germany city survey - colliers international
TRANSCRIPT
The title of the preface to last year’s City
Survey “Boom continues” has proven
accurate. Following 2018’s all-time high
in transaction volume and the ongoing
boom on the leasing market, a similar
annual result appeared realistic even in
early 2019. However, it was impossible to
anticipate the extraordinary pace of mar-
ket activity at year-end. Much to the sur-
prise of market participants, not to men-
tion our own, we ended up having to make
a significant upward adjustment to our
prediction from early last year that “a
more lively investment environment is
difficult to imagine.”
With new highs and record results every
year, we are seeing entirely new stand-
ards being set in terms of annual results
and the long-term averages that serve as
a reference have increased significantly.
Take-up results over the past five years
have averaged at around 4 million sqm
and three cities have recorded prime rents
that are either approaching €40 per sqm
or have already surpassed this threshold
by a significant margin. Transaction vol-
umes of €60bn are becoming the new
standard and the weighted average of
gross prime yields in the office segment
across the Big 7 fell below the 3% mark to
2.98% by the end of 2019.
Both German and foreign investors con-
tinue to set their sights on German real
estate and are increasingly viewing the
country with its seven highly liquid, diver-
sified investment hubs as an alternative to
Greater London and Paris. The circle of
foreign investors active in Germany con-
tinues to expand thanks to the ECB’s
ongoing zero-interest policy, which will
continue under new president Christine
Lagarde, and the affordable financing
conditions that go with it hand-in-hand as
well as advantageous hedging costs for
investors from non-EU countries. An
increasing number of market players are
getting involved in the competition for
scarce supply. Germany’s political and
economic stability despite the current
growth slump in a challenging global
environment continues to be a decisive
argument for investors.
Real estate continues to offer very inter-
esting investment opportunities even in
the current market conditions. We would
be happy to use our unique market exper-
tise to help you reach and even surpass
your investment goals.
Matthias Leube MRICSCHIEF EXECUTIVE OFFICER
NEW DIMENSIONS
3CONTENTS
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Market Data 4
Commercial Real Estate Market GermanyOffice Leasing 6Investment 9Retail Investment 12Industrial and Logistics Investment 15Hotel Investment 18
City Reports
BerlinOffice Leasing 23Investment 25
DüsseldorfOffice Leasing 29Investment 31
FrankfurtOffice Leasing 35Investment 37
HamburgOffice Leasing 41Investment 43
CologneOffice Leasing 47Investment 49
MunichOffice Leasing 53Investment 55
StuttgartOffice Leasing 59Investment 61
Research Services 64
Glossary 66
Contacts /Locations 67
CONTENTS
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Office LeasingTOP 7 Berlin Düsseldorf Frankfurt Hamburg Cologne Munich Stuttgart
Stock of Office Space in million sqm 92.26 20.50 7.75 11.56 13.85 7.91 22.66 8.03
Office Space Take-up 2019 in sqm 3,948,400 1,030,000 475,000 550,500 535,400 275,000 770,400 312,100
Change year-on-year in % 4.0 30.2 40.5 – 10.9 – 5.1 – 5.2 – 21.3 44.4
Forecast for 2020
Office Space Take-up in sqm Average 2009 –2018
3,293,700 693,700 314,700 486,100 510,900 291,600 738,400 258,300
Prime Rent in € / sqm 39.90 28.50 45.50 29.00 25.50 39.50 24.00
Forecast for 2020
Average Rent in € / sqm 26.30 17.30 21.30 17.30 15.20 20.10 16.60
Forecast for 2020
Vacant Office Space in sqm 2,652,800 246,000 454,500 793,600 344,700 175,000 489,400 149,600
Vacancy Rate in % 2.9 1.2 5.9 6.9 2.5 2.2 2.2 1.9
Change year-on-year in bp* – 20 – 30 – 50 10 – 110 – 60 40 – 40
Forecast for 2020
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.* basis points
InvestmentGermany TOP 7 Berlin Düsseldorf Frankfurt Hamburg Cologne Munich Stuttgart
Transaction Volume 2019 in million € 71,630 40,047 12,172 3,840 7,843 4,293 3,240 10,904 1,755
Change year-on-year in % 18.2 21.3 74.9 12.3 – 18.8 – 24.2 74.2 67.0 – 20.4
Forecast for 2020
Transaction Volume in million € Average 2009 – 2018
37,500 20,960 4,566 1,832 4,512 3,190 1,236 4,504 1,120
Prime Yield Offices in % 2.90 3.30 3.00 3.20 3.30 2.75 3.30
Prime Yield High Street Retail in % 3.10 3.20 2.80 3.30 3.30 2.75 3.30
Prime Yield Industrial & Logistics in % 4.20 **
** Refers to the defined logistics market areas
MARKET DATA
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OFFICE LEASING 6INVESTMENT 9RETAIL INVESTMENT 12INDUSTRIAL AND LOGISTICS INVESTMENT 15HOTEL INVESTMENT 18
COMMERCIAL REAL ESTATE MARKET GERMANY
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Take-up
The German office leasing market once
again recorded a strong annual result with
some markets posting new all-time highs.
The country’s Big 7 office markets regis-
tered 3.9 million sqm in take-up in 2019, up
4% yoy. This result is the second-best
ever recorded and exceeds the 10-year
average by 20%.
The Berlin office market posted a record
result with 1.0 million sqm, up 30% yoy.
This is the first time that the German capi-
tal has surpassed the 1-million-sqm mark.
Munich came in second with 770,400 sqm,
down 21% compared to a strong 2018.
Tenants proved hesitant due to the eco-
nomic slowdown, particularly in the
second half of the year.
Frankfurt took 3rd place in the ranks with
550,500 sqm, exceeding the 10-year aver-
age by 13%. However, Frankfurt’s annual
result was still 11% shy of previous-year
results due to a lack of major deals. Ham-
burg experienced a similar trend with
535,400 sqm in take-up, surpassing the
10-year average by 5%.
Large-scale transactions helped Düssel-
dorf achieve a new all-time high of
475,000 sqm. This reflects a 41% yoy
increase and an impressive 51% above the
10-year average. Stuttgart managed to top
previous year results by 44% with take-up
of 312,100 sqm. This marks the second
time Stuttgart has managed to break
through the 300,000-sqm barrier.
Cologne finished up the year with 275,000
sqm in take-up, down 5% yoy due to a par-
ticularly severe shortage in supply.
Fast Facts
Office Leasing TOP 7 2019 Change year-on-year
Office Space Take-up in sqm 3,948,400 4.0%
Vacant Floor Space in sqm 2,652,800 – 8.1%
Vacancy Rate in % 2.9 – 20 bp*
Office Space Stock in million sqm 92.26 0.8%
* basis points
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
202020192018201720162015
3.9 3.94.2
3.53.8
3.5
Average 2015 – 2019
Whole year Forecast
OFFICE LEaSING
Figure 1: Office Space Take-up in the TOP 7 in million sqm
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rents
Average rents showed continued strong
growth this past year with many of the
country’s Big 7 cities recording an
increase in prime rents. Frankfurt
claimed pole position with €45.50 per
sqm, followed by Berlin and Munich.
These two cities swapped places during
2019, coming in below the €40 threshold
at year-end with €39.90 per sqm and
€39.50 per sqm, respectively. Berlin
posted an increase of 13% and Munich
reported a 10% increase. Hamburg and
Düsseldorf both came in just shy of the
€30 mark with prime rents at €29.00 per
sqm and €28.50 per sqm, respectively.
Cologne (€25.50 per sqm) and Stuttgart
(€24.00 per sqm) brought up the pack.
Average rents also reached new heights
in 2019, up 21% to €26.30 per sqm in Ber-
lin. Stuttgart was the only market to expe-
rience similar activity with average rents
up 19% to €16.60 per sqm. In absolute
terms, Frankfurt and Munich followed in
the ranks with €21.30 per sqm and €20.10
per sqm, respectively. Hamburg and Düs-
seldorf came in neck-and-neck with
€17.30 per sqm, the former registering
steeper growth (10%) than the latter (7%).
Average rents in Cologne were up 10% to
€15.20 per sqm.
Supply and Vacancy
Vacancy continued to drop in 2019, albeit
at a slower pace. Vacancy in many of Ger-
many’s Big 7 markets is currently limited
to outdated, barely marketable office
space and has begun to bottom out. The
Big 7 have seen a drop in vacancy to less
than 2.7 million sqm, reflecting a
decrease of 20 bps to a current 2.9%.
Berlin recorded the lowest vacancy rate at
1.2% followed by Stuttgart (1.9%) and
Cologne (2.2%). Absolute vacancy in all
three cities dropped by more than 20% in
2019. Munich’s vacancy rate experienced a
slight increase to 2.2%. However, scarce
supply continues to dominate the market.
The vacancy rate in Cologne matched
Munich’s results. Hamburg followed in the
ranks at 2.5% with vacancy down 110 bps.
Düsseldorf fell below the 6% mark at 5.9%
0
500
1,000
1,500
2,000
2,500
2021202020192018201720162015
1,508
1,121
842 939770
843
1,226
2,0562,261
Average 2015 – 2019Pre-letCompletions
0
1
2
3
4
5
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20192018201720162015
5.6 %
4.9 %
4.1 %
3.1 %2.9 %
5.0
4.4
3.7
2.92.7
Vacancy RateVacancy
Figure 2: Completions of Office Properties in the TOP 7 in total in 1,000 sqm
Figure 3: Vacancy Rate in the TOP 7 in % and Vacancy in million sqm
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due to strong leasing activity, while Frank-
furt exceeded the same mark, coming in
1% higher at 6.9%. Large-scale space
available for immediate tenancy in the city
outskirts is keeping vacancy rates stable
for the moment.
Over 1.2 million sqm of new office space
hit Germany’s Big 7 markets in 2019, up
46% compared to the previous year
(0.8 million sqm). At the moment, 4.3 mil-
lion sqm is scheduled for completion by
2021 with Berlin and Munich experi encing
particularly high construction activity.
Property developments were a significant
source of supply serving the high demand
in many of the Big 7 markets. Property
developments accounted for 40% of leas-
ing activity in Germany’s office hubs. As
such, pre-leasing rates remain high. 92%
of the space completed in 2019 was leased
by year-end and 73% of space currently
under construction has already been
leased as of early 2020. Markets continue
to quickly absorb new space.
Summary and Outlook
Our forecast for 2020 assumes that office
leasing markets will remain mostly unaf-
fected by external risks such as Brexit
and trade conflicts thanks to more robust
economic growth and ongoing record
employment. Although we do expect to
see lower demand in certain locations and
sectors, this will only have an impact on
take-up results and not on rent levels. In
view of these factors and the well-stocked
development pipeline, we expect 2020
take-up to come in at up to 3.5 million sqm.
In any case, 2020 results are sure to exceed
the 10-year average of 3.3 million sqm.
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Q4 19Q4 18Q4 17Q4 16Q4 15
Cologne StuttgartMunich
HamburgFrankfurtDüsseldorfBerlin
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16
18
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22
24
26
28
Q4 19Q4 18Q4 17Q4 16Q4 15
Cologne StuttgartMunich
HamburgFrankfurtDüsseldorfBerlin
Marc SteinkeConsultant | Research & GIS
+49 211 862062-40
Figure 4: Vacancy Rate in the TOP 7 in % Figure 5: Average Rents in the TOP 7 in €/sqm
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Transaction Volume
Commercial assets changed hands for
€71.6bn in 2019, marking a sensational
18% increase from 2018’s all-time high,
which topped the €60bn mark for the first
time. Q4 2019 was by far the strongest
performing quarter to date at €28.1bn,
reflecting 39% of total annual transaction
volume.
Compared to the overall market, invest-
ment volume in the Big 7 saw even more
dynamic growth, up 21% to an all-time
high of €44.0bn. Berlin and Munich were
the first investment hubs to exceed €10bn
in terms of annual take-up. Düsseldorf
and Cologne also recorded new record
results while the other Big 7 cities signifi-
cantly exceeded their long-term averages.
Supply and Demand
The increase in transaction volume can be
attributed to a high number of large-scale
landmark deals. A total of 49 assets with a
volume of more than €250m changed
hands over the course of the year. The
transaction volume generated by transac-
tions of this size came to €27.0bn, claim-
ing 38% of total annual transaction volume
alone. That represents an increase of
11 percentage points compared to 2018,
which was also characterized by an
explosion of landmark deals. The largest
deal signed was US investment firm
Blackstone’s acquisition of the commer-
cial assets held by Canadian REIT Dream
Global. This deal alone involved more than
100 German office and logistics proper-
ties and accounted for a volume of roughly
€3.1bn. THE SQUAIRE at Frankfurt Air-
port and Tucherpark office campus in
Munich went for around €1bn each.
Fast Facts
Investment 2019 2018 Veränderung
Transaction Volume in million € 71,630 60,593 18.2%
Total Top 7 44,047 36,305 21.3%
Type of transaction
Individual Transactions 50,576 43,003 17.6%
Share in the TOP 7 34,908 29,978 16.4%
Portfolio Transactions 21,053 17,590 19.7%
Share in the TOP 7 9,140 6,327 44.5%
Source of capital
Share by International Buyers 30,436 24,116 26.2%
Share in the TOP 7 19,841 15,104 31.4%
Share by International Sellers 30,526 20,997 45.4%
Share in the TOP 7 20,356 13,010 56.5%
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30
40
50
60
70
80
202020192018201720162015
thereof O�ce PropertiesForecastAverage 2015 – 2019
Transaction Volume in Germany
24.6 24.9 26.730.9
40.5
55.452.6
57.360.6
71.6
60.0
Figure 1: Total and Office Transaction Volume in Germany in billion €
INVESTMENT
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In addition to single-asset and portfolio
deals, H2 also saw a number of minority-
share investments in companies holding
large property portfolios or in their
respective portfolios. Private equity
investment firm Madison and investment
firm FFP owned by Peugeot, for example,
each purchased 5% shares in Austrian
property company Signa. Commerz Real
acquired a 20% share in 10 Kaufhof
department stores owned by Signa. TLG’s
acquisition of a 13% share in Aroundtown
laid the foundation for the full merger of
the two companies. This type of real estate
investment has managed to make its mark
with a transaction volume of roughly €2.8bn
and will become increasingly important
under the current high pressure to invest
combined with limited supply.
