MARKET REPORT 217/218 Accelerating success. Office and Investment Market Hamburg
Market Overview Office Leasing TOP 7 BERLIN DÜSSELDORF FRANKFURT HAMBURG COLOGNE MUNICH STUTTGART STOCK OF OFFICE SPACE 9.52 19.5 7.6 11.57 13.75 7.85 22.4 7.85 in million sq m OFFICE SPACE TAKE-UP 4,156,7 937, 333, 71,1 622, 32, 984,2 268,4 217 in sq m Change year-on-year in % 6 9-9 29 14-2 26-38 OFFICE SPACE TAKE-UP 3,167,9 634,3 331,8 462,7 55,13 261, 718,4 254,6 (for the entire year) 1-year Ø PRIME RENT 31.3 27. 41. 26. 21.5 35.6 24.3 in /sq m AVERAGE RENT in /sq m 19.15 15.4 2. 15.4 12.9 17.3 13.4 VACANT OFFICE SPACE in sq m 3,652,8 39, 532,4 1,14,9 625, 314, 535,9 164,6 VACANCY RATE in % 4.1 2. 7. 9.6 4.5 4. 2.4 2.1 Change year-on-year in basis points -8-1 -5-16 -5-1 -6-7 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 2,74 6,912 3,41 2, 6,17 1,2 217 in million Change versus prior year in % 9 4 54 26 13-31 14-1 -37 TRANSACTION VOLUME (for the entire year) 1-year Ø PRIME YIELD OFFICES in % PRIME YIELD HIGHSTREET RETAIL in % PRIME YIELD INDUSTRIAL & LOGISTICS in % 33,667 18,49 4,9 1,538 3,79 2,912 1,11 4,1 95 3.2 3.75 3.3 3.3 4.25 3.2 3.8 3.2 3.5 2.8 3.2 3.5 2.8 3.1 4.65* *) Refers to the defined logistics market areas 2
City Facts HAMBURG Population in 1, 1,861 Employees Paying Social Se cu rity Contributions in 1, Fast Facts OFFICE LEASING HAMBURG 217 Change vs. prior year Office Space Take-up 622, sq m 13.7 % Leasing Take-up 583,5 sq m 19. % Prime Rent 26./sq m. % Average Rent 15.4/sq m 2. % Vacancy Rate 4.5 % -5 bp* Office Space Stock 13.75 m sq m 1.2 % Achieved Rents 949 Unemployment Rate in % 6.5 Per Capita Disposable Income in 24,241 Office Leasing Take-up By the end of 217 the total take-up on the Hamburg office leasing market was recorded at approximately 622, sq m. It therefore surpassed the forecast of 6, sq m and outperformed the excellent previous year s result of 547,3 sq m by 14 %. Take-up in 217 beat the 5-year average by more than 16 %. Leases signed in the large-space segment of 1, sq m and up, significantly boosted the overall result in 217. These include Hamburg University s interim lease at Überseering 35 (City North) in Q1 of around 2, sq m and the leases signed by publishing house Gruner+Jahr at Hannoverscher Bahnhof (HafenCity) and Olympus at Wendenstraße (City South), each signed for more than 3, sq m office space. Construction on the expansion of the Jungheinrich headquarters at the company s current location at Friedrich-Ebert-Damm 129 (Barmbek) got underway as well in 217. The new-build will HAMBURG Price range in / sq m Average rent in /sq m 1 City 13.-26. 19.4 2 HafenCity 13.5-24. 19. 4 3 Harbour Fringe 14.5-22. 17.6 433 18 4 Alster West 13.5-22.5 17.5 23 19 13 5 Alster East 12.-2. 17.1 14 6 St. Georg 11.-17.5 15. 7 City South 8.5-15.6 11.9 447 12 Eppendorf Winterhude 8 St. Pauli 1.-23.5 15.5 9 Altona 11.-17. 13.5 1 Bahrenfeld 8.-14.5 12. 11 Eimsbüttel 1.-16. 11.5 431 7 Eimsbüttel 1 11 Bahrenfeld Harvestehude 4 5 5 Uhlenhorst 15 Barmbek 75 16 Wandsbek 12 Eppendorf 1.-17.5 12.5 Sternschanze 6 24 13 Airport 8.-12.5 9.7 14 City North 8.-15. 1.8 15 Barmbek 9.-16. 12.5 16 Wandsbek 8.-15.9 9.5 17 Harburg 8.5-13.5 9.8 18 Periphery East 6.5-13.5 9.5 19 9 Altona 3 8 St. Pauli Hamburg 1 St.Georg Altstadt HafenCity 2 Hammerbrook 7 255 5 17 73 Harburg 253 19 Periphery West 7.5-12. 9.6 4 *) basis points 3
encompass roughly 15, sq m. These four leases accounted for one-sixth of total take-up generated in 217. However, only the expansion project applied to Q4 217. Leases signed for office spaces between 2, and 5, sq m contributed the lion s share to the strong year-end result. Rents The ongoing high demand on the Hamburg office market resulted in a rise of rental levels in 217: The average rent increased by 2 % from 15.1 per sq m to 15.4 per sq m. In 218 we expect a further increase due to ongoing high demand. Rents in the City and HafenCity submarkets are already priced for more than 2. per sq m for units of 1, sq m and up. Along with the City South submarket, the City and HafenCity submarkets are experiencing the highest demand in Hamburg, and we expect to see rents particularly increase in these submarkets. Prime rent in Hamburg has remained steady at 26. per sq m since late. With the start of the marketing activities for completed project developments, particularly in the HafenCity and City submarkets, prime rents will likely rise even further. Supply and Vacancy ICT and media companies were particularly