Office Space Market Cologne - October 2017 - Greif & Contzen
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Office Space Market
Cologne
October 2017
Coeur Cologne © Greif & Contzen 2017
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de
Office Space Market Cologne
October 2017
High take-up of office space, new buildings in great demand
Dear Sir or Madam
Nine take-ups ranging between 5,500 and 18,500 square metres were realised during the
first three quarters of the year. A total of around 260,000 square metres of office space was
let during the period under review. The average rent per square metre is about five percent
higher than at the beginning of the year, standing currently at EUR 12.80.
In view of the ever decreasing vacancy rate, completion of new buildings has become a
crucial factor in particular with regard to large office units. Four of the nine take-ups
mentioned above took place in property development projects and STRABAG AG are
building their new headquarters with more than 17,000 square metres.
For a number of years now, office locations with good traffic links on the right bank of the
Rhine have been becoming increasingly important for the office space market, due to a
better availability of commercial building land and consolidation areas. Many reputable
potential tenants have been convinced by these areas. Various new office buildings are
going to be built over the next few years, as part of large-scale urban development projects
in Deutz and Mülheim. In the short to medium term, further property development projects
are scheduled to be realised in the districts on the right bank of the Rhine but also in other
areas such as the Kölner Ringe, Braunsfeld and Ossendorf.
The focus topic of this report are the intended building activities over the next three years.
There is potential to create up to about 730,000 square metres of new office space in
Cologne in the period until 2020 alone.
Owing to pre-letting ratios and other decisive factors, figures for 2019 and 2020 are, of
course, of a theoretical nature. However, if potential for completion is differentiated by
location, there are already some specific and interesting indications for possible market
developments.
Please do not hesitate to get in touch with us, if you have any specific questions regarding
Cologne's office space market.
Yours faithfully
Florian Schmidt
Head of Office Properties
Greif & Contzen Immobilienmakler GmbH
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 2 of 15
Office Space Market Cologne
October 2017
Office space market Cologne – key figures development and forecast
Year 2013 2014 2015 2016 Develop Forecast 2017
-ment
Take-up
280 260 290 440 330
(000's m²)
Existing space
7.6 7.7 7.7 7.8 7.9
(million m²)
Completions
62 82 49 110 95
(000's m²)
Vacancies
560 510 440 360 300
(000's m²)
Vacancy rate in % 7.4 6.6 5.7 4.6 3.8
Highest rent
25.00 21.25 24.50 24.80 25.00
(€/m²)
Prime rent
(according to gif) 21.25 21.25 21.25 21.50 21.50
in €/m²
Average rent (initial
18.75 18.25 19.75 20.70 21.00
letting*) in €/m²
Average rent
(weighted
12.70 12.70 12.40 14.10 13.80
according to unit
size*) in €/m²
Average rent (mean
11.88 11.90 11.90 12.20 13.00
value*) in €/m²
Employees
contributing to
499 512 522 536 549
social insurance
(000’s)**
Unemployment rate
9.3 9.6 9.3 8.5 8.5
in %**
* for new buildings and revitalised properties in good and very good city centre locations
** as of 30 June, forecast regarding employees contributing to social insurance
Greif & Contzen Research, Cologne, October 2017
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 3 of 15
Office Space Market Cologne
October 2017
Significant lettings
Three of the biggest take-ups of the year so far took place in the submarket of Deutz. The
Federal Office for Family Affairs and Civic Duties concluded a contract for around 19,000
square metres of office space that were available due to the relocation of Deutsche
Lufthansa AG. STRABAG AG took up construction activities for their new headquarters
with around 17,000 square metres, in direct vicinity of the development area Deutzer Hafen.
Landschaftsverband Rheinland took up around 8,000 square metres in a new construction
project nearby. Furthermore, the office space provider Design Offices GmbH rented around
9,000 square metres in the prestigious building Dominium in the Bankenviertel.