These minority-share investments boost-
ed the transaction volume generated by
portfolio deals to €21.1bn over the course
of the year, again reflecting a 29% share
in total transaction volume. The focus on
single-asset deals that we saw in 2018
generally continued into 2019 with invest-
ment volume up to €50.6bn.
Foreign investors were particularly able
to beat out the domestic competition
when it came to the year’s mega deals.
Even though the total share of foreign
capital involved in 2019 market activity
was down yoy by 5 percentage points
to €23.7bn, or 40%, foreign investor par-
ticipation in mega deals accounted for
53% of transaction volume, a significant
climb yoy.
Asset/fund managers once again domi-
nated the market buy-side with a market
share of 24%. Open-ended real estate
funds and special funds took 2nd place
with 22%, benefiting from their access to
particularly high liquidity. Property
de velopers reclaimed their sell-side pole
position from previous years and posted a
23% market share. Their significance as a
source of product was particularly appar-
ent in Berlin (41% market share), Hamburg
(30%) and Munich (23%). Asset/fund
managers trailed at some distance with
2nd place in the nation-wide ranking and
an average market share of 14%.
SellersBuyers SellersBuyers
0 10 20 30
Other Investors
Property Developers
Opportunity Funds/Private Equity Funds
Listed Property Companies
Open-ended Real Estate Funds/Special Funds
Asset Managers/Fund Managers
Other Investors
Corporates/Owner-occupiers
Opportunity Funds/Private Equity Funds
Listed Property Companies
Asset Managers/Fund Managers
Property Developers
up to € 10 m 5%€ 10 m to € 25 m 10%€ 25 m to € 50 m 12%
above € 250 m 37%
€ 50 m to € 100 m 16%
€ 100 m to € 250 m 20%
SellersBuyers SellersBuyers
0 10 20 30
Other Investors
Property Developers
Opportunity Funds/Private Equity Funds
Listed Property Companies
Open-ended Real Estate Funds/Special Funds
Asset Managers/Fund Managers
Other Investors
Corporates/Owner-occupiers
Opportunity Funds/Private Equity Funds
Listed Property Companies
Asset Managers/Fund Managers
Property Developers
up to € 10 m 5%€ 10 m to € 25 m 10%€ 25 m to € 50 m 12%
above € 250 m 37%
€ 50 m to € 100 m 16%
€ 100 m to € 250 m 20%
Figure 2: Transaction Volume by Size Category 2019 share in %
Figure 3: Buyer and Seller Groups in Germany in billion €
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yields
The ongoing momentum on the invest-
ment market continues to put pressure on
yields. Gross prime yields continued to
drop in 2019, particularly in the office seg-
ments of Germany’s Big 7, with prime
locations in Cologne down 45 bps, Frank-
furt down 30 bps, Munich down 25 bps,
Berlin and Düsseldorf both down 20 bps
and Stuttgart down 10 bps. In December
2019 yields were recorded within a very
narrow range of between 2.75% in Munich
and 3.30% in Düsseldorf, Cologne and
Stuttgart. Prime yield compression for
high street properties in Germany’s top 7
cities appears to be over for the most
part. Gross initial yields for office build-
ings and office-retail mix assets in Munich,
Cologne and Stuttgart are stabilizing as a
result.
Office Investment
Fueled by major deals, the office segment
was able to considerably expand its posi-
tion as 2019’s most popular asset class.
Investors poured €40.5bn into office
assets over the past 12 months, boosting
market share to 57% in total, up to 62% for
single-asset deals and to an above-aver-
age 44% for portfolio transactions.
Summary and Outlook
The boom phase is set to continue in 2020.
Billion-euro deals like Metro’s sale of over
80 Real hypermarkets and Aroundtown’s
acquisition of the TLG portfolio have
already been announced for early 2020.
Rapid resale of portfolio acquisitions
recorded in the past two years will consist-
ently bring product to the market, primarily
in the country’s highly liquid Big 7, but also
increasingly outside the top locations in
those cities. Portfolio managers are also
taking advantage of this high-priced phase
to clean out their portfolios, meeting with a
stronger risk appetite on the part of inves-
tors. Historically low financing costs, neg-
ative interest rates on cash reserves and
low-risk government bonds will continue to
drive momentum on the market going for-
ward. Based on these favorable overall
conditions, we consider transaction vol-
ume in the realm of €60bn realistic for
2020 as well.
thereof TOP 7Transaction Volume Germany
0 10 20 30 40 50
Otherproperties
Building SiteCommerical
Mixed use
Hotel
Industrial& Logistics
Retail
O�ce
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Q4 19Q4 18Q4 17Q4 16Q4 15
Cologne StuttgartMunich
HamburgFrankfurtDüsseldorfBerlinthereof TOP 7Transaction Volume Germany
0 10 20 30 40 50
Otherproperties
Building SiteCommerical
Mixed use
Hotel
Industrial& Logistics
Retail
O�ce
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Q4 19Q4 18Q4 17Q4 16Q4 15
Cologne StuttgartMunich
HamburgFrankfurtDüsseldorfBerlin
Susanne KieseHead of Research
+49 211 862062-47
Figure 4: Transaction Volume by Type of Property in billion €
Figure 5: Office Prime Yield in the TOP 7 in %
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Transaction Volume
German retail assets changed hands for
€10.1bn in 2019, up slightly yoy. Following
2015’s all-time high and 2017’s impressive
result, this is the third time over the past
decade that transaction volume has sur-
passed the €10bn mark. Although the
retail sector was exempt from the impres-
sive end-of-year rally, which particularly
boosted record activity in the office seg-
ment in 2019, it once again proved the
second-strongest asset class on the mar-
ket as a whole with a market share of 14%.
Retail and office were the only two asset
classes to achieve double-digit results.
Supply and Demand
Investor interest in German retail assets
remained high despite fundamental struc-
tural changes in the retail sector. This can
be attributed to extremely robust general
conditions in Germany driven by a strong,
crisis-resistant domestic economy over
the past few years and high consumer
spending. The German investment market
is at the same time characterized by a
variety of asset types and diversity of
locations, which allows for a highly selec-
tive capital allocation approach. Foreign
investors find this particularly attractive,
and they accounted for €4.0bn, or 39%, of
retail investments in 2019. Austrian inves-
tors (15% market share) were by far the
most active, mainly due to the largest deal
of the year valued at over €1bn, in which
listed Austrian property company Signa
completed the purchase of all of the Kauf-
hof department stores in Germany,
acquiring the last 49.9%.
The share claimed by portfolio deals
increased 2 percentage points to 57%
over the past 12 months. This includes
minority-share investments in companies
holding large property portfolios, a trend
that had an impact on the market in 2019.
As such, the market share claimed by
portfolio deals is almost double the aver-
age across all asset types (29%) and
reflects a transaction volume of €5.8bn.
Fast Facts
Investment 2019 2018
Transaction Volume in million € 10,122 9,793
Portfolio Transactions 57% 55%
TOP 7 33% 33%
Share by International Buyers 39% 44%
Share by International Sellers 53% 52%
Prime Yield High Street Retail 2.75% 2.75%
0
2
4
6
8
10
12
14
16
20192018201720162015Average 2015 – 2019Whole year
15.9
9.2
11.9
9.8 10.1
Figure 1: Transaction Volume Retail in billion €
rETaIL INVESTMENT
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Open-ended real estate funds and special
funds were the most active investor group
buy-side, accounting for an investment
volume of €3.2bn (32%). They came in
ahead of listed property companies
(20%), which kept the overall market lead-
er, asset/fund managers (9%), at a signifi-
cant distance in 3rd place. Listed property
companies claimed pole position sell-side
(19%) thanks to the above-mentioned
minority investments, followed by oppor-
tunity and private equity funds (17%) and
asset/fund managers (16%).
In terms of asset types, high street assets
in prime locations took 1st place at
€4.5bn, or 45%, in part due to the Kaufhof
deal. However, 2019 also saw strong
demand for retail warehouses and retail
parks with a food anchor, as evidenced by
the sale of the Superfood portfolio com-
prising 68 supermarkets for around
€250m in Q4.
Investors showed a clear preference for
food retailers and daily amenity retail as
these assets are considered crisis-resist-
ant in light of the disruptive changes being
caused by e-commerce. They poured
€3.8bn, or 37%, into retail warehouses
and retail parks, accordingly. In terms of
number of deals, these assets claimed an
even higher market share of 61%.
Shopping centers came in 3rd with a mar-
ket share of 18% in terms of volume and
9% in terms of number of deals. Investors
are especially selective when it comes to
investment opportunities in this segment
and demand is beginning to shift towards
mixed-use assets. The highest volume
single-asset deals of the year were
Königsbau-Passagen in Stuttgart and the
Zoom office/retail property in Berlin,
which changed hands for €280m and
€265m, respectively.
yields
Prime yields for commercial buildings in
top locations in the Big 7 remained stable
for the most part over the course of the
year, currently ranging between 2.75%
and 3.30%. More and more investors,
however, are expecting to soon see a
downward trend in rents and purchase
prices. Stuttgart and Hamburg have
already posted increases in gross initial
SellersBuyers SellersBuyers
0 1 2 3 4
Other Investors
Opportunity Funds/Private Equity Funds
Private Investoren/Family Offices
Asset Managers/Fund Managers
Listed Property Companies
Open-ended Real Estate Funds/Special Funds
Other Investors
Open-ended Real Estate Funds/Special Funds
Property Developers
Asset Managers/Fund Managers
Opportunity Funds/Private Equity Funds
Listed Property Companies
High Street 45%
Shopping Centers 18%
Retail Warehouses/Retail Parks 37%
SellersBuyers SellersBuyers
0 1 2 3 4
Other Investors
Opportunity Funds/Private Equity Funds
Private Investoren/Family Offices
Asset Managers/Fund Managers
Listed Property Companies
Open-ended Real Estate Funds/Special Funds
Other Investors
Open-ended Real Estate Funds/Special Funds
Property Developers
Asset Managers/Fund Managers
Opportunity Funds/Private Equity Funds
Listed Property Companies
High Street 45%
Shopping Centers 18%
Retail Warehouses/Retail Parks 37%
Figure 2: Transaction Volume by Type of Building 2019 share in %
Figure 3: Transaction Volume by Buyer and Seller Groups in billion €
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yields for high street assets (20 bps in
Stuttgart and 10 bps in Hamburg to
3.30%). Yields for shopping centers in
prime locations with high footfall range
between 4.50% and 4.75%. An upward
trend in yields can also be seen outside of
prime locations and in less attractive sec-
ondary and tertiary cities. Retail parks and
retail warehouse portfolios with food
anchors with yields of around 5.00% con-
tinue to find popularity with investors
looking for higher yields.
Summary and Outlook
The structural changes currently taking
place across the retail landscape and the
selective approach taken by investors will
continue in 2020. Contract negotiations
are proving rather lengthy as a result, and
a number of billion-euro deals, which had
been expected for 2019, including Metro’s
sale of over 80 Real hypermarkets, have
been postponed to early 2020. However,
we can also expect high-volume single
assets in established locations featuring
upside potential after revitalization to
change hands. Even though retail assets
are only partially benefiting from the cur-
rent investment boom, we consider €10bn
in total transaction volume realistic for
2020, especially in light of the fact that the
downside potential of one-time deals as
can typically be seen in the office segment
is relatively low.
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HamburgFrankfurtDüsseldorfBerlin
Susanne KieseHead of Research
+49 211 862062-47
Figure 4: Prime Yield High Street Retail in %
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Transaction Volume
The German industrial and logistics real
estate market finished out 2019 with a
satisfactory annual result. Investors
poured roughly €6.6bn into this asset
class, bringing in the third-strongest
annual result to date since record year
2017 (€8.7bn) and 2018 (€6.8bn) despite
ongoing limited supply. This result also
managed to top the 5-year average by
roughly 19%. Industrial and logistics once
again proved the third strongest asset
class on the overall commercial real
estate market with a market share of over
9%. This excellent result can largely be
attributed to exceptionally lively activity
during the end-of-year rally. Almost the
same amount of capital was invested in
Q4 as in Q1 and Q2 combined. And results
would have been even higher if more
product had been available.
Supply and Demand
Portfolio deals accounted for €2.6bn in
transaction volume in 2019, or 40% of
annual transaction volume, down 32% yoy.
Apollo Global Management and Palmira
Capital Partners sold the Maximus portfo-
lio in Q4, the largest logistics portfolio deal
in 2019. Singapore’s sovereign wealth fund
(GIC) acquired the pan-European logistics
portfolio comprising 28 assets before the
end of the year. The portfolio changed
hands for around €950m, €540m of which
was generated by the portfolio’s German
assets. Other deals included the sale of the
Blue Chip portfolio comprised of 3 large
distribution centers to GreenOak and
Apeiron (roughly €350m) as well as the
sale of 9 logistics assets to the REIT man-
aged by Asian investor Frasers (roughly
€320m). The deal involving the sale of the
Amazon logistics center (75,000 sqm) in
Dortmund was one of the year’s major and
most expensive single-asset deals with a
gross yield of just above 4%. Arabian
investors sold the asset to Savills Invest-
ment Managers for roughly €140m just
two years after initial acquisition. Anoth-
er notable single-asset deal was La
Française’s acquisition in September of
Fast Facts
Investment 2019 2018
Transaction Volume in million € 6,566 6,814
Portfolio Transactions 40% 56%
TOP 7 35% 38%
Share by International Buyers 60% 47%
Share by International Sellers 30% 31%
Prime Yield Industrial and Logistics in the TOP 7 (average in %)
4.20% 4.50%
0
1
2
3
4
5
6
7
8
20192018201720162015
6.64.0 4.6 8.7 6.8
2.7 2.9
1.3 1.1
7.6
1.41.8
4.8
3.2
3.9
Average 2015 – 2019
IndustrialLogistics TAV in total
Figure 1: Transaction Volume Industrial and Logistics in billion €
INDUSTrIaL aND LOGISTICS INVESTMENT
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the new Amazon logistics center in
Mönchengladbach (around 150,000 sqm)
under similar conditions on behalf of
South-Korean investors Samsung and KB.
