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Berlin's office market stable once again

Berlin's office market stable once again - New lease volume at 433,000 m² - Vacancy rate remains constant - Top-level lease price back at 22 EUR per m²/month

The office space market in Berlin is once again stable in late summer 2014. In the first nine months of the year, a total of 433,000 m² new office space was leased. This is equivalent to the previous year's result (437,000 m²) and significantly above the ten-year average of 316,300 m² (+37%). The five-year average of 400,200 m² was also exceeded (+8 %). The current turnover volume of 130,000 m² does, however, mean that the market has not quite reached the level of the previous two quarters, which each saw a lease volume of around 150,000 m².

According to international real estate consultancy Cushman & Wakefield (C&W), no contracts were concluded for spaces in excess of 10,000 m² in contrast to the first six months of 2014. Stable property turnover was recorded for the size segments 5,000 m³ to 10,000 m² (Q2: 15,200m²) and 1,000 m² to 3,000 m² (Q2: 36,100 m²), with a market share of 12% and 29% respectively in the third quarter. This contrasted with a slight fall in lease performance in the other size segments.

As in the first half of the year, the only sector of the economy with an above-average share of the lease market to the end of September was the IT business, which is firmly estabilshed in Berlin (market share 15%).  The majority of the sectors have contributed between 4% and 6%

to overall turnover to date. The market in Berlin is therefore once again broad-ranging and stable.

The vacancy rate remained stable for the third quarter in succession. There is currently 1.13 million m² space available on the market on a short-term basis. With the total office space available amounting to 17.7 million m², this corresponds to a vacancy rate of 6.4%. If lease performance remains stable over the coming months, the vacancy rate is expected to fall as the majority of the space currently under construction has been leased in advance.

Over the course of 2014 to date, 88,300 m² (Q3: 25,600 m²) of new office space has been completed, with a further 304,000 m² still under construction. A completion volume of 62,300 m² is forecast for the closing quarter, with 77% currently leased in advance.

The top-level lease price has also remained stable in the German capital and stood at EUR 22.00/m²/month at the end of September. The average lease price is currently EUR 12.05/m²/month, but is subject to upward pressure.

“The mood among market particpants is good,” said Gerald Dietzold, Head of Office Space Leasing at C&W. “A number of large-scale lease applications are still underway in the market that could be concluded by the end of 2014. A renewed market upturn in the fourth quarter, resulting in a turnover volume in excess of the previous year's figure, remains within the bounds of possiblity.”