active in leasing office space. A lease signed by Gruner+Jahr publishing house contributed its fair share to the sector s 17 % in take-up. Traditionally the most active tenants, consulting firms, took second place only at 14 %. The manufacturing industry also accounted for 14 %, followed by the construction and real estate sector at around 13 %. Business centers and coworking spaces accounted for more than half of the sector s share in take-up. Regus (Spaces), for example, signed a lease for approximately 7,2 sq m in the Kallmorgen Tower located at Willy-Brandt- Straße 23. Lively take-up activity in Hamburg diminished supply to 625, sq m at year s-end. In 217 the vacancy rate gained some momentum after stagnating at 5. % throughout and dropped 5 bp to 4.5 % over the course of the year. We expect to see the vacancy rate continue to decline in 218 driven by the high demand. Key Developments Leasing deals in the pipeline encompass around 25, sq m. Most notably, new properties, e.g. Watermark and Shipyard in the HafenCity submarket, will be introduced to the market. Speculative property developers have been particularly active in the construction of new office buildings in the HafenCity. Ongoing high demand, particularly for modern office space, puts the chance of vacancy in the new office buildings at close to zero. Occupiers especially appreciate the location and infrastructure of HafenCity and view the submarket as more than just an alternative to scarce supply in the City. Office Space Take-up in 1, sq m 7 6 5 4 3 2 1 Prime and Average Rents (in /sq m) 24. 14. 14.5 14.5 15.1 15.4 213 213 Prime Rent 18 99 24.5 25. 26. 26. 214 214 8 57 423 426 46 49 Leasing Owner-occupiers Average Rent 39 584 217 Completion Volume (in 1, sq m) and thereof Pre-let/Owner-occupied 3 25 2 15 1 5 12 Completions 255 1 217 thereof Pre-let/Owner-occupied 25 15 78 218 Vacancy Rate (in %) and Vacancy (in 1, sq m) 1, 8 6 4 2 7.% 213 6.% 932 798 698 677 214 5.2% 5.% 13 219 4.5% 625 217 217 4
Summary and Outlook The Hamburg office leasing market has a strong track record when it comes to take-up. 217 outperformed the 1 and 5-year averages by around 23 % and 16 %, respectively. The Hamburg office market continues to boom, in part due to a robust job market. Although we currently do not see any indication of market activity slowing down, we do not expect to see comparable take-up results in 218. A take-up in excess of 5, sq m does, however, appear realistic. Fast Facts INVESTMENT HAMBURG 217 Transaction Volume in million 3,41 4,91 Portfolio Transactions 37 % 29 % Share by International Buyers 43 % 36 % Share by International Sellers 29 % 1 % Most Important Property Type Office: 67 % Office: 7 % Prime Yield Office 3.3 % 3.5 % Commercial Transaction Volume (in million ) 5, 4, 3, 2, 1, 2,8 213 3,65 214 4, Types of Properties (in %) 4,91 Mixed Use Industrial & Logistics Retail Building Site 4 1 (commercial) 5 7 3,41 217 Investment Transaction Volume In 217 the transaction volume at the Hamburg commercial real estate market reached 3.4 bn, 17 % above the 1-year average but roughly 31 % below the record year s figures ( 4.9 bn). The 217 result can be attributed to a very strong Q4 that attained a transaction volume of 1.4 bn spread over 36 real estate deals. The sale of two assets from the Germany-wide Signa portfolio, each in the three-digit million euro range, had a particularly strong impact on the total transaction volume. Signa Holding was able to add two core assets located in Hamburg to its portfolio by purchasing the Alsterarkaden and the Kaufmannshaus in the submarket City from RFR Holding GmbH. The initial reservation observed at the Hamburg investment market in the first three quarters of 217 turned into a spectacular year-end rally. Supply and Demand The ongoing shortage of supply on the market, especially of core assets in the City submarket, prevented an even higher transaction volume in Hamburg. In total, five transactions surpassing the 1 m mark were registered, including Patrizia AG s purchase of the HafenCity Gate in the submarket HafenCity from Orion Capital Managers (as part of the Odin Portfolio). Other transactions included the Hotel Radisson Blue at Marseiller Straße 2 (around 2 m, Alster West submarket), Kaisergalerie at Große Bleichen 31 (around 17 m, City submarket) and the two assets from the Signa portfolio (Alsterarkaden and Kaufmannshaus, City submarket). The three major deals in the City were responsibe for more than 5 % of total transaction volume in the submarket. Similar to previous years, office assets accounted for roughly two-thirds (67 %) of total transaction volume in 217. Hotel assets trailed far behind, finishing second place at around 16 %. Hotel 16 67 Office 5
