At 2.1 billion euros, investments in the German office real estate investment market were made in the first half of 2025, around 23 percent less than in the same period last year. In particular, the weak second quarter with a volume of only 765 million euros led to this result. As in the other asset classes, prime yields for first-class office properties remained stable and stood at an average of 4.96 percent in the top 7 markets at the end of the second quarter. These are the results of a recent analysis by the global real estate service provider CBRE.
“The office real estate investment market remained cautious despite a number of large deals – also due to the uncertain economic situation. As soon as the economy gets back on track, the office investment market should also recover,” says Kai Mende, CEO of CBRE in Germany.
Positive signals from demand for office space and economic conditions
Prime and average rents in the German office markets increased year-on-year, reflecting the continued demand for high-quality office space. The leading macroeconomic indicators are sending cautiously positive signals, which could be reflected in increasing planning security among users in the medium term. At the same time, demand for space remains selective and quality-driven.
“The positive prospects for an end to the recession in the current year and growth in the following years provide a good foundation for the prospects on the German real estate investment market,” says Dr. Jan Linsin, Head of Research at CBRE.
At the beginning of June, the European Central Bank (ECB) lowered both its main refinancing rate and the deposit rate by 0.25 percentage points to 2.15 percent and two percent, respectively. This was the eighth rate cut since June 2024 and the third in a row in 2025. CBRE expects another rate cut later this year. However, the yields on the ten-year German government bond and the euro swap rate (ten years) are 2.6 percent – a good 0.2 percentage points higher than at the beginning of the year.
“After a more moderate development in the second quarter, transaction momentum on the European real estate markets is likely to pick up again, as the resilience of the European and especially the German economy makes real estate investments attractive. Swap rates in the euro area are currently around 1.4 and 1.75 percentage points lower than in the US and the UK, respectively, which leads to attractive borrowing costs. However, long-term interest rates have not fallen as much as expected six months ago, which limits the decline in yields in the short term and thus benefits investors who are looking for earnings growth,” explains Linsin.
Core, Core, Core!
“Investors have recently focused primarily on security when it comes to office investments: Core is clearly in focus,” says Marcus Lemli, Head of Capital Markets at CBRE.
In general, purchases were predominantly selective – portfolio transactions were hardly recorded on the market with a share of seven percent. Accordingly, the investment strategy in the office property market is also much more security-oriented than in the market as a whole – 62 percent of capital flowed into core and core-plus products, even more than in the same period last year. The value-add products favored by the overall market accounted for only 16 percent of this asset class, compared to 30 percent in the first half of 2024.
In contrast to the overall real estate investment market, more investment was made in the top 7 locations in the office property segment, including in the context of major transactions such as the Upper West in Berlin or Rosenheimer Straße in Munich. Accordingly, these two investment markets were also the strongest among the top 7 markets. Düsseldorf, Hamburg and Cologne also achieved results in the three-digit million range.
The number of transactions in the size segment of over 100 million euros remained stable compared to the previous year with three deals. Overall, however, the number of transactions across all size classes fell only slightly, so that the average deal size fell by 17 percent to just over 21 million euros.
International investors accounted for 30 percent of the transaction volume, significantly more than in the first half of 2024 (twelve percent). Among other things, a Spanish family office invested in two high-quality office properties in Hamburg and Munich.
Outlook for the rest of the year
“In view of the transaction pipeline, an investment volume of up to five billion euros is expected for 2025 as a whole,” Lemli expects.
“Slight downward adjustments to prime yields are possible in the further course of the year. We see that the price expectations in the core segment and for absolute, liquid premium products between buyer and seller have continued to converge and that higher multipliers are being bought by wealthy individuals and family offices in particular,” says Linsin.
