemployment Rate in % 8.1 Per Capita Disposable Income in 24,370 Office Leasing Take-up The Cologne office leasing market generated an above-average result in with take-up at 302,000 sq m (including owner-occupiers), outperforming the 10-year average (261,000 sq m) by around 16 %. As expected, results were considerably lower yoy (-21 %) as 2016 saw the signing of a large-scale lease for 60,000 sq m at a property development for Zurich Versicherung insurance in MesseCity (Deutz submarket). The public administration sector accounted for a large share of take-up activity in Cologne. The German Institute for Federal Real Estate (BImA), for example, signed the largest-scale lease of the year for roughly 19,000 sq m of office space. The offices will be occupied by the German Federal Office for Family and Civil Affairs. The leased property is located at Von- Gablenz-Straße 2-6 and was previously occupied by Lufthansa COLOGNE Price range in / sq m Average rent in /sq m 1 City Rheinufer Deutz Cologne East Ossendorf / Niehl Ehrenfeld / Braunsfeld Cologne West Cologne North Sülz/Lindenthal/Klettenberg Cologne South Airport / Porz *) basis points Pulheim 59 7 Frechen Hürth Chorweiler Müngersdorf 9 Ossendorf 6 Lindenthal Junkersdorf/ Marsdorf Nippes Neustadt-Nord Altstadt-Nord Ehrenfeld Köln Neustadt-Süd Deutz Marienburg 51 3 Kalk Leverkusen Mülheim Gremberghoven 8 51 Bergisch Gladbach Hahnwald

4 until the end of. Owner-occupier Strabag accounted for the second-largest deal. The company s current site at Siegburger Straße 241 will see development of a new-build featuring 17,000 sq m of office space. Lufthansa airlines and its relocation activities in Cologne also accounted for considerable large-scale take-up in early. Lufthansa is planning to move its administrative offices to the One Cologne office building on Venloer Straße in fall 2018, where the company has leased roughly 4,600 sq m. Until then, the company has signed an interim lease for space in the Braunsfeld district. A largescale lease signed in Q4 by Design Offices, a coworking space provider, is worth mentioning as well. The company has leased around 9,300 sq m of office space at Tunisstraße 19-23, a prime Cologne downtown location. The premises are scheduled to be converted for use as coworking space. painted a diverse picture in terms of take-up by industry. In addition to the public administration sector and associations mentioned above, which accounted for almost 15 % of total take-up, the construction and real estate industry as well as the media and ICT industry generated similar results. Trade, tourism and transportation trailed just behind. Rents Average rents have posted a noticeable increase over the past 18 months following the slight decline the Cologne market experienced in H after five consecutive years of upward movement. The city saw an increase of almost 9 % yoy, putting weighted average rent at per sq m. Prime rents in Cologne followed a similar, although weaker, trend in recent quarters, up 2 % yoy to a current per sq m. Supply and Vacancy Office Space Take-up in 1,000 sq m Leasing Owner-occupiers Completion Volume (in 1,000 sq m) and thereof Pre-let/Owner-occupied Completions thereof Pre-let/Owner-occupied 90 Vacancy Rate (in %) and Vacancy (in 1,000 sq m) Vacancy in Cologne took another nosedive at year-end due to lively leasing activity. Only 314,000 sq m were available for immediate tenancy at the end of the year, around 80,000 sq m less than in the previous year. The vacancy rate currently comes to 4.0 %, continuing the downward trend we have been seeing since Although supply of rental properties featuring units under 1,000 sq m remains sufficient, units of more than 1,000 sq m can be hard to come by, particularly for tenants looking for high-end accommodation. Key Developments % 7.2% 5.9% 5.0% % 314 The submarkets located along the right bank of the Rhine River continue to offer the highest development potential. Developments currently underway in this area include MesseCity, Euroforum Nord and Deutzer Hafen. Property developer Gerchgroup recently acquired a 16-hectar lot from Deutz AG and is planning to develop a new urban district on the former works site in Mülheim including commercial space. Prime and Average Rents (in /sq m) Prime Rent Average Rent 4