Foreign investors continued to be active
on the German market in 2019, pouring a
total of around €4.0bn into German logis-
tics and industrial assets. This reflects a
60% market share, up 13 percentage
points yoy. Asian investors like Frasers
and GIC (Maximus portfolio) accounted for
€1.6bn alone. British investors (roughly
€1.1bn) and US investors (€547m) were
particularly active on the German logistics
market as well. British investor Savills
Investment Managers acquired the Ama-
zon logistics center in Dortmund as well
as 3 DHL transshipment centers in Berlin,
Leimen and St. Ingbert (Saarland) for
around €49m. German investors were less
active in 2019 compared to the previous
year, accounting for €2.6bn, or 40%, with
results down 12 percentage points yoy.
The investor group dedicated one third of
this transaction volume to light industrial
assets while foreign investors continued
to focus on traditional logistic assets.
yields
High-quality assets featuring long-term
leases and low-risk tenants have become
quite rare on the German market. Demand
for logistics space is extremely high at the
moment and even investors with less
experience in this segment have become
increasingly interested. Prices are rising
as a result and purchase price multipliers
continue to increase. Gross prime yields
were recorded at 4.2% at year-end for lat-
est-generation logistics assets in top
locations featuring a standard lease term
of at least 10 years (net yield of roughly
3.7%). Gross prime yields fell another 30
bps over the course of 2019 with no end
in sight.
Summary and Outlook
Prime yield compression is set to continue
in light of ongoing negotiations and cur-
rent bidding rounds involving core assets,
and we expect multipliers to exceed 24x in
the next few months. Gross prime yields
continue to approach the 4% mark. Some
owner-occupiers are likely to take advan-
SellersBuyers SellersBuyers
0 1 2 3 4
Other Investors
Corporates/Owner-occupiers
REITs
Pension Funds
Open-ended Real Estate Funds/Special Funds
Asset Managers/Fund Managers
Other Investors
Open-ended Real Estate Funds/Special Funds
Private Investors/Family Offices
Property Developers
Corporates/Owner-occupiers
Asset Managers/Fund Managers
up to € 10 m 8%
€ 10 m to € 30 m 18%
€ 30 m to € 50 m 11%
above € 100 m 51%€ 50 m to € 100 m 12%
SellersBuyers SellersBuyers
0 1 2 3 4
Other Investors
Corporates/Owner-occupiers
REITs
Pension Funds
Open-ended Real Estate Funds/Special Funds
Asset Managers/Fund Managers
Other Investors
Open-ended Real Estate Funds/Special Funds
Private Investors/Family Offices
Property Developers
Corporates/Owner-occupiers
Asset Managers/Fund Managers
up to € 10 m 8%
€ 10 m to € 30 m 18%
€ 30 m to € 50 m 11%
above € 100 m 51%€ 50 m to € 100 m 12%
Figure 2: Transaction Volume by Size Category 2019 share in %
Figure 3: Transaction Volume by Buyer and Seller Groups in billion €
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tage of these favorable market conditions
to sell their assets in the scope of sale-
and-leaseback transactions, anticipating
high profit in light of strong demand and
intensified competition. Investors will
have to adjust their price expectations in
order to gain access to coveted assets.
Even stock properties are recording mul-
tipliers at levels previously typical for
new-build core products. The current ups
and downs in industrial production do not
seem to have had an impact on investment
activity around German industrial and
logistics assets to date, and investor inter-
est in these assets will remain strong in
2020. Investor sentiment for 2020 is
favorable with e-commerce and high
c onsumer spending in Germany pointing
to continued growth in demand for logis-
tics space.
Nicole KinneAssociate Director I
Research Industrial & Logistics
+49 89 624294-792
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Figure 4: Prime Yield Logistics in the TOP 7 Average in %
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Transaction Volume
The German hotel investment market
posted just over €5.0bn in 2019, exceed-
ing this mark for the second time. Activity
on the market picked up speed following a
calm H1 and experienced an impressive
end-of-year rally. The result posted in
2019 reflects a striking 25% increase
over a calm 2018, exceeding the 5-year
average by 20%. The share of hotel
assets in total transaction volume
remained stable at 7%.
Supply and Demand
Portfolio deals were up again in 2019 with
Axa Investment Managers acquiring 11
European hotels from Principal Real
Estate for over €530m. Swedish investor
Pandox spent just under €500m on hotel
assets, including three hotel portfolios.
Portfolio deals accounted for €1.4bn in
total, up from a 16% market share in the
previous year to 27%.
High-volume single-asset deals also
experienced a comeback, particularly
near year-end. Large-scale transactions
clearly targeted business hotels in the
Germany’s Big 7 cities. THE SQUAIRE at
Frankfurt Airport, which houses two
hotels operated by the Hilton Group,
claimed pole position. The multi-bil-
lion-euro sale of Tucherpark in Munich to
Commerz Real and property developer
Hines also involved a Hilton hotel. These
major deals boosted total transaction vol-
ume in Germany’s Big 7 markets to €3bn.
At the same time, investors are increasing-
ly turning to secondary and tertiary mar-
kets in response to price pressure. More
than €2bn were poured into markets out-
side the Big 7, resulting in a market share
of 40%. As property sizes tend to be small-
er in these markets, investment activity
tended to focus on deals of up to €50m.
Fast Facts
Investment 2019 2018
Transaction Volume in million € 5,033 4,020
Portfolio Transactions 27% 16%
TOP 7 60% 67%
Share by International Buyers 41% 43%
Share by International Sellers 30% 29%
Prime Yield Hotel 3.70% 3.75%
0
1
2
3
4
5
6
20192018201720162015
4.04.24.5
5.05.2
Average 2015 – 2019Whole year
HOTEL INVESTMENT
Figure 1: Transaction Volume Hotel in billion €
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Investors nevertheless are conducting
particularly detailed analyses before
investing in assets located in secondary
and tertiary cities. Market conditions and
upside potential can vary considerably
from location to location. BMO Real
Estate’s acquisition of Tafelhof Palais in
Nuremberg for over €230m was the high-
est-volume deal signed outside the Big 7
in 2019.
German investors once again dominated
the market buy-side with a 59% market
share, up 2% yoy. They poured almost
€3.0bn into German hotel assets over the
course of the year. Investors from Swe-
den, Saudi Arabia, Israel and Singapore
followed in the ranks. Investor activity
sell-side was similar to what we saw in
the previous year, with German investors
accounting for 70% of transactions
signed, selling hotel assets valued at
€3.5bn. Foreign investors sold assets
worth €1.5bn. Investors from the US and
France were particularly active sell-side
posting a market share of 11% each, fol-
lowed by Spain with 4%.
Hotels in the 4-star segment continued to
dominate the market with a share of 60%
and more than €3.0bn in transaction vol-
ume, an above-average result even for the
most popular hotel category. 3-star hotels
were the only other segment to achieve a
two-digit market share at 24% (€1.2bn)
while 5-star hotels and boarding houses
took a breather. The market share gener-
ated by luxury hotels dropped to 7%,
reflecting €340m in transaction volume,
down from an impressive 17% in the pre-
vious year. Serviced apartments experi-
enced a steep drop in market share to 3%,
or €130m.
Although asset/fund managers managed
to snatch 1st place in the previous year’s
buy-side ranking, they were once again
outperformed by open-ended real estate
funds and special funds in 2019. This
investor group managed to almost double
their investment volume yoy to €1.6bn,
boosting their market share from 22% to
32%. Asset/fund managers also exceeded
the €1bn mark with €1.4bn, which put
their market share down slightly from
30% to 27%. Listed property companies
came in 3rd with almost €750m.
SellersBuyers SellersBuyers
0.0 0.5 1.0 1.5 2.0
Other Investors
Corporates/Owner-occupiers
Pension Funds
Listed Property Companies
Asset Managers/Fund Managers
Open-ended Real Estate Funds/Special Funds
Other Investors
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
Open-ended Real Estate Funds/Special Funds
Corporates/Owner-occupiers
Property Developers
4 Stars 60%
3 Stars 24%
5 Stars 7%
2 Stars 4%
Boarding House 3%
Other 1%1 Star 1%
SellersBuyers SellersBuyers
0.0 0.5 1.0 1.5 2.0
Other Investors
Corporates/Owner-occupiers
Pension Funds
Listed Property Companies
Asset Managers/Fund Managers
Open-ended Real Estate Funds/Special Funds
Other Investors
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
Open-ended Real Estate Funds/Special Funds
Corporates/Owner-occupiers
Property Developers
4 Stars 60%
3 Stars 24%
5 Stars 7%
2 Stars 4%
Boarding House 3%
Other 1%1 Star 1%
Figure 2: Transaction Volume by Star Segment 2019 share in %
Figure 3: Transaction Volume by Buyer and Seller Groups in billion €
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Property developers came out on top sell-
side as usual with over €1.6bn, a signifi-
cant yoy increase that is attributable to
the well-stocked development pipeline.
Their sell-side market share climbed from
29% to 33% as a result. Corporates and
owner-occupiers along with open-ended
real estate funds and special funds fol-
lowed in the ranks, disposing of more
assets than in the previous year and
accounting for around €900m and
€700m, respectively. This reflects a mar-
ket share of 18% and 14%.
yields
High prices are prompting investors,
particularly in the Big 7, to perform more
extensive analyses before deciding to
buy. Prices appear to have peaked in
some locations due to concerns regar-
ding excess capacity.
The current situation is also reflected in
prime yields, which were down slightly
yoy and began to experience a flat trend
around year-end. Yields in the Big 7 cur-
rently range between 3.70% in Munich to
4.40% in Berlin. Düsseldorf and Stuttgart
were the first cities to experience slight
yield increases over the course of 2019.
We do not expect prices to drop much fur-
ther as interest rates remain low. 2020 is
likely to see a stabilization at current lev-
els with scattered price reductions in cer-
tain markets.
Summary and Outlook
The German hotel investment market
came close to bringing in a record result
in 2019 despite the ongoing shortage of
supply. The end-of-year rally showed that
demand for hotel assets remains high.
Investors were especially interested in
high-volume single-asset deals in the
Big 7 as well as investments in secondary
and tertiary markets. Portfolio deals also
experienced a comeback in 2019. The
hotel investment market is going to bene-
fit from ongoing strong activity on the
overall market, making a year-end result
on par with the 5-year average of €4.2bn
realistic.
Marc SteinkeConsultant | Research & GIS
+49 211 862062-40
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Cologne StuttgartMunich
HamburgFrankfurtDüsseldorfBerlin
Figure 4: Prime Yield Hotel in %
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BERLIN 22
DÜSSELDORF 28
FRANKFURT 34
HAMBURG 40
COLOGNE 46
MUNICH 52
STUTTGART 58
CITY REPORTS
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CITY FACTS BERLINPopulation in 1,000 3,645
Employees Paying Social Se cu rity Contributions in 1,000
1,528
Unemployment Rate in % 7.7
Per Capita Disposable Income in € 22,220
Fast Facts
Office Leasing Berlin 2019 Change year-on-year
Office Space Take-up 1,030,000 sqm 30.2%
Leasing Take-up 989,000 sqm 24.0%
Prime Rent 39.90 € / sqm 13.7%
Average Rent 26.30 € / sqm 21.2%
Vacancy Rate 1.2% – 30 bp
Office Space Stock 20.50 million sqm 9.8%
BERLIN
achieved rents in € / sqm
Submarket Prime Rent Average RentCBD City West 34.30 31.40CBD City East 36.50 29.10CBD Potsdamer Platz / Leipziger Platz 44.00 38.30Central Station 37.00 29.70Mediaspree 38.50 33.10City West 35.00 26.00City East 38.00 28.90City Margins North 33.00 25.20City Margins South 35.60 28.50Periphery North 23.00 20.20Periphery West 19.50 15.90Periphery South 22.50 16.30Periphery East 31.10 23.00Adlershof 16.00 14.20Schönefeld 12.20 12.20
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Take-up
Activity on the Berlin office leasing mar-
ket continued to boom with a strong end-
of-year rally in 2019. A total of 1 million
sqm of office space was snapped up by
new tenants, marking a new record result
and reflecting a strong 30% yoy increase.
Large-scale leases signed for over 5,000
sqm had a significant impact on take-up
results. 50 new leases were signed in this
space segment, accounting for more than
half of total take-up.
High-volume leases involving the public
sector contributed the largest share to
office take-up in Berlin, accounting for
236,600 sqm and generating a market
share of almost 23%. Notable deals
included BIMA’s lease of more than
30,000 sqm at B:HUB located on Kynast-
straße and around 14,000 sqm at Airport
Bureau Center (Saatwinkler Damm) taken
up by the German Federal Environmental
Agency (Umweltbundesamt). ICT compa-
nies accounted for a number of smaller
deals, coming in 2nd with a 20% market
share and over 130 new leases signed for
around 204,000 sqm.
Market activity once again revolved
around the City East submarket including
the CBD, contributing around 25% to total
take-up. However, neighboring locations
are attracting an increasing demand due
to the ongoing supply bottleneck in central
locations. The City Periphery North and
City Periphery South submarkets both
benefited from current market conditions,
coming in 2nd and 3rd place, respectively,
among the city’s most popular office loca-
tions. Large-scale tenants in particular
can still find available options in these
submarkets. Examples include the lease
signed by Vamed AG for around 9,000
sqm in City Periphery West and the SONY
Music Entertainment lease for roughly
8,000 sqm in City Periphery South.
OFFICE LEaSING
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
0
200
400
600
800
1,000
1,200
20192018201720162015
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
0
200
400
600
800
1,000
1,200
20212020201920182017
790740
837752
989
53123 100
39 41
628
442
117203
309
856
1,154
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rents
Berlin continues to break one record after
the other when it comes to office rents.