Lot sales came in third at 7 %, beating out retail assets with a low market share of 5 %. Mixed-use properties accounted for 4 % of transaction activity. Practically none of the assets sold in Hamburg in 217 could be associated with the industrial and logistics sector. Asset/fund managers were most active as buyers at the Hamburg commercial market, accounting for 22 % of the total transaction volume. Open-ended real estate funds and special funds came in second place with a share of roughly 18 %, followed by REITs with a share of around 17 %. Asset/fund managers were also the most active sellers, accounting for 23 %. Opportunity and equity funds sold assets worth roughly 21 % of total transaction volume with property developers and development companies accounting for around 16 %. In 217, Hamburg real estate was not only coveted by german investors but internationally sought after. Foreign investors accounted for 43 % and predominantly came from neighboring countries, such as Austria, Switzerland and France. In addition a substantial part of the capital originated from Norway and the UK. Asian investors, who were more active in 217 on the German market than in previous years, have yet to make a significant impact in Hamburg. The share of international investors selling assets in 217 reached 29 % of the total transaction volume. Yields All types of usage experienced significant yield compression in 217, especially logistics assets. A drop of 85 bp from 5.5 % to 4.65 % could be observed in the sector. Prime rents for office space and properties featuring an office-retail mix recorded a 2 bp decline with current yields at 3.3 % and 3.2 %, respectively. The combination of scarce supply, in particular looking at downtown core assets, and the ongoing low interest rate environment continues to drive yield compression. This trend can be strongly felt in the CBD as well as in the surrounding submarkets such as City South and St. Georg. Transaction Volume by Buyer Groups (in million, share in %) Asset managers / Fund managers Open-ended real estate funds / Special funds Listed property companies Property developers Private investors / Family Offices Other investors Open-ended real estate funds / Special funds Property developers Listed property companies Private investors / Family Offices Other investors 2 4 6 8 22 % 18 % 17 % 14 % 8 % 21 % Transaction Volume by Seller Groups (in million, share in %) Asset managers / Fund managers 23 % 21 % 16 % 9 % 7 % 25 % 2 4 6 8 Summary and Outlook The Hamburg commercial real estate investment market is in good shape despite the ongoing shortage in supply. The fact that the demand on the office leasing market remains high is one of the factors that keep investors coming back. A number of forward deals and large-volume deals are in the pipeline for 218, which makes it safe to say that transaction volume can be expected to once again reach the 4. bn mark in 218. Corinna Nürnberger Consultant Research +49 4 32871-128 corinna.nuernberger@colliers.com 6
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 MF Matthias Friedel Luftbildfotografie Photo credits inside pages Page 2 Fotolia Page 3 Europa-Passage, Allianz Real Estate GmbH Henning Kreft Fotograf Page 7 istock, william87 7
43 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 86 EMEA: 111 Contact: Corinna Nürnberger Consultant Research Tel +49 4 32871-128 corinna.nuernberger@colliers.com Colliers International Hamburg GmbH Burchardstraße 17 295 Hamburg +49 4 32871-2.3 billion global turnover 95 billion in transaction volume with more than 8, investment and leasing deals 17 million sq m under management Over 15, 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, professionals operating from 43 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 1 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 1 consecutive years, more than any other real estate services firm. For the latest news from Colliers International, visit Colliers.com, or follow us on Twitter: @ColliersIntl and LinkedIn. To see the latest news on Colliers International in Germany follow www.colliers.de. colliers.com Copyright 218 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). 218. All rights reserved.