The Berlin office letting market confirmed its positive start to the year in the second quarter, recording its strongest first half of the year in several years with take-up of 385,500 square metres. In addition to a high number of leases, the return of large-scale leases in particular provided additional momentum. The real estate investment market, on the other hand, continued to be characterised by selective investor demand. Despite a moderate decline in transaction volume, Berlin maintained its position as the most important investment location among Germany’s top 7 markets. These are the results of a recent study by the global real estate service provider CBRE.
Office rental market
“The Berlin office letting market gained significant momentum in the first half of the year. It is particularly pleasing that in addition to a high number of lease agreements, large-scale rentals have also returned. This shows that companies are once again making more long-term location decisions,” says Marc Vollmer, Head of Office Leasing Berlin at CBRE.
Owner-occupier projects, especially in the public sector, made an important contribution to take-up, while smaller spaces continued to account for a significant part of market activity. At the same time, closing activity remained high across all space sizes, a sign of the broad demand base of the Berlin market.
The quality focus of users continues to shape the market. Modern office space in central locations remains particularly in demand and continues to generate rising prime rents, especially in City West. The prime rent has risen by 4.5 percent to 46.50 euros per square metre per month over the past twelve months. At the same time, differentiation within the market continues: while high-quality buildings continue to expand their attractiveness, older existing spaces and less central locations are increasingly coming under competitive pressure.
Central market areas continued to develop particularly dynamically. The Mediaspree and neighboring locations in Friedrichshain are increasingly benefiting from an attractive interplay of modern space quality and a competitive rent level compared to Berlin. Hackescher Markt is a sought-after location, especially for technology-oriented companies. However, since large-scale modern office space is only available to a limited extent there, alternative central development locations continue to gain in importance. Around the main railway station, for example, another technology cluster is being established in Europacity with high-quality new construction space and internationally active technology companies.
This development is also evident in the user industries. While the public sector was one of the strongest buyers in the first half of the year due to large-volume owner-occupier projects, the technology sector remains a key growth driver of the Berlin office market. Berlin is thus consolidating its position as a leading European location for innovative software and AI companies.
The vacancy rate remained stable compared to the previous quarter at 8.4 percent. After the increase in vacancies in recent quarters could be attributed primarily to the completion of speculative new buildings, hardly any additional space came onto the market in the second quarter. In the short term, the completion of further projects is likely to increase the vacancy rate slightly. In the medium term, however, the declining development of the new construction pipeline speaks for a stabilization of the market. At the same time, renovations of existing office buildings are becoming increasingly important in order to meet the increasing quality requirements of users.
Real estate investment market
“The Berlin investment market remains robust despite a challenging market environment. Demand is there, but continues to focus on properties with a convincing location, sustainable cash flow or clearly recognizable value appreciation potential,” says Steffen Pulvermacher, Head of Investment Berlin & Region East at CBRE.
In the first half of the year, Berlin remained the highest-volume investment market among Germany’s top 7 locations. Although the transaction volume fell slightly by 13 percent year-on-year to a total of 1.9 billion euros, the market is nevertheless stable. While large-volume core transactions remain rare, opportunistic purchases and value-add strategies ensure continued market activity.
Residential real estate was once again the asset class with the highest volume. In the commercial sector, office properties led the way with a transaction volume of almost 500 million euros. The acquisition by Colonial SFL of 51 percent of the shares in two Prime properties, the “LindenCorso” on Unter den Linden and the “Atrium” on Friedrichstrasse, a 300 million euro portfolio from Generali, contributed a large share of the transaction volume in the second quarter. CBRE acted as advisor on this transaction. In addition, further market activity was dominated by smaller transactions with a volume of less than EUR 20 million. Properties with repositioning and ESG potential were particularly in demand. The growing activity of owner-occupiers on the buyer side is also striking. Market-driven price expectations are increasingly opening up attractive buying opportunities for companies outside the classic investor circle.
The prime yield for office properties in central locations remained stable at 4.6 percent in the second quarter. At the same time, differentiation within the market continues: high-quality core properties in the established CBD locations continue to meet stable investor demand, while the yield adjustment in secondary locations continues. “The investment market is thus increasingly reflecting the development of the rental market: location and property quality are once again being rewarded much more strongly,” says Matthias Mohr, Senior Director Valuation Advisory Services at CBRE.
Outlook for the full year 2026
“For the Berlin office leasing market, we expect a stronger annual result than in 2025. The combination of high closing momentum and the return of larger lettings forms a solid basis for this,” says Vollmer. “The quality focus of users will continue to shape the market. Modern, ESG-compliant office space in central locations is likely to further expand its attractiveness, while owners of older existing buildings will increasingly have to invest in modernisation and repositioning.”
“The investment market is also likely to pick up gradually over the course of the year. National and international investors are interested. However, market-driven price expectations and an increasing range of investable products remain decisive. Despite the continued complexity of transaction processes, market liquidity is improving noticeably,” says Pulvermacher.