Prime rents have increased to €39.90 per
sqm and average rents to €26.30 per sqm,
reflecting yoy increases of around 14%
and 21%, respectively. The area demar-
cated by the city’s inner suburban train
ring saw a particularly steep increase. At
these rates, rents in this area could even
hit levels of between €45 and €50.
Supply and Vacancy
Vacancy was recorded at a new all-time
low of 1.2%. The amount of space availa-
ble for immediate tenancy dropped
58,000 sqm from 2018 levels to a current
246,000 sqm. Vacancy is particularly low
in the submarkets located within the city’s
inner suburban train ring.
key Developments
The market will continue to face a supply
bottleneck at least over coming months.
Property developments generated around
60% of leasing activity in 2019. However,
construction activity has picked up con-
siderably. Roughly 2.0 million sqm of new
office space is scheduled to hit the market
in 2020 and 2021, although around 50%
has already been pre-leased.
Summary and Outlook
We do not see any signs of large compa-
nies or SMEs rethinking their plans to
expand and trust in the economy still high.
Activity on Berlin’s office leasing market
is set to remain lively in 2020, although it
is rather unlikely that results will again
exceed the 1-million-sqm mark.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
Average RentPrime RentVacancy RateVacancy
0
100
200
300
400
500
600
700
800
2019201820172016201510
15
20
25
30
35
40
45
20192018201720162015
24.30
28.5031.30
15.10 16.30
19.15
35.10
21.70
39.90
26.30
3.7 %
3.0 %
2.0 %
1.5 %1.2 %
685
567
390
304246
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Transaction Volume
The Berlin investment market for commer-
cial real estate set a new standard in 2019
with a transaction volume of €12.2bn, up
an incredible 75% yoy and even surpassing
2015’s record result by 50%.
Investment in office assets remained the
main driver behind the city’s strong
results. This asset class alone exceeded
all previous commercial transaction vol-
ume records at just under €9.7bn. Proper-
ty developers have responded to the
ongoing lack of supply over the past few
years by adding new office properties to
the market. The market was dominated by
a number of forward deals as a result,
especially in the Mediaspree submarket.
However, the most notable deal of 2019
involved the FÜRST property develop-
ment situated in the prominent location of
Kurfürstendamm in the City West submar-
ket, which changed hands for over three
quarters of a billion Euros. The EDGE East
Side and Stream office towers were sold
in the Mediaspree submarket for roughly
€1bn combined.
INVESTMENT
Fast Facts
Investment Berlin 2019 2018
Transaction Volume 12,172 million € 6,959 million €
Portfolio Transactions 17% 19%
Share by International Buyers 59% 47%
Share by International Sellers 46% 38%
Most Important Property Type Office 79% Office 59%
Prime Yield Office 2.90% 3.10%
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20192018201720162015
Industrial &Logistics 1%
Other 5%
Building Site 2%
Retail 9%
Hotel 4%
Office 79%
8,100
4,900
7,5226,959
12,172
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20192018201720162015
Industrial &Logistics 1%
Other 5%
Building Site 2%
Retail 9%
Hotel 4%
Office 79%
8,100
4,900
7,5226,959
12,172
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Supply and Demand
Investors have been focusing on commer-
cial assets in Berlin, particularly office
buildings, for quite some time now. This
high demand, however, has been facing
comparatively low supply in recent years.
Prices have risen significantly as a result
and many investors had no choice but to
postpone their investment plans to 2019.
This strong demand has also been driven
by ongoing low interest rates.
Supply has grown over the past year in
response, providing many investors with
product in the form of property develop-
ments. This trend is also reflected in the
composition of seller groups. Property
developers accounted for more than 40%
of transaction volume in 2019, roughly
four times higher than the volume record-
ed in 2018. Listed property companies
sold properties valued at almost €2bn
while asset/fund managers disposed of
commercial assets located in Berlin for
around €1.7bn. The latter were once again
the most active players when it came to
buying properties, investing more than
double the amount recorded in the previ-
ous year at €5.7bn. Open-ended real
estate funds and insurance companies
trailed behind in 2nd and 3rd place respec-
tively with slightly more than €1bn each.
2019 results once again point to how pop-
ular the Berlin office market is with for-
eign investors, who accounted for 59% of
capital invested. However, less than half
of total transaction volume was generated
by foreign investors sell-side, with a mar-
ket share of 46%.
yields
Berlin experienced ongoing yield com-
pression in 2019, albeit at a slower pace.
Investors have been willing to pay roughly
35x the annual rent for premium office
assets in prime locations. Gross prime
initial yields were down 20 bps yoy to
2.90% as a result. Logistics assets have
continued to experience yield compres-
sion as well. Gross initial yields are
approaching the 4.00% mark due to a lack
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
0 2,000 4,000 6,000 8,000
Other Investors
Open-ended Real EstateFunds/Special Funds
Banks
Asset Managers/Fund Managersr
Listed PropertyCompanies
Property Developers47%
0 2,000 4,000 6,000 8,000
Other Investors
Listed PropertyCompanies
Property Developers
Insurance Companies
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
10%
9%
6%
5%
23%
41%
16%
14%
4%
6%
19%
0 2,000 4,000 6,000 8,000
Other Investors
Open-ended Real EstateFunds/Special Funds
Banks
Asset Managers/Fund Managersr
Listed PropertyCompanies
Property Developers47%
0 2,000 4,000 6,000 8,000
Other Investors
Listed PropertyCompanies
Property Developers
Insurance Companies
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
10%
9%
6%
5%
23%
41%
16%
14%
4%
6%
19%
27BErLIN
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of product, coming to 4.20% at year-end,
down 30 bps yoy. Hotel assets experi-
enced a similar trend with a 30-bps
decrease in terms of gross initial yields.
Hotel assets in Berlin proved neverthe-
less the most lucrative compared to hotels
in Germany’s other top 7 markets at
4.40%. Retail assets in high-street loca-
tions remained at 3.10%, down only 10 bps
yoy.
Summary and Outlook
Momentum on the Berlin commercial
property market has picked up signifi-
cantly in the past few years. However, it
was impossible to anticipate 2019’s
extraordinary result. Nevertheless, the
favorable general conditions evident in
early 2020 point to the possibility of
another strong annual result in the same
ballpark.
Expectations that new President of the
ECB, Christine Lagarde, would promote a
more restrictive monetary policy were not
fulfilled. Pressure to invest is still high
and real estate assets are attractive com-
pared to other investment products. We
expect demand to remain high in 2020 as
a result. This demand will be met with
considerable supply as the development
pipeline, particularly for office properties,
is well-stocked at least for the next few
years. Because 2019’s record result was
so high, total transaction volume in 2020
will likely fall short of this mark. We nev-
ertheless anticipate another exceptionally
strong year with well above-average
annual results for 2020.
The Berlin investment market reached an all-time high in 2019 and is setting new standards with over €12 billion transaction volume.
CONTACT Margit Lippold Director | Research
+49 30 202993-43, [email protected]
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DÜSSELDORF
CITY FACTS DÜSSELDORFPopulation in 1,000 619
Employees Paying Social Se cu rity Contributions in 1,000
424
Unemployment Rate in % 6.5
Per Capita Disposable Income in € 28,742
Fast Facts
Office Leasing Düsseldorf 2019 Change year-on-year
Office Space Take-up 475,000 sqm 40.5%
Leasing Take-up 470,800 sqm 45.9%
Prime Rent 28.50 € / sqm 1.8%
Average Rent 17.30 € / sqm 6.8%
Vacancy Rate 5.9% – 50 bp
Office Space Stock 7.75 million sqm 0.8%
achieved rents in € / sqm
Submarket Prime Rent Average RentCBD 28.50 23.40City Center 25.00 19.20Harbour Area 25.00 19.50Kennedydamm 25.00 21.60Left of the Rhine 18.00 13.20Düsseldorf-North 18.00 13.80Airport City 17.50 16.20Grafenberger Allee 16.00 14.00City Center-East 16.00 11.50Düsseldorf-South 12.00 11.00
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Take-up
The office leasing market in the Düsseldorf
municipal area recorded a new all-time
high in 2019 with take-up at 475,000 sqm,
finally beating out the previous record
from 2007. This result not only reflects an
impressive yoy 41% increase but also
exceeds the 10-year average by 51%. The
city recorded 9 major deals signed for
over 10,000 sqm. Although the largest
two leases were signed for space at prop-
erty developments, most of the other
transactions signed for more than 5,000
sqm involved stock properties. Space
available for immediate tenancy decreased
significantly as a result. Consulting firms
and public administration played a signifi-
cant role in 2019.
While take-up in the smallest space seg-
ment of 500 sqm remained stable com-
pared to the previous year, larger units of
up to 1,000 sqm experienced a considera-
ble 29% drop in take-up. This trend can be
attributed to the high results posted over
the past few years and the resulting short-
age of space in coveted submarkets. Units
ranging between 1,000 and 5,000 sqm
managed to maintain 2018 take-up levels
for the most part.
In terms of location, the majority of take-up
tended to revolve around three submar-
kets, all of which recorded significant
increases yoy. The City Center claimed
pole position with 95,800 sqm, up 3% yoy
with slightly more than 100 leases signed.
The Left of the Rhine and Harbour sub-
markets followed in the ranks with 88,300
sqm (+90%) and 81,200 sqm (+202%),
respectively. The two submarkets regis-
tered just over 40 deals each.
0
100
200
300
400
500
201920182017201620150
30
60
90
120
150
20212020201920182017
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
357 359322 323
471
347 11 15 4
53
110
89 8692 93
138
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
0
100
200
300
400
500
201920182017201620150
30
60
90
120
150
20212020201920182017
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
357 359322 323
471
347 11 15 4
53
110
89 8692 93
138
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rents
Prime rents in the CBD increased slightly
to €28.50 per sqm at year-end. Looking
ahead, we consider further rental growth
in upcoming quarters realistic due to
shortage of supply. Weighted average
rents also posted a significant increase to
€17.30 per sqm, up 7% yoy.
Supply and Vacancy
The vacancy rate fell by 0.5 percentage
points yoy to 5.9% at year-end due to the
large number of major leases signed for
space at stock properties. Space will con-
tinue to become increasingly hard to come
by in the wake of ongoing high demand,
particularly in central locations. Units of
over 2,000 sqm available for immediate
tenancy are particularly scarce with
smaller units of around 1,000 sqm already
experiencing a similar trend. Companies
on the lookout for space will in many cas-
es be required to start their search for
new office space earlier as a result.
key Developments
Roughly 93,400 sqm is scheduled for com-
pletion in 2020, of which only around 57%
has been pre-leased. That means there is
still opportunity for potential tenants to
snap up space at these property develop-
ments. Another 140,000 sqm is scheduled
to enter the market in 2021, 80% of which
has been pre-leased. Most of this activity
revolves around the Harbour, Düsseldorf
North and Kennedydamm submarkets.
Summary and Outlook
The Düsseldorf office leasing market
posted a record result in 2019, fueled by a
number of major deals. We expect to see
considerably lower take-up in the munici-
pal area of around 360,000 sqm in 2020.
The drop in vacancy is expected to contin-
ue, fostering further moderate rent
increases in popular locations.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
0
200
400
600
800
2019201820172016201510
15
20
25
30
35
20192018201720162015
28.0026.00 26.50 27.00
16.20
28.50
17.30
14.40 14.90 15.40
Average RentPrime RentVacancy RateVacancy
8.5 %
7.5 %7.0 %
5.9 %6.4 %
651
576532
495455
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Transaction Volume
The investment market in the Düsseldorf
municipal area posted a new all-time high
of just over €3.8bn in 2019 following a
breathtaking finish to the year. The end-
of-year rally brought in double the trans-
action volume recorded in the first three
quarters of the year. Not only did this
result reflect a 12% increase over the pre-
vious record dating back to 2018, it also
managed to beat out the 5-year average
by 50%. Taking into account the large
number of deals signed in the surrounding
area of Düsseldorf that contributed a total
of €450m, transaction volume in the
Greater Düsseldorf Area even managed to
exceed €4bn for the first time. Ten deals
for over €100m were signed in the munic-
ipal area alone. The segment of between
€50m and €100m also contributed to the
excellent result with 13 deals signed.
Portfolio deals once again achieved a
moderate market share of roughly 21%,
repeating the previous year’s trend. In
addition to traditional single-asset deals
and the acquisition of entire stock portfo-
lios, we also saw increasing activity in
terms of minority-share investment in
companies holding real estate portfolios.
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
1,000
2,000
3,000
4,000
20192018201720162015
Mixed Use 3%
Building Site 9%
Hotel 9%
Other 1%
Retail 14%
Office 64%
2,550
2,180
2,740
3,420
3,840
Fast Facts
Investment Düsseldorf 2019 2018
Transaction Volume 3,840 million € 3,420 million €
Portfolio Transactions 22% 30%
Share by International Buyers 24% 41%
Share by International Sellers 48% 22%
Most Important Property Type Office 64% Office 66%
Prime Yield Office 3.30% 3.50%
INVESTMENT
0
1,000
2,000
3,000
4,000
20192018201720162015
Mixed Use 3%
Building Site 9%
Hotel 9%
Other 1%
Retail 14%
Office 64%
2,550
2,180
2,740
3,420
3,840
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This deal structure amassed a total of
almost €400m in the municipal area
alone.
Supply and Demand
Office assets remained the most popular
asset class with a share of 64%, or €2.5bn
in transaction volume, followed by retail
assets with 14%, or €525m. Hotels and
land site deals signed for future property
and district developments were next in the
ranks with a 10% share each. These devel-
opments will make a significant medi-
um-term contribution to transaction vol-
ume estimated at almost €1bn. All other
asset classes accounted for a compara-
tively insignificant share. Investment in
the core and core plus segment accounted
for 73% of transaction volume across all
asset classes.
Activity tended to revolve around the CBD
as well as the City Center, Kennedydamm
and Düsseldorf North submarkets, each of
which posted transaction volumes of more
than €500m. In terms of the number of
deals signed, the City Center submarket
came out on top (25), followed by Düssel-
dorf North (14) and Kennedydamm (12).
