After the first six months, the Hamburg office market can look back on a somewhat more subdued half-year balance compared to the previous year. Take-up of 177,000 m² is around 18% below the previous year's figure and 24% below the long-term average (Ø 10 years: 233,000 m²). Compared to the first quarter (91,000 m²), take-up in the second quarter was also slightly lower at 86,000 m². This is the result of the analysis by BNP Paribas Real Estate.
"Despite a high level of resilience, the Hamburg market continues to be characterized by an overall subdued environment. Against the backdrop of macroeconomic uncertainties, a cautious public sector and the lack of major deals so far, demand remains subdued, while modern space in attractive locations with good public transport connections continues to be in above-average demand in the wake of the "war for talents", says Heiko Fischer, Managing Director and Hamburg Branch Manager of BNP Paribas Real Estate GmbH.
At the same time, there is a certain reluctance on the supply side: project developments are currently often only initiated when pre-letting rates are higher and are accordingly postponed.
In the top segment, on the other hand, there is a positive dynamic: a first high-priced deal in new construction (over €41/m²) sends a signal for the rent level of upcoming projects. The 8% increase in prime rents, which is currently at 39.00 €/m² for absolute top areas and locations.
Broad, broadly diversified demand side
On the user side, there is a broadly diversified distribution of demand. The collective category "other services" leads by far (24%), followed by transport and traffic (14%) and ICT technologies (12%). While the former is supported by a high number of small and medium-sized deals, the share of transport and traffic is largely based on MSC's large deal (13,000 m²). Public administration, on the other hand, is acting much more cautiously than in the previous year. Among the top 5 deals, only one contract has so far been for the second quarter (Deutsche Bank, around 7,600 m² in the Emporio in the CBD).
On the supply side, the vacancy rate has risen by 12% within twelve months and currently stands at around 953,000 m². Compared to the first quarter, however, there is only a moderate increase of 1%. With a vacancy rate of 6.5%, the market continues to be in the range of the fluctuation reserve and continues to show a moderate level in a nationwide comparison of the top markets. The low proportion of modern space in the vacancy rate remains striking at only 27%, among which there is hardly any space in central locations for first occupancy.
Space under construction increased slightly (+9%) year-on-year to 232,000 m², of which a significant proportion (159,000 m²) is still available. As a result, the pre-letting rate drops to 31%. However, a large part of the new building volume will not be completed until next year.
Prospects
For the coming quarters, the Hamburg office market is expected to continue to develop moderately, but gradually stabilise. Although macroeconomic uncertainties and structural demand-related changes are dampening the momentum of deals, at the same time part of the well-filled letting pipeline is likely to be reflected in deals with a time lag, especially in the prime segment.
"The focus of users remains on modern, ESG-compliant spaces in well-connected locations that are particularly suitable for hybrid working environments. The limited supply of high-quality space available at short notice is delaying decisions regarding planned relocations, while the currently still available new construction volume also offers potential for new contracts," predicts Heiko Fischer.
In the second half of the year, geo- and macroeconomic uncertainties are likely to increasingly recede into the background and be positively overshadowed by a gradual recovery of the economy. Overall, there are good conditions for a gradual market revival with a moderate increase in take-up. An annual result at the previous year's level (around 400,000 m²) currently appears to be the most likely scenario. On the supply side, a further shortage of modern space can be expected in the medium term if construction activity remains stable, which means that the upward pressure on prime rents will continue.
