Cologne office market: subdued start to the year against the backdrop of economic slump, prime rent remains stable

"This comparatively cautious start to the year should be seen in view of the challenging and fluctuating macroeconomic situation. The result should therefore not be overestimated and is likely to represent an even more important snapshot than usual after only three months," explains David Braun, Cologne branch manager of BNP Paribas Real Estate GmbH. Compared to the very good quarter of the previous year, which was characterised by two major deals with more than 10,000 m² each, the structure of the leases has so far been more fragmented. Deutsche Bank is responsible for the largest deal and has leased modern office space of over 7,000 m² in the city. This is followed by the industrial insurer MSIG Europe SE, which is also taking over space in the city in the order of 3,400 m².

The prime rent for office space in Cologne remains constant at €33.50/m² and is achieved for high-quality properties in central locations. In contrast, the average rent, which is naturally subject to greater fluctuations, has risen by 4% in the last twelve months and currently stands at €21.40/m². This development illustrates the continued robust demand for modern office space in the entire market segment.

After the first three months of a year, the industry evaluation usually represents a snapshot rather than a typical industry distribution for the city. Other services accounted for an above-average share of sales at a good 27% (10 years: 18%). This is followed by banks and financial service providers with a share of 20%. It is noteworthy that both sectors also record above-average take-up of space in absolute terms. However, for the public administration, which has traditionally been in high demand, especially last year, no significant take-up of space has yet been recorded this year.

Compared with the same quarter of the previous year, construction activity increased by around 33%. Currently, around 190,000 m² of space is under construction on the Cologne market. However, only about 52,000 m² of this is available to the market. The pre-letting rate continues to rise and is currently above average at 73%.

The vacancy rate continued to grow year-on-year to 515,000 m² (+4% compared to Q4 2025). In this context, it is pleasing to note that the modern vacancy rate has fallen significantly to 115,000 m² compared to the previous quarter, which means that only around 22% of the total vacancy rate has modern furnishings. At 6.5%, the vacancy rate remains above the fluctuation reserve.

"The relatively subdued start to the year should not be overstated in view of the overall volatile market environment. The overall still quite low take-up of space is also due to structural factors. For example, the leasing processes from application to completion currently take much more time. The trends and drivers are almost unchanged compared to the previous quarters. Modern, ESG-compliant office space in the city centre and in well-connected locations continues to be the clear focus of demand," says Lars Faßbender, Cologne branch manager of BNP Paribas Real Estate GmbH.

The economic recovery is currently on a fragile foundation against the backdrop of trade and geopolitical risks. In particular, the armed conflicts in the Middle East are weighing heavily on the global economy. However, the infrastructure and armaments package adopted last year is likely to provide support for the German economy and provide positive impetus in the coming months. A return of confidence in economic resilience is expected in the course of the year. The relatively low take-up of space so far may somewhat obscure the fact that there are currently many large-scale searches on the market. In view of this, take-up is likely to increase gradually in the coming months, so that earnings should be at an average level by the end of the year.

Link to the market report: https://www.realestate.bnpparibas.de/marktberichte/bueromarkt/koeln-report