Transaction volume reflected a well-diver-
sified breakdown by sector in 2019. Asset/
fund managers generated the highest
transaction volume with just shy of
€740m. Property developers and develop-
ment companies came in second with
around €660m ahead of open-ended real
estate funds and special funds with rough-
ly €640m. Asset/fund managers also gen-
erated the highest transaction volume sell-
side with around €740m. Opportunity
funds and private equity funds, property
developers and open-ended real estate
funds and special funds followed in the
ranks, each contributing just over €500m.
Foreign investors proved less active buy-
side in 2019 compared to the previous
year, accounting for a share in total trans-
action volume of only 24%. Just over half
of the international capital invested in 2019
stemmed from Europe, one third from
American investors and the remaining
share from Asia.
0 500 1,000 1,500
Other Investors
Corporates/Owner-occupiers
Open-ended Real EstateFunds/Special Funds
Property Developers
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
19%
0 500 1,000 1,500
Other Investors
Pension Funds
Listed PropertyCompanies
Open-ended Real EstateFunds/Special Funds
Property Developers
Asset Managers/Fund Managers
17%
17%
13%
11%
23%
19%
14%
13%
13%
10%
31%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
33DüSSELDOrF
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yields
The ongoing momentum on the invest-
ment market continues to put pressure
on gross initial yields. Prime yields for
premium office assets in top locations
came to 3.30% at year-end, down anoth-
er 20 bps yoy. Retail and mixed-use
assets posted yields of up to 3.20% in the
CBD with some parts of the Königsallee
neighborhood recording even lower yields.
Top locations in the highly sought-after
Kennedydamm and Harbour submarkets
also registered ongoing yield compres-
sion with some prime office assets even
achieving CBD levels.
Summary and Outlook
Demand for Düsseldorf commercial real
estate remained exceptionally strong
across all risk classes with 2019 the third
year in a row to set a new record. Numer-
ous large-scale transactions, particularly
in the office segment, contributed to this
all-time high.
These impressive results would have been
even higher if a number of high-volume
deals in advanced stages had not been
postponed to 2020. We can expect activity
on the Düsseldorf investment market to
remain exceptionally lively in 2020 even
though it will be difficult to match the
record set in 2019. However, taking into
account the large-scale deals currently in
the pipeline, we still consider a transaction
volume of at least €3.0bn realistic. Current
high demand from investors is anchored in
their confidence in the office leasing mar-
ket, which provides a solid foundation
thanks to falling vacancy rates and upward
rent price trends.
The Düsseldorf investment market managed to once again exceed the previous year’s record result, almost reaching the €4bn mark in the municipal area.
CONTACT Lars Zenke Director | Research
+49 211 862062-48, [email protected]
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CITY FACTS FRANKFURTPopulation in 1,000 753
Employees Paying Social Se cu rity Contributions in 1,000
602
Unemployment Rate in % 4.9
Per Capita Disposable Income in € 27,138
Fast Facts
Office Leasing Frankfurt 2019 Change year-on-year
Office Space Take-up 550,500 sqm – 10.9%
Leasing Take-up 533,700 sqm – 12.0%
Prime Rent 45.50 € / sqm 8.3%
Average Rent 21.30 € / sqm 4.9%
Vacancy Rate 6.9% 10 bp
Office Space Stock 11.56 million sqm 0.6%
achieved rents in € / sqm
Submarket Prime Rent Average RentBanking District 47.00 34.00Westend 35.00 25.00City 36.00 22.50Central Station / Westhafen 24.00 21.00Bockenheim 20.00 17.00Europaviertel / Fair District 22.50 21.00City West 20.00 17.90Frankfurt South 21.00 15.50Airport 27.00 21.50Frankfurt West 15.00 12.50Frankfurt North 12.50 9.00Mertonviertel 14.00 13.00Eastend West 21.00 15.30Eastend East 13.00 10.50Niederrad 16.50 14.50Eschborn 16.00 13.00Kaiserlei 16.50 13.00
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Take-up
The Frankfurt office leasing market saw
another strong year in 2019 with take-up
at roughly 551,000 sqm. Although this
result managed to surpass both the 5 and
10-year average, it fell short of the previ-
ous year’s result by around 11%. Following
a weak Q3, leasing activity significantly
took off in Q4. Almost 156,000 sqm, or
28%, can be attributed to the banking sec-
tor, which dominated the office leasing
market in 2019.
The city’s Banking District recorded the
highest take-up just ahead of Niederrad,
nevertheless posting a yoy decrease of
25% at roughly 83,000 sqm. Large-scale
leases involving units of over 10,000 sqm
remained scarce in the Banking District
and none of the 5 largest leases of the year
were signed for space in this submarket.
Niederrad came in a close second with
roughly 81,000 sqm. This above-average
result can largely be attributed to the
lease signed by DekaBank for around
46,000 sqm. City West ranked third with
take-up at around 48,000 sqm generated
by only 10 leases. The lease signed by the
City of Frankfurt for around 26,500 sqm
at the new civic center located at
Solmsstrasse 27-37 contributed signifi-
cantly to annual results. This was the sec-
ond-largest deal signed in 2019. The
neighboring Bockenheim submarket also
posted a strong 45,000 sqm, largely
thanks to the lease signed for around
26,500 sqm by ING-DiBa at the develop-
ment Trade.
0
100
200
300
400
500
600
700
800
201920182017201620150
50
100
150
200
250
300
20212020201920182017
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
348
548
668606
534
424
4212 17
198
111
82 92
125
296
144
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
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rents
Prime rents were up more than 8%, or
€3.50 per sqm, to €45.50 per sqm in 2019.
Average rents also experienced a 5%
increase to €21.30 per sqm thanks to a
large number of leases at higher rent lev-
els.
Supply and Vacancy
Around 794,000 sqm was available for
immediate tenancy at the end of 2019,
reflecting a vacancy rate of 6.9%. In con-
trast to preceding years, the drop in
vacancy appears to have stopped for the
moment. However, we did see notable dif-
ferences between central locations, loca-
tions near the city center and peripheral
areas. Almost 40% of total vacancy could
be found in the submarkets Eschborn,
Eastend East and Mertonviertel. Older
buildings in satellite locations are only
benefiting to a certain degree from the
favorable general conditions on the over-
all market. With additional and, in some
cases, large-scale stock space becoming
available on the market in 2020, we can
expect vacancy rates to remain stable or
increase slightly.
key Developments
Completion volume in 2019 hit the
100,000-sqm mark for the first time
since 2016 at around 125,000 sqm. More
than double that amount is scheduled for
completion in 2020 (roughly 296,000 sqm)
and demand for space at property devel-
opments remains high. 70% of the office
space at developments scheduled for
completion in 2020 has already been
pre-let.
Summary and Outlook
The office leasing market again recorded a
take-up volume of more than 550,000 sqm
for the fourth year in a row, an impressive
indication of the ongoing lively activity in
the office segment. Other indicators such
as vacancy rate, positive rental trend and
pre-leasing rates at property develop-
ments also point to a favorable market
environment. Whether or not the current
trend will continue into the new decade
will strongly depend on the restructuring
of the German banking sector.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
0
300
600
900
1,200
1,500
2019201820172016201510
20
30
40
50
20192018201720162015
38.50 37.50
41.00 42.00
19.00 18.70 20.00 20.30
45.50
21.30
Average RentPrime Rent
11.8 %11.2 %
9.6 %
6.8 % 6.9 %
1,3581,289
1,105
784 794
Vacancy RateVacancy
0
300
600
900
1,200
1,500
2019201820172016201510
20
30
40
50
20192018201720162015
38.50 37.50
41.00 42.00
19.00 18.70 20.00 20.30
45.50
21.30
Average RentPrime Rent
11.8 %11.2 %
9.6 %
6.8 % 6.9 %
1,3581,289
1,105
784 794
Vacancy RateVacancy
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Transaction Volume
The Frankfurt commercial real estate
market posted over €7.8bn in transaction
volume in 2019. Although this result is
down 19% compared to 2018’s record
year, it still surpassed the 5-year-aver-
age by 17%.
Behind this strong performance was an
exceptional end-of-year rally. Almost half
of total annual transaction volume was
generated in Q4 alone with 50 deals
signed for over €3.9bn. High-volume
landmark deals such as the sale of THE
SQUAIRE (over €900m), the Welle
(around €620m) and T8 (€400m) contri-
buted significantly to this result. Follow-
ing investments in a number of high-rise
deals in the Banking District, City and
Westend submarkets in 2018, the share in
transaction volume claimed by the CBD
dropped by around a third in 2019 as activ-
ity shifted towards the other submarkets.
In addition to THE SQUAIRE, notable
deals outside the CBD included the high-
rise deals THE SPIN and 99 West.
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
2,000
4,000
6,000
8,000
10,000
20192018201720162015
Retail 3%
Building Site 2%
Other 1%
Hotel 10%
Office 80%
Industrial &Logistics 2%
Mixed Use 2%
5,6876,143
6,912
9,664
7,843
Fast Facts
Investment Frankfurt 2019 2018
Transaction Volume 7,843 million € 9,664 million €
Portfolio Transactions 15% 9%
Share by International Buyers 51% 51%
Share by International Sellers 55% 43%
Most Important Property Type Office 80% Office 90 %
Prime Yield Office 3.00% 3.30%
INVESTMENT
0
2,000
4,000
6,000
8,000
10,000
20192018201720162015
Retail 3%
Building Site 2%
Other 1%
Hotel 10%
Office 80%
Industrial &Logistics 2%
Mixed Use 2%
5,6876,143
6,912
9,664
7,843
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Supply and Demand
Office assets once again proved the
strongest asset class on the Frankfurt
market, accounting for roughly 80% of
total transaction volume in 2019. Almost
all of the other asset classes only man-
aged to generate single-digit market
shares due to limited supply. Hotel assets
were the only exception with a 10% share,
or around €795m. These results can pri-
marily be attributed to the two Hilton
hotels at THE SQUAIRE and the NH Col-
lection Hotel under construction at Güter-
platz at THE SPIN.
2019 was also characterized by ongoing
lively activity on the part of foreign inves-
tors who accounted for just shy of €4bn,
or a share of over 50%. Foreign investors
proved even more dominant in terms of
high-volume deals for over €100m,
accounting for a 68% market share in that
segment. Thanks to high liquidity and
favorable market conditions, investors
from South Korea were particularly active
buy-side, preferring core and core+ big
tickets.
Asset/fund managers were the most
active seller group, generating €2.7bn, or
a 35% market share. They managed to
outperform open-ended real estate funds
and special funds, which had come out on
top in the previous year. Listed property
companies claimed third place with a
share of 14%. Asset/fund managers were
the most active sell-side as well, posting
the highest transaction volume of €1.5bn
and almost tripling their transaction vol-
ume yoy. Opportunity funds and private
equity funds came in second with roughly
€1.4bn.
yields
Prices for office assets rose throughout
the market over the course of the year.
Gross prime yields for office assets in
Frankfurt’s top locations came to 3.00%
at the end of 2019, down 30 bps yoy. The
yield gap between prime and secondary
locations continued to close thanks to the
40-bps drop in prime yields to 3.50%
posted in secondary locations. Office
assets saw the steepest price increases
in peripheral locations, with yields post-
ing a low 4.35% at year-end. This reflects
a yoy decrease of 55 bps.
0 1,000 2,000 3,000
Other Investors
Private Investors/Family Offices
Listed PropertyCompanies
Property Developers
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
35%
0 1,000 2,000 3,000
Other Investors
Insurance Companies
Private Investors/Family Offices
Listed PropertyCompanies
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
21%
14%
9%
7%
14%
19%
18%
16%
9%
8%
30%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
0 1,000 2,000 3,000
Other Investors
Private Investors/Family Offices
Listed PropertyCompanies
Property Developers
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
35%
0 1,000 2,000 3,000
Other Investors
Insurance Companies
Private Investors/Family Offices
Listed PropertyCompanies
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
21%
14%
9%
7%
14%
19%
18%
16%
9%
8%
30%
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Yields for logistics and hotel assets took
another tumble to 4.20% and 3.75%,
respectively, down 30 bps and 25 bps as
at year-end.
Summary and Outlook
Market activity in 2019 reflected the ongo-
ing popularity of the Frankfurt investment
market, which continues to benefit from
economic and political stability. The mar-
ket was able to continue the previous
years’ excellent performance in 2019,
particularly in light of its popularity with
foreign investors and the current upward
price trend.
With the pipeline currently well-stocked
with a number of high-volume deals, we
are likely to see another high transaction
volume in 2020 mainly thanks to the cur-
rently stable economic conditions and a
strong office leasing market. This trend
will also be supported by rising property
prices with the gap between yields for
assets in a variety of locations continuing
to close. Based on these factors, we can
again expect to see above-average trans-
action volume in 2020 at around €7.5bn.
Rising rents and growing scarcity of space in many submarkets have further spurred the already high demand on the Frankfurt investment market.
CONTACT Laura Müller Associate Director | Research
+49 69 719192-29, [email protected]
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CITY FACTS HAMBURGPopulation in 1,000 1.841
Employees Paying Social Se cu rity Contributions in 1,000
996
Unemployment Rate in % 5.9
Per Capita Disposable Income in € 25,720
Fast Facts
Office Leasing Hamburg 2019 Change year-on-year
Office Space Take-up 535,400 sqm – 5.1%
Leasing Take-up 487,900 sqm – 0.8%
Prime Rent 29.00 € / sqm 7.4%
Average Rent 17.30 € / sqm 10.2%
Vacancy Rate 2.5% – 110 bp
Office Space Stock 13.85 million sqm 0.8%
achieved rents in € / sqm
Submarket Prime Rent Average RentCity 29.00 22.50HafenCity 26.00 20.00Harbour Fringe 23.50 21.00Alster West 24.00 18.20Alster East 24.00 17.00St. Georg 20.00 17.20City South 16.00 12.60St. Pauli 23.50 19.50Altona 18.00 14.70Bahrenfeld 16.00 12.90Eimsbüttel 15.50 12.80Eppendorf 16.50 13.50Airport 13.00 10.10City North 16.00 11.20Barmbek 16.50 12.10Wandsbek 15.00 9.40Harburg 15.50 12.00Hamburg East 18.00 12.80Hamburg West 15.00 10.60
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Take-up
Hamburg posted office take-up results of
535,400 sqm in 2019, down 5% yoy but
exceeding the 10-year average by 5%. The
lively activity seen in 2018 continued into
2019 with take-up remaining high thanks
to ongoing strong demand. The result,
however, did slow somewhat in 2019 for
the second year in a row.