5 Summary and Outlook generated above-average take-up results of more than 300,000 sq m. We expect the Cologne market to post similar take-up results of between 280,000 and 300,000 sq m in 2018 as well. There is room for upward movement in terms of both average and prime rents as ongoing absorption will further intensify competition for available space. Fast Facts INVESTMENT COLOGNE 2016 Transaction Volume in million 2,000 1,760 Portfolio Transactions 20 % 17 % Share by International Buyers 40 % 28 % Share by International Sellers 42 % 18 % Most Important Property Type Office: 50 % Office: 77 % Prime Yield Office 4.25 % 4.50 % Investment Transaction Volume Cologne s commercial investment market recorded an all-time high in with a total investment volume of 2.0 bn, reflecting a 14 % yoy increase and even an 80 % increase over the 10-year average set the last record at 1.9 bn, which means that in, Cologne breached the 2 bn mark for the first time. Commercial Transaction Volume (in million ) 2,000 1,600 1, ,316 1,940 1,760 2,000 A significant share of transaction volume can be attributed to high-volume deals. One deal signed in early involved the sale of the large-scale mixed-use project Gerling-Quartier located in the city center by Austria-based Immofinanz to a joint venture consisting of Quantum Immobilien AG and Proximus Real Estate. Quantum and Proximus also acquired the neighboring building complex Friesenquartier from Immofinanz. Other significant deals included Swiss Life s acquisition of the former Kaufhof headquarters on Leonhard-Tietz-Straße and the purchase of the Deutsche Bank complex (An den Dominikanern) in the banking district by a special fund for institutional investors established by Momeni. Larger transactions were not confined to downtown areas, as Apollo Global Management s acquisition of 17 assets located at Cologne s TechnologiePark in Müngersdorf shows Types of Properties (in %) 2016 A total of 16 transactions were conducted in the 30 m to 100 m range, with another 8 going for between 20 m to 30 m and a number of smaller transactions (27 deals) for under 20 m. Investor interest particularly tended to revolve around downtown Cologne, which claimed a share of around 40 %. Core and core+ investments combined accounted for two-thirds of transaction volume. Building Site (commercial) Other Hotel Industrial & Logistics Mixed Use Office 22 Retail 5

6 Supply and Demand Although activity on the Cologne investment market was characterized in the first half of the year by relatively equal distribution of transaction volume across the different asset classes, office assets managed to expand their lead during H2. At year-end, office assets accounted for 50 % of transaction volume. Retail and mixed-use assets followed in the ranks at just shy of 22 % and around 11 %, respectively. The logistics and warehousing sector secured a market share of 7 %. Commercial sites and hotel assets each accounted for shares of between 4 % and 5 %. REITs were most active buy-side with roughly 640 m in transaction volume, followed by open-ended real estate/special funds with around 470 m. Insurance companies also accounted for a significant share of transaction volume with roughly 260 m. REITs also recorded the highest number of deals signed (12 transactions). Property developers/development companies generated the highest transaction volume sell-side with roughly 480 m, followed by opportunity funds/ private equity funds ( 370 m) and closed-ended real estate funds ( 340 m). Transaction Volume by Buyer Groups (in million, share in %) Listed property companies Open-ended real estate funds / Special funds Insurance companies Opportunity funds / Private equity funds Asset managers / Fund managers Other investors % 23 % 13 % 6 % 6 % 20 % Transaction Volume by Seller Groups (in million, share in %) Property developers 24 % Foreign investor activity remained strong in, bringing in 40 % both buy and sell-side. The major players involved came from the US, the UK, Switzerland and Israel. Yields Prime yields for office assets dropped to 4.25 % at year-end, or 25 bp yoy. If supply remains limited, we can expect yield compression to continue. High-street retail properties are still recording prime yields of up to 3.50 %, down 70 bp yoy. Summary and Outlook Cologne s investment market set a new record high driven by several large-scale transactions, but we saw strong activity in the other market segments as well. Available properties in central locations remain scarce, causing investors to increasingly turn to alternative assets. It will likely be difficult for the Cologne investment market to bring in results in 2018 that are similar to s record high. We therefore expect transaction volume in the municipal area to come in at around the 1.5 bn mark. Opportunity funds / Private equity funds Closed-ended real estate funds Private investors / Family Offices Asset managers / Fund managers Other investors 18 % 17 % 11 % 9 % 21 % Lars Zenke Director Research lars.zenke@colliers.com 6

7 Glossary Take-up of Space Take-up of space is the sum of all spaces either newly let, sold to owner-occupiers, or built for or by an owner-occupier within the period under consideration. The salient date is that on which the lease or purchase agreement is signed. The renewal of an existing lease is not counted in the take-up of space. Leasing performance Leasing performance reflects take-up excluding owner-occupied space. Prime Rent The premium rent represents the median of the top 3 % of new lets (not counting owner-occupiers) during the 12 months just ended. Average Rent The average rent is calculated by taking the individual rents agreed to in all new leases, weighting them by the amount of space rented and computing the mean value. Vacancy Vacancy is defined as all office space available for occupation within three months. Prime yields Prime yields are the best return that can be realized for a property of highest quality and in the best location when leased under usual market conditions (highly solvent tenant). The figures here are gross yields. Photo credits Front page Dream Global Advisors Germany GmbH Photo credits inside pages Page 2 Fotolia Page 3 shutterstock r.classen Page 7 istock, william87 7

8 403 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 86 EMEA: 111 Contact: Lars Zenke Director Research lars.zenke@colliers.com Colliers International Deutschland GmbH Kranhaus 1, Im Zollhafen Köln billion global turnover 95 billion in transaction volume with more than 80,000 investment and leasing deals 170 million sq m under management Over 15,000 professionals About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 15,000 professionals operating from 403 offices in 68 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 10 consecutive years, more than any other real estate services firm. For the latest news from Colliers International, visit Colliers.com, or follow us on and LinkedIn. To see the latest news on Colliers International in Germany follow colliers.com Copyright 2018 Colliers International Deutschland GmbH This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s) All rights reserved.