This rather average annual result can be
attributed to a modest Q4, which only
posted 104,200 sqm in take-up, combined
with the absence of large-scale leases
signed for over 10,000 sqm of office
space in the second half of the year. Ham-
burg University, the OTTO Group, XING
and Vattenfall signed four large-scale
leases in H1, each for over 10,000 sqm.
The largest deal of H2 was the Lichtblick
lease signed for around 8,400 sqm at the
ConneXion property development.
Despite increasingly scarce supply, the
City submarket remained the most popu-
lar office location with 123,500 sqm in
take-up. The majority of leases signed in
the submarket involved smaller units of
less than 1,000 sqm. Hamburg East came
in second with 70,000 sqm in take-up. ICT
companies claimed the largest share of
take-up with 14%, followed by educational
institutions with 13%.
0
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200
300
400
500
600
201920182017201620150
50
100
150
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20212020201920182017
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460490
584
497 488
8057 39
67 47
132
97100
175
132
190
150
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
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201920182017201620150
50
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497 488
8057 39
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rents
Prime rents in Hamburg came to €29.00 per
sqm at year-end, up 7% yoy. Some leases
were even signed for over €30.00 per sqm
at property developments and refurbish-
ment projects in the city center. Weighted
average rents rose yoy by more than 10% to
€17.30 per sqm. This indicates that rents are
rising even faster than in previous years.
Supply and Vacancy
The vacancy rate dropped 110 bps over the
course of the year, down from 3.6% to a
current 2.5%. Only 345,000 sqm was
available for immediate tenancy on the
Hamburg office market at year-end. Ham-
burg City even posted a lower vacancy
rate of 2.0%.
key Developments
Around 190,000 sqm is currently in the
pipeline for 2020. Development activity is
targeting Hamburg City and the west of
Hamburg (Altona and Bahrenfeld sub-
markets). Around two thirds of the space
scheduled for completion in 2020 has
already been pre-leased, which means we
can expect pending new-build comple-
tions to only ease the tight situation on the
market to a very limited extent.
Summary and Outlook
Rents will continue to rise over the course
of the year, putting prime rents at over
€30.00 per sqm by the end of 2020. The
chances of seeing a new record take-up
result in 2020 are slim as the shortage of
supply that was already palpable in 2019 is
going to intensify in 2020. Companies are
assessing their expansion plans more
carefully in light of the somewhat gloomy
outlook for the global economy. We there-
fore expect to see another drop in take-up
in 2020 with results coming in below the
500,000-sqm mark.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
0
100
200
300
400
500
600
700
800
2019201820172016201510
15
20
25
30
35
20192018201720162015
25.0026.00 26.00
14.50 15.10
27.0029.00
15.40 15.70 17.30
Average RentPrime RentVacancy RateVacancy
5.0 %
4.5 %
3.6 %
2.5 %
5.2 %
698 677625
488
345
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Transaction Volume
The Hamburg real estate investment mar-
ket recorded a strong 2019 thanks to an
end-of-year rally driven by a large num-
ber of deals. The Hamburg commercial
real estate market posted €4.3bn in trans-
action volume, down 24% compared to
2018’s record high. However, 2019 results
did manage to surpass the 10-year-aver-
age by almost one third, coming in more or
less in line with the 5-year-average.
Several high-volume deals were signed
particularly towards the end of the year
with Q4 pulling in €1.8bn in transaction
volume, or roughly 42% of total transac-
tion volume. Q4 2019 marked the strong-
est quarterly performance ever recorded
in Hamburg. As such, the overall yoy
decrease can particularly be attributed to
a slower first half of the year.
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
1,000
2,000
3,000
4,000
5,000
6,000
20192018201720162015
Building Site 4%
Industrial &Logistics 3%
Other 1%
Mixed Use 7%
Retail 10%
Office 71%
Hotel 4%
4,000
4,910
3,410
5,665
4,293
Fast Facts
Investment Hamburg 2019 2018
Transaction Volume 4,293 million € 5,665 million €
Portfolio Transactions 36% 24%
Share by International Buyers 29% 32%
Share by International Sellers 37% 37%
Most Important Property Type Office 71% Office 61%
Prime Yield Office 3.20% 3.20%
INVESTMENT
0
1,000
2,000
3,000
4,000
5,000
6,000
20192018201720162015
Building Site 4%
Industrial &Logistics 3%
Other 1%
Mixed Use 7%
Retail 10%
Office 71%
Hotel 4%
4,000
4,910
3,410
5,665
4,293
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Supply and Demand
The fact that 2019 fell short of 2018’s
strong performance of over €5.6bn can
primarily be attributed to ongoing limited
supply. Investor interest remains high,
particularly in light of ongoing low inter-
est rates and financing costs. Office
assets remain a particular favorite,
accounting for over €3bn in 2019 and
claiming pole position with 71% of total
transaction volume. High-volume sin-
gle-asset deals in the office segment
included the sale of Edge HafenCity, the
Euler-Hermes new-build headquarters
and the Economic Quarter in the City
South submarket. Retail assets trailed at
some distance, claiming second place at
just under 10%.
Portfolio transactions boosted their mar-
ket share from 24% in 2018 to 36% in
2019, primarily thanks to Commerz Real’s
acquisition of the Millennium portfolio.
The core deal comprised eight Hamburg
office and retail properties, which
changed hands for well over €400m.
Asset/fund managers were the most
active buy-side in 2019, accounting for
24% of total transaction volume.
Open-ended real estate funds and special
funds came in second with roughly 18%.
Property developers and development
companies were the most active sell-
side with a share of 30%, or €1.3 bn in
transaction volume. REITs took second
place, parti cularly benefiting from Black-
stone’s acquisition of REIT Dream Glob-
al’s commercial portfolio.
0 400 800 1,200 1,600
Other Investors
Private Investors/Family Offices
Insurance Companies
Asset Managers/Fund Managers
REITs
Property Developers24%
0 400 800 1,200 1,600
Other Investors
Property Developers
Insurance Companies
Opportunity Funds/Private Equity Funds
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
18%
10%
9%
8%
31%
30%
19%
12%
10%
9%
20%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
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yields
In the wake of the yield compression seen
across all segments in recent years, yield
levels shifted only slightly in 2019. Gross
prime yields for premium office assets
remained stable at 3.20% throughout the
year, while yields for retail assets were
up slightly by 10 bps to 3.30%. In contrast,
prime logistics experienced further com-
pression from 4.50% to 4.20%. Hotel
assets also saw prime yields drop 25 bps
to 3.75% at year-end. Yields in the office
segment remained flat in 2019 in
response to a shortage of prime assets.
Assuming that assets of this caliber
become available in the CBD in 2020, we
can expect prime yields to again drop 20
to 30 bps in light of the current general
economic environment and the fact that
investors remain under considerable
pressure to invest. 2019 already saw
increasing activity in submarket locations
outside traditional office hubs with the
gap between yields in primary and sec-
ondary locations continuing to close. This
trend is expected to continue into 2020.
Summary and Outlook
The yoy drop in transaction volume to
€4.3bn in 2019 can primarily be attributed
to a modest H1 characterized by limited
supply.
This downward trend is likely to see a
reversal in 2020. A lively Q4 generating
the highest quarterly result ever recorded
at €1.8bn confirmed high investor interest
in Hamburg real estate and gives cause to
be optimistic moving forward into 2020.
We can expect transaction volume to sig-
nificantly exceed the 5-year average of
around €4.3bn and even beat out the €5bn
mark as demand remains strong and the
deal pipeline is currently well-stocked.
There is currently no end in sight to prime
yield compression on the Hamburg
investment market as pressure to invest
remains high.
All signs are pointing to a great year on the Hamburg investment market. Limited availability will continue to dictate activity on the office leasing market in 2020.
CONTACT Simon Gstalter Senior Consultant | Research
+49 40 328701-172, [email protected]
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COLOGNE
CITY FACTS COLOGNEPopulation in 1,000 1,086
Employees Paying Social Se cu rity Contributions in 1,000
583
Unemployment Rate in % 7.4
Per Capita Disposable Income in € 25,806
Fast Facts
Office Leasing Cologne 2019 Change year-on-year
Office Space Take-up 275,000 sqm – 5.2%
Leasing Take-up 261,600 sqm – 4.9%
Prime Rent 25.50 € / sqm 10.9%
Average Rent 15.20 € / sqm 10.1%
Vacancy Rate 2.2% – 60 bp
Office Space Stock 7.91 million sqm 0.8%
achieved rents in € / sqm
Submarket Prime Rent Average RentCity 25.50 18.50Rheinufer 23.00 16.70Deutz 21.50 16.50Cologne-East 15.50 13.10Ossendorf / Niehl 15.50 14.00Ehrenfeld / Braunsfeld 15.50 12.50Cologne-West 12.00 10.00Cologne-North 9.50 8.00Sülz / Lindenthal / Klettenberg 16.50 12.50Cologne-South 12.50 11.10Airport / Porz 12.00 10.40
47COLOGNE
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Take-up
The Cologne office leasing market
(municipal area) recorded 275,000 sqm
in take-up in 2019, down roughly 5% yoy
as well as compared to the 10-year aver-
age. The city recorded 10 major deals
signed for over 5,000 sqm. Supply of
large-scale adjoining space remains
scarce and is mainly limited to property
developments. Stock buildings account-
ed for only two large-scale transactions
in 2019. As a result, property develop-
ments generated 40% of leasing activity.
Their market share was even higher in
the space segment of over 5,000 sqm
with 84%. The Sparkasse Cologne/Bonn
bank signed the largest-scale lease of
the year for over 17,000 sqm at the “kite”
property development in the Ossendorf/
Niehl submarket, also the only lease
signed for over 10,000 sqm.
Demand once again proved well-diversi-
fied despite the supply bottleneck. The IT
sector claimed pole position with a mar-
ket share of 12%, closely followed by busi-
ness centers and consulting firms with
almost 10% each.
The traditionally strong City submarket
(109,000 sqm) dominated market activity
in terms of take-up with the Ossendorf/
Niehl (39,000 sqm), Airport/Porz
(30,000 sqm) and Ehrenfeld/Braunsfeld
(29,000 sqm) submarkets following at
considerable distance.
The space segment of up to 2,000 sqm
experienced a particularly strong
decrease in take-up. While large-scale
tenants have a fallback option in property
developments, companies needing less
space often have no alternative but to
extend their leases at stock buildings.
0
100
200
300
400
20192018201720162015
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
0
50
100
150
200
20212020201920182017
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364
274 275 262
3916 28 15 13
152
31
90
5765
173
107
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
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rents
Prime rents in Cologne were up 11% yoy to
€25.50 per sqm at the end of December.
Weighted average rents also recorded an
increase and came to €15.20 per sqm
(+10%) at year-end 2019. This trend can
be attributed to limited supply in the City
submarket. We do not expect the supply
bottleneck to ease in 2020 and predict
further rental growth.
Supply and Vacancy
Vacancy in Cologne continued to drop in
2019 with total vacancy recorded at 2.2%,
down 0.6 percentage points yoy. Large-
scale adjoining stock space of over 1,000
sqm is currently not available in central
locations, forcing potential tenants to
turn to property developments or other
submarkets closer to the city outskirts.
As a result companies will in many cases
be required to start early with the lookout
for space.
key Developments
Roughly 173,000 sqm is scheduled for
completion in 2020, 88% of which has
already been pre-leased. Another 107,000
sqm of office space will be added to the
market in 2021, 76,000 sqm of which still
available for lease. Key developments
include Butzweilerhof in the Ossendorf/
Niehl submarket, in which several devel-
opments are planned in the coming years,
as well as I/D Cologne in the East sub-
market and Messe-City in Deutz.
Summary and Outlook
Take-up on the Cologne office leasing
market in 2019 fell just short of previ-
ous-year results due to limited supply.
With a number of companies still in the
market for large-scale space, we consid-
er 275,000 sqm in total take-up realistic
for 2020. Potential large-scale tenants
will continue to focus on property devel-
opments and both prime and average
rents will continue to rise as a result.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
Average RentPrime RentVacancy RateVacancy
0
100
200
300
400
500
2019201820172016201510
15
20
25
30
20192018201720162015
21.20 21.00 21.50
11.80 11.8512.90
23.00
13.80
25.50
15.20
5.9 %
5.0 %
4.0 %
2.8 %
2.2 %
460
390
314
220
175
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Transaction Volume
The Cologne investment market recorded
€3.2bn in transaction volume thanks to
the end-of-year rally, breaking through
the €3bn-barrier for the very first time.
These results reflect a strong yoy increase
of 74%, outperforming the 10-year aver-
age by an impressive 86%. A total of 8
deals for over €100m each were posted in
the past year alone, claiming more than
half of total transaction volume combined.
Notable deals included the sale of the
Stadthaus property for €500m, the sale of
a portfolio comprised of several assets
located at Technologiepark and the sale of
Wallarkaden at Rudolfplatz square for
€140m. Portfolio deals accounted for 32%,
a slightly higher market share than the
previous year’s 25%.
In addition to these major deals, 19 assets
also changed hands in the mid-priced
segment of between €30m and €100m,
setting the tone for lively market activity.
The growing number of minority-share
investments in companies holding large
property portfolios or in their respective
portfolios also contributed to the strong
annual result.
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
500
1,000
1,500
2,000
2,500
3,000
3,500
20192018201720162015
Building Site 4%
Mixed Use 6%
Industrial & Logistics 3%
Retail 8%
Hotel 10%
Office 68%
Other 1%
1,9401,760
2,0001,860
3,240
Fast Facts
Investment Cologne 2019 2018
Transaction Volume 3,240 million € 1,860 million €
Portfolio Transactions 32% 25%
Share by International Buyers 41% 52%
Share by International Sellers 56% 42%
Most Important Property Type Office 68% Office 48%
Prime Yield Office 3.30% 3.75%
INVESTMENT
0
500
1,000
1,500
2,000
2,500
3,000
3,500
20192018201720162015
Building Site 4%
Mixed Use 6%
Industrial & Logistics 3%
Retail 8%
Hotel 10%
Office 68%
Other 1%
1,9401,760
2,0001,860
3,240
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Supply and Demand
Fueled by a number of major deals, the
office segment was able to considerably
expand its position as the most popular
asset class with a share of 68% (€2.21bn),
followed by hotels with 10% (€330m).
Retail assets came in 3rd with 8% (€257m).
More than 80% of transaction volume
was generated by assets in the core and
core+ segment.
In terms of location, transaction activity
was dominated by the established City and
Deutz submarkets, which accounted for
more than half of transaction volume with
€1.8bn combined. Commercial assets val-
ued at almost €900m changed hands in
the Ehrenfeld/Braunsfeld and Ossendorf/
Niehl submarkets.
Foreign investors claimed a buy-side
market share of roughly 41% of transac-
tion volume, down 11 percentage points
yoy. However, this reflects an increase of
€360m in absolute terms. Foreign inves-
tors claimed an even higher market share
sell-side with 56%. As such, Cologne
remains particularly popular among for-
eign investors in the high-volume seg-
ment.
Asset/fund managers dominated market
activity buy-side with a market share of
28% and €915m in transaction volume.
Open-ended real estate funds and special
funds with access to particularly high
liquidity from private as well as institu-
tional investors followed in the ranks with
23%, or €750m. Asset managers/fund
managers also claimed pole position sell-
side with 26% or over €850m. Property
developers came in 2nd with roughly
€600m in transaction volume (19%).
0 400 800 1,200
Other Investors
Insurance Companies
REITs
Opportunity Funds/Private Equity Funds
Property Developers
Asset Managers/Fund Managers
28%
0 400 800 1,200
Other Investors
Pension Funds
Private Investors/Family Offices
Opportunity Funds/Private Equity Funds
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
23%
19%
8%
6%
16%
26%
19%
15%
12%
6%
22%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
0 400 800 1,200
Other Investors
Insurance Companies
REITs
Opportunity Funds/Private Equity Funds
Property Developers
Asset Managers/Fund Managers
28%
0 400 800 1,200
Other Investors
Pension Funds
Private Investors/Family Offices
Opportunity Funds/Private Equity Funds
Open-ended Real EstateFunds/Special Funds
Asset Managers/Fund Managers
23%
19%
8%
6%
16%
26%
19%
15%
12%
6%
22%
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yields
Prime office yields were already down
50 bps in 2018. This trend continued in
line with current investment market
dynamics with another drop of 45 bps in
2019 to a current 3.30% for premium
office assets in the City submarket. This
means that prime office properties in
Cologne are currently changing hands at
the same yields as similar assets in Düs-
seldorf. Prime yields nevertheless appear
to have almost bottomed out. Yield com-
pression has also accelerated in locations
outside the City submarket, primarily in
the wake of limited supply of prime
assets. This trend is likely to continue in
2020.
Summary and Outlook
Driven by several large-scale transac-
tions, the Cologne investment market
posted a new all-time high in 2019. Major
deals in the office segment particularly
contributed to this result. Although
asset/fund managers dominated market
activity sell-side as well as buy-side,
Cologne nevertheless continues to boast
a well- diversified supply and demand
structure. Cologne also remained popu-
lar with foreign investors in 2019. The
stable office leasing market with its
upside potential in terms of rents and
low vacancy risk creates a solid basis for
establishing investor trust.
In addition to the traditionally highly popu-
lar City submarket, the submarkets locat-
ed along the right bank of the Rhine River
will see particularly strong activity going
forward due to upcoming property devel-
opments. Despite ongoing high demand,
we do not expect the Cologne investment
market to match this new record result in
2020 in light of limited supply. However,
with the development pipeline full, we
once again expect to see several forward
deals signed in 2020. Combined with a
number of deals already approaching
marketing phase, we expect 2020 to bring
in another above-average transaction vol-
ume of around €2.5bn.
The Cologne investment market exceeded all expectations and posted a new record result with €3.2 bn in transaction volume.
CONTACT Bastian Hallen Consultant | Research
+49 221 986537-31, [email protected]
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CITY FACTS MUNICHPopulation in 1,000 1,472
Employees Paying Social Se cu rity Contributions in 1,000
897
Unemployment Rate in % 3.4
Per Capita Disposable Income in € 30,478
Fast Facts
Office Leasing Munich 2019 Change year-on-year
Office Space Take-up 770,400 sqm – 21.3%
Leasing Take-up 627,200 sqm – 33.6%
Prime Rent 39.50 € / sqm 9.7%
Average Rent 20.10 € / sqm 5.7%
Vacancy Rate 2.2% 40 bp
Office Space Stock 22.66 million sqm 0.5%
achieved rents in € / sqm
Submarket Prime Rent Average RentCenter 42.00 31.50Center NW 36.50 30.60Center NE 35.50 26.80Center SE 31.00 22.70Center SW 30.00 20.50City NW 27.50 20.40City NE 30.00 19.60City SE 26.00 15.60City SW 25.00 17.40Periphery SW 17.70 12.50Periphery NW 14.00 12.00Periphery NE 16.90 12.70Periphery SE 17.50 11.30
53M
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Take-up
Activity on the Munich office leasing mar-
ket was calmer in 2019 compared to pre-
vious years with take-up down 21% yoy to
770,400 sqm. Take-up results excluding
owner-occupiers fell 34% to 627,200
sqm. Although the economic slowdown in
Germany was reflected in more limited
demand for office space in Munich, take-
up still managed to exceed the 10-year
average. This drop in demand affected all
space segments, particularly the large-
scale segment of over 5,000 sqm where
results were down 30% to 274,300 sqm.
Companies from the IT sector were
involved in the majority of the leases
signed for office space, putting their take-
up results down only slightly from 2018
levels. The IT sector contributed almost
one third to total take-up as a result. Busi-
nesses from the manufacturing industry
came in second, accounting for a share
of 18%. In contrast, consulting firms post-
ed their weakest leasing result since
2003 with their market share down to 9%.
rents
Average rents climbed to €20.10 per sqm
(+6%) over the course of the year,
exceeding €20.00 per sqm for the very
first time. Tenants looking for space with-
in city limits were confronted with rents
of €22.80 per sqm on average, up 10%
yoy. No large-scale leases were signed
for space at new-builds located in the city
outskirts and average rent there fell 4%
to €12.30 per sqm. Prime rents were up
10% yoy in contrast to a current €39.50
per sqm.
Supply and Vacancy
The vacancy rate saw a slight increase
from 1.8% to 2.2% over the course of 2019
with 489,400 sqm available for immediate
tenancy. However, this increase has had
no effect on the overall supply bottleneck
in Munich. Around 218,100 sqm, or 1.3%,
of stock space was vacant within city lim-
its while vacancy in the outskirts came to
4.4% or 271,300 sqm. New-build space
0
200
400
600
800
1,000
20192018201720162015
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
0
100
200
300
400
500
20212020201920182017
653730
785
944
627
10450
199
35
143
238205
164138
416
309
365
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
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and space in property developments
approaching completion continue to be in
high demand. All of the new office space
that was added to the market in 2019 has
now been almost fully absorbed and even
77% of the space scheduled for comple-
tion in 2020 has already been pre-leased.
key Developments
The east of Munich remains a hot spot for
office development. Bavaria Towers,
which features around 60,000 sqm of
office space, was recently completed and
is now almost fully let. Properties cur-
rently under construction in the Berg am
Laim district include Die Macherei and
New Eastside Munich. Several property
developments are lined up in the Werksvi-
ertel district and are already meeting with
high tenant demand. The Obersendling
district in the south of Munich, which saw
activity slow in recent years, is again
attracting increasing attention from prop-
erty developers. The location will see a
significant upgrade over the next few
years thanks to a number of new-builds
and refurbishments of older stock build-
ings.
Summary and Outlook
Munich remains a landlord’s market even
though activity on the leasing market
slowed somewhat in 2019. We anticipate
further rental growth due to ongoing
scarce supply as construction activity will
not be enough to significantly ease the
current situation on the market. We also
expect companies looking for space to
remain hesitant in the first half of the
year. Despite several large-scale deals
currently in the pipeline, the Munich mar-
ket is likely to see another calm year in
2020 with take-up coming in at around
700,000 sqm.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
Average RentPrime RentVacancy RateVacancy
0
200
400
600
800
1,000
201920182017201620155
15
25
35
45
20192018201720162015
33.3035.00 35.60
16.30 16.00 17.30
36.00
19.00
39.50
20.10
3.8 %
3.0 %
2.4 %2.2 %
1.8 %
874
688
536
411489
55M
UNICH | 2019 / 2020
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Transaction Volume
The Munich market posted a new record
result in commercial transaction volume
at roughly €10.9bn. Q4 alone accounted
for more than half of total transaction vol-
ume, with commercial properties chang-
ing hands for €5.6bn. Overall, transaction
activity outperformed the previous year’s
already strong result by 67% and exceed-
ed the 10-year average by an impressive
140%. High-volume single-asset deals,
some of which went for significantly more
than €300m, and large-scale portfolio
deals were the main drivers behind this
strong take-up result. As such, Munich
remains one of the most sought-after
European markets among real estate
investors and will maintain its popularity
in 2020. Although investors would have
been willing to pour more capital into the
market, the supply bottleneck prevented
them from doing so. We can expect
increased construction activity to bring
more investment opportunities involving
new-builds and property developments to
the market.
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
2,000
4,000
6,000
8,000
10,000
12,000
20192018201720162015
Mixed Use 6%
Industrie/Logistik 5%
Retail 4%
Building Site 5%
Hotel 6%
Office 74%
5,850
6,8606,170 6,531
10,904
Fast Facts
Investment Munich 2019 2018
Transaction Volume 10,904 million € 6,531 million €
Portfolio Transactions 17% 17%
Share by International Buyers 39% 38%
Share by International Sellers 38% 32%
Most Important Property Type Office 74% Office 64%
Prime Yield Office 2.75% 3.00%
INVESTMENT
0
2,000
4,000
6,000
8,000
10,000
12,000
20192018201720162015
Mixed Use 6%
Industrie/Logistik 5%
Retail 4%
Building Site 5%
Hotel 6%
Office 74%
5,850
6,8606,170 6,531
10,904
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Supply and Demand
Demand for office properties remains
particularly high, with this asset class
claiming 74% of total volume and sur-
passing other usage types by a significant
margin. Mixed-use properties and hotels
trailed behind with €660m and €640m in
transaction volume, respectively. More
than 20 office deals were signed for over
€100m, including 4 single-asset deals for
more than €300m each. The highest-vol-
ume properties to change hands in 2019
included Tucherpark, the Die Macherei
new-build business district and Kuster-
mann Park close to the Werksviertel
district. The exclusive Lenbach Gärten
property went for somewhere in the mid-
9-figure range close to year-end. H1 saw
the sale of the LUDWIG stock building in
the city center to a private investor. The
city outskirts also set the stage for sever-
al high-volume deals. The sale of Agrob
Medienpark in Ismaning and Sky head-
quarters in Unterföhring both reflect
growing demand in locations outside the
city center.
Almost 25% of the transaction volume
buy-side was generated by open-ended
real estate funds and special funds, which
continue to benefit from access to large
amounts of capital. Asset/fund managers
followed in the ranks with around 15% and
opportunistic investors and pension
funds claimed roughly 11% each.
Foreign investors posted a slight yoy
increase in market share to a current
39%. The sources of capital among for-
eign investors proved highly diversified
as well. The US (39%) and the UK (16%)
contributed the lion’s share to the trans-
action volume generated by foreign inves-
tors. Asian investors accounted for 14%,
closely followed by investors from the
Middle East with 13%.
yields
The combination of high liquidity, easy
access to cash, negative interest rates
and sustainable rental growth contributed
to a further drop in yields. Prime yields
decreased by another 25 bps over the
0 1,000 2,000 3,000 4,000
Other Investors
Listed PropertyCompanies
Banks
Insurance Companies
Opportunity Funds/Private Equity Funds
Property Developers25%
0 1,000 2,000 3,000 4,000
Other Investors
Property Developers
Pension Funds
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
Open-ended Real EstateFunds/Special Funds
15%
11%
11%
10%
28%
23%
13%
12%
11%
9%
32%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
0 1,000 2,000 3,000 4,000
Other Investors
Listed PropertyCompanies
Banks
Insurance Companies
Opportunity Funds/Private Equity Funds
Property Developers25%
0 1,000 2,000 3,000 4,000
Other Investors
Property Developers
Pension Funds
Opportunity Funds/Private Equity Funds
Asset Managers/Fund Managers
Open-ended Real EstateFunds/Special Funds
15%
11%
11%
10%
28%
23%
13%
12%
11%
9%
32%
57M
UNICH | 2019 / 2020
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course of the year to 2.75% at year-end
with further compression possible. Prime
yields were not only recorded in the city
center but also at high-end property
developments in established locations
along the Mittlerer Ring central ring road.
Yield compression has also reached the
Munich outskirts with some high-end and
well-let office buildings going for less
than 4.50%.
Other asset classes are also seeing ongo-
ing yield compression. Industrial and
logistics recorded prime yields of 4.30%
and hotels registered another drop in
prime yields, down 5 bps to 3.70%.
Summary and Outlook
Munich remains Germany’s most expen-
sive office market with the lowest yields.
As long as yields for real estate assets
remain favorable compared to secure
investment options, further yield com-
pression to low levels would come as no
surprise. Despite the office leasing mar-
ket posting a weaker result due to unfa-
vorable economic conditions, we do not
see signs of the boom on the Munich mar-
ket faltering as we enter the new decade.
Inspired by the overall conditions on the
capital and investment markets, investors
are increasingly placing their focus on
yield-generating real estate investments
and Munich continues to be a popular des-
tination. However, the lack of supply will
prove a limiting factor despite increasing
development activity and may prevent the
market from reaching another all-time
record take-up result. We nevertheless
expect numerous high-volume invest-
ment opportunities to materialize and
new products to enter the market, with
transaction volume finishing out 2020 in
the realm of €7bn, once again significant-
ly exceeding the long-term average.
We expect activity on the leasing market to pick up in the second half of the year and the boom on the investment market to continue unabated.
CONTACT Tobias Seiler Director | Research
+49 89 624294-63, [email protected]
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CITY FACTS STUTTGARTPopulation in 1,000 635
Employees Paying Social Se cu rity Contributions in 1,000
426
Unemployment Rate in % 3.9
Per Capita Disposable Income in € 27,314
Fast Facts
Office Leasing Stuttgart 2019 Change year-on-year
Office Space Take-up 312,100 sqm 44.4%
Leasing Take-up 279,200 sqm 85.8%
Prime Rent 24.00 € / sqm 4.3%
Average Rent 16.60 € / sqm 18.6%
Vacancy Rate 1.9% – 40 bp
Office Space Stock 8.03 million sqm 1.0%
achieved rents in € / sqm
Submarket Prime Rent Average RentCity 24.00 19.70Center 20.00 16.80Zuffenhausen / Feuerbach 16.50 16.20Weilimdorf 15.50 15.30Bad Cannstatt / Wangen 19.00 16.20Vaihingen 17.50 15.30Degerloch 19.90 19.90Möhringen 15.00 14.10Fasanenhof 16.00 13.70Leinfelden-Echterdingen 17.00 13.30
59STUTTGarT
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Take-up
The Stuttgart office leasing market
(including Leinfelden-Echterdingen) was
once again characterized by high demand,
exceeding the previous year’s result by
roughly 44% with 312,100 sqm in take-up.
This reflects the second-highest result
ever recorded in the capital of Baden-
Wurttemberg, also taking into account the
strong previous years. This impressive
result can mainly be attributed to a num-
ber of large-scale deals, almost exclu-
sively limited to peripheral city districts.
In Q3 the State of Baden-Wurttemberg
acquired a building encompassing 27,200
sqm in the Stuttgart-Feuerbach district
as an owner-occupier. Vector Informatik
signed a lease for around 25,000 sqm in
the Stuttgart-Weilimdorf district and Sie-
mens took up another 20,000 sqm at the
Campus Urbanic property development in
Stuttgart-Zuffenhausen. Owner- occupiers
claimed a relatively low market share at
around 32,900 sqm, putting take-up
excluding owner-occupiers at 279,200
sqm, just shy of 2016’s record result of
297,900 sqm. With a total of 214 leases
signed, activity levels remained average
as in the previous year. Consulting firms
were particularly active in 2019 with 44
leases signed, primarily for smaller units
near the city center. IT firms were next in
line with 27 leases signed. For the first
time since 2012, companies from the
manufacturing sector failed to claim pole
position in terms of take-up, registering a
total 65,400 sqm. Public administration
snatched 1st place in the ranks instead,
achieving a new record take-up result for
the sector at 82,500 sqm.
0
50
100
150
200
250
300
20192018201720162015
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
0
50
100
150
200
250
20212020201920182017
226
298
212
150
279
65
133
56 66
33
115128129
93 88
138
204
Figure 1: Office Space Take-up in 1,000 sqm Figure 2: Completion Volume in 1,000 sqm
OFFICE LEaSING
0
50
100
150
200
250
300
20192018201720162015
Leasing Owner-occupiers thereof Pre-let/Owner-occupiedCompletions
0
50
100
150
200
250
20212020201920182017
226
298
212
150
279
65
133
56 66
33
115128129
93 88
138
204
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rents
Rents continued their upward trend in
2019. Average rents climbed to a new all-
time high of €16.60 per sqm. Overall, the
lion’s share of leases signed (133,800
sqm) featured rents ranging from €15.00
per sqm to €20.00 per sqm. Prime rents
could not quite keep up with the trend
seen in average rents, maxing out at
€24.00 per sqm at year-end. This result
can primarily be attributed to limited sup-
ply of high-priced rental space.
Supply and Vacancy
While vacancy leveled out in the past two
years at a rate of just over 2%, it dropped
below this threshold in 2019 for the first
time in 18 years to 1.9% at year-end 2019.
With stock at roughly 8 million sqm, only
149,600 sqm of space was available as at
31 December 2019.
key Developments
Property developments did little to ease
the situation supply-side in 2019. Although
a total of more than 88,000 sqm of office
space was completed, the majority of it
had already been pre-leased. Most of the
space at property developments sched-
uled for completion in the next couple of
years has already be pre-leased as well.
As in previous years, development activi-
ty will continue to focus peripheral sub-
markets where developers are able to find
space to build.
Summary and Outlook
The past year was characterized by sig-
nificant excess demand for office space.
This can particularly be seen in the cur-
rent rent trend, with rents at record levels
in most submarkets. We do not expect the
tight supply situation to ease anytime
soon, particularly in light of high pre-leas-
ing rates at property developments. This
trend will continue to boost rents in 2020.
Figure 3: Vacancy Rate in % and Vacancy in 1,000 sqm Figure 4: Prime and Average Rents in ¤/sqm
Average RentPrime RentVacancy RateVacancy
0
100
200
300
400
2019201820172016201510
15
20
25
20192018201720162015
22.80 23.0024.30
12.1013.00 13.40
23.0024.00
14.00
16.603.5 %
2.8 %
2.1 % 2.3 %1.9 %
270
219
165185
150
61STUTTGarT
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Transaction Volume
The Stuttgart real estate investment mar-
ket once again recorded above-average
results, generating a commercial transac-
tion volume of almost €1.8bn in 2019.
Investments in residential assets
accounted for an additional €160m. This
excellent result can be attributed to
numerous high-volume single-asset
deals and a large number of transactions
(72), almost on par with the above-aver-
age transaction activity seen in the previ-
ous year (75 deals signed). Q4 contribut-
ed the lion’s share with more than half a
billion euros in transaction volume. How-
ever, 2019 commercial transaction vol-
ume still fell short of the previous year’s
record high of over €2.2bn due to limited
supply.
Supply and Demand
Investor demand was high across most
asset and risk classes with office (50%)
claiming by far the largest share in terms
of transaction volume. Demand on the
office market continues to be boosted by
rising rents. The Stuttgart office market is
also currently undergoing a transitional
phase in terms of layout preferences and
Figure 5: Transaction Volume in million € Figure 6: Transaction Volume by Type of Property 2019 share in %
0
500
1,000
1,500
2,000
2,500
20192018201720162015
Mixed Use 13%
Building Site 4%
Retail 22%
Hotel 11%
Office 50%
1,695
1,913
1,200
2,206
1,755
Fast Facts
Investment Stuttgart 2019 2018
Transaction Volume 1,755 million € 2,206 million €
Portfolio Transactions 35% 14%
Share by International Buyers 53% 19%
Share by International Sellers 47% 23%
Most Important Property Type Office 50% Office 67%
Prime Yield Office 3.30% 3.40%
INVESTMENT GEWErBEIMMOBILIEN
0
500
1,000
1,500
2,000
2,500
20192018201720162015
Mixed Use 13%
Building Site 4%
Retail 22%
Hotel 11%
Office 50%
1,695
1,913
1,200
2,206
1,755
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higher fitout standards. As a result,
value-add investments have become
highly sought-after by German and for-
eign investors alike in addition to the
already popular and less risky core and
core+ assets.
Investment activity in retail assets over
the past year can be described as selec-
tive and hesitant compared to the office
segment. Nevertheless, retail still man-
aged to contribute a relatively high share
to transaction volume with 20% thanks to
the high-volume acquisition of the down-
town shopping center Königsbau-Passa-
gen. The deal was the largest recorded in
2019 with a purchase price of around
€280m. Hotel assets also claimed a con-
siderable share in total transaction vol-
ume with seven 3-star and 4-star hotels
changing hands for a total of €190m,
including the brands Ibis Styles, Niu and
AcomHotels.
2019 was characterized by above-aver-
age foreign investor activity with a market
share of over 50%, which can be attribut-
ed to the high volume generated by sin-
gle-asset deals involving this investor
group. A total of 3 deals involving com-
mercial properties were signed in the
9-figure range.
The core and core+ segments in particu-
lar have been seeing a trend toward loca-
tions outside of Stuttgart for some time
now. This focus on cities such as Lein-
felden-Echterdingen, Böblingen, Essling-
en and Ludwigsburg can be traced back to
the severe shortage of suitable invest-
ment opportunities on the Stuttgart mar-
ket. Many German and foreign investors
consider the Stuttgart region a strong
economic center and therefore an attrac-
tive investment location. Examples
include the recent acquisition of the Ger-
man Thales headquarters in Ditzingen by
Italian investor Antirion for just shy of
€245m in Q4 2019. The price on the deal
was raised several times and the deal rep-
resents this investor’s second high-vol-
ume transaction of the year. In total,
Antirion invested more than €500m in the
region in 2019.
0 200 400 600
Other Investors
Property Developers
Private Investors/Family Offices
Insurance Companies
Opportunity Funds/Private Equity Funds
REITs19%
0 200 400 600
Other Investors
Property Developers
Listed PropertyCompanies
Opportunity Funds/Private Equity Funds
Open-ended Real EstateFunds/Special Funds
Insurance Companies
18%
18%
10%
8%
27%
20%
18%
14%
9%
8%
31%
Figure 7: Transaction Volume by Buyer Groups in million €, share in %
Figure 8: Transaction Volume by Seller Groups in million €, share in %
0 200 400 600
Other Investors
Property Developers
Private Investors/Family Offices
Insurance Companies
Opportunity Funds/Private Equity Funds
REITs19%
0 200 400 600
Other Investors
Property Developers
Listed PropertyCompanies
Opportunity Funds/Private Equity Funds
Open-ended Real EstateFunds/Special Funds
Insurance Companies
18%
18%
10%
8%
27%
20%
18%
14%
9%
8%
31%
63STUTTGarT
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yields
Ongoing high demand on the Stuttgart
real estate investment market across all
asset and risk classes combined with
insufficient supply caused yields to
remain low over the past twelve months.
At year-end 2019, prime yields were
recorded at 3.30% for office assets and
downtown buildings featuring a retail-of-
fice mix and at 4.20% for modern logistics
assets.
Summary and Outlook
With the financial markets and, therefore,
the investment market continuing to enjoy
favorable overall conditions, we can par-
ticularly expect the office segment to
remain a seller’s market and for yields for
premium properties to remain low. The
potential negative effects of the economic
slowdown in the manufacturing sector on
the office leasing markets will not have a
significant impact on the investment mar-
ket in light of the lack of investment
options, historically low office vacancy
and ongoing office demand from multiple
sectors established in the region. The drop
in demand for office space coming from
the industrial sector in 2019 was more
than compensated by demand from public
administration and the IT sector. With a
high share of older stock properties com-
pared to the German average, the Stuttgart
office market continues to hold attractive
investment opportunities, also in the val-
ue-add segment. We expect 2020 transac-
tion volume to match the previous year’s
result.
Strong excess demand on the Stuttgart office leasing market has created a favorable investment environment.
CONTACT Alexander Rutsch Senior Consultant | Research
+49 711 22733-395, [email protected]
64
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We help you avoid risks and surprises in your property acquisitionOur extensive buy-side advice illuminates all
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Take-up of SpaceTake-up of space is the sum of all spaces
either newly let, sold to owner-occupiers,
or built for or by an owner-occupier with-
in 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 count-
ed in the take-up of space.
Leasing PerformanceLeasing performance reflects take-up
excluding owner-occupied space.
Prime RentThe premium rent represents the median
of the top 3 % of new lets (not counting
owner-occupiers) during the 12 months
just ended.
Average RentThe 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.
VacancyVacancy is defined as all office
space available for occupation within
three months.
Prime YieldsPrime 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.
CompletionsNew-build space and space listed on
the market after a renovation period of
at least 12 months is included in total
available office space for the quarter in
which the development or renovation
was completed. In regards to expansion
or the addition of floors, only the amount
of new additional space is included.
GLOSSARY
67CONTaCTS / LOCaTIONS
| 2019 / 2020 C
ity Survey G
ermany | C
olliers International
BerlinBudapester Straße 50
10787 Berlin
Phone +49 30 202993-0
DüsseldorfKönigsallee 60 C
(Entrance Grünstraße)
40212 Düsseldorf
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20095 Hamburg
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CologneKaiser-Wilhelm-Ring 15
50672 Köln
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LeipzigMarkgrafenstraße 2
04109 Leipzig
Phone +49 341 2182990-0
MunichDachauer Straße 63
80335 München
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90402 Nürnberg
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Photo credits
Front page : Nextower, Getty Images International
Berlin : Mediaspree, Colliers International, Thomas Rosenthal
Düsseldorf : Medienhafen, Fotolia
Frankfurt : EZB, Jannik Selz on Unsplash
Hamburg : Speicherstadt, Cristina Gottardi on Unsplash
Cologne : Kranhäuser, shutterstock – r.classen
Munich : Altstadt, Thinkstock, Michael Abid
Stuttgart : Königstraße, Getty Images – Westend61
CONTACTS / LOCATIONSMatthias Leube MRICSCHIEF EXECUTIVE OFFICER
Ulf Buhlemann FRICSHEAD OF PORTFOLIO
INVESTMENT & ADVISORY
Dirk Hoenig-OhnsorgHEAD OF RETAIL INVESTMENT
Christian Kadel FRICSHEAD OF CAPITAL MARKETS
Susanne KieseHEAD OF RESEARCH
Peter Kunz FRICSHEAD OF INDUSTRIAL &
LOGISTICS
René-P. SchappnerHEAD OF HOTEL
Wolfgang SpeerHEAD OF OFFICE &
OCCUPIER SERVICES
Colliers InternationalDeutschland GmbHThurn-und-Taxis-Platz 660313 Frankfurt
CONTACT
RESEARCH
Susanne KieseHead of Research | Germany+49 211 86 20 [email protected]
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