Selection of significant lettings up to September 2017
Tenant (location) office space (m²)
Federal Office for Family Affairs and Civic Duties (Deutz) approx. 18,800
STRABAG AG (new building for owner-occupation, Deutz) approx. 17,100
Design Offices GmbH (Bankenviertel) approx. 9,000
Landschaftsverband Rheinland (Deutz) approx. 8,000
Deutsche Bahn AG (Köln Ost) approx. 7,300
OBI GmbH & Co. Deutschland KG (Mülheim) approx. 6,700
Deutsche Lufthansa AG (Braunsfeld) approx. 6,500
Federal Office for Family Affairs and Civic Duties (Kalk) approx. 5,600
Federal Office of Administration (Ossendorf) approx. 5,500
Deutsche Lufthansa AG (Innere Kanalstraße) approx. 4,600
Greif & Contzen Research, Cologne, October 2017
Take-up of office space (m²) development and forecast 2007 to 2017
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Greif & Contzen Research, Cologne, October 2017
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 4 of 15
Office Space Market Cologne
October 2017
MediaPark © Greif & Contzen 2017
Take-up of office space from a wide range of industries
Up to this point, public institutions account for the biggest share of the take-up of office
space this year. This is in particular due to two large-scale lettings to federal authorities.
Runner up is the transport industry with 14 percent, owing to rental contracts concluded by
Deutsche Lufthansa AG, followed closely by the media industry. Construction and retail
companies account for ten percent each. On the whole it can be said that once again, a
large share of the demand has been spread across a wide range of industries.
Take-up of office space according to industries in 2017
Consulting Real Estate Insurance Software, IT Finance Education Authorities,
3% 3% 2% 2% 1% 1% associations
26%
Healthcare
3%
Services
4%
Industrial,
technology
8%
Retail 10% Construction Media 13% Transport 14%
10%
Greif & Contzen Research, Cologne, October 2017
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 5 of 15
Office Space Market Cologne
October 2017
Development of rental prices
The average rent has increased by about five percent to around EUR 12.80 per square
metre since the beginning of the year. The weighted average rent based on unit size is
currently EUR 13.75 per square metre. A decrease was to be expected, after the key figure
had soared to EUR 14.10 per square metre in 2016, owing to the large unit taken up by
Zurich Versicherung. However, this still corresponds to an increase by around 11 percent
compared to 2015.
The prime rent remains unchanged at EUR 21.50 per square metre that were reached in
2016. A number of contracts was concluded for rents above this figure, however, these
lettings do not account for the required minimum share of take-up according to the Society
of Property Researchers, Germany. With regard to current property development projects
in particular, it is to be expected that the prime rent is going to increase at least in the
medium term.
Top rents of up to EUR 25.00 per square metre are already being achieved in the premium
segment of outstanding properties in excellent locations. The pricing structure summarised
in the table below is the result of an analysis of office space leases for the most expensive
units in around 60 high-quality office buildings, concluded since 2007.
Maximum rent price structure according to property types and quality
of location
New buildings Revitalised buildings Up-to-date older buildings
Top quality 18.00 € - 21.25 € 17.00 € - 25.00 € 16.50 € - 25.00 €
location1
Good quality 16.25 € - 20.00 € 14.50 € - 17.75 € 14.50 € - 16.50 €
location²
Average quality 11.00 € - 15.00 € 11.00 € - 14.00 € 9.50 € - 14.00 €
location³
Listed as monthly base rent per square metre
1
city centre locations with very good traffic links, high visibility and an established business environment,
such as Bankenviertel, Mediapark, Rheinauhafen, Rheinufer
² city centre locations with certain drawbacks regarding factors such as visibility or neighbours
³ locations outside of the city centre including business parks such as Airport Business Park , Braunsfeld,
Ehrenfeld, Kalk, Ossendorf
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 6 of 15
Office Space Market Cologne
October 2017
Vacancy rate continues to decrease
Vacant office space has been decreasing continuously, for the past eight years. Since
2014, vacancies have been decreasing by at least 50,000 square metres per year. At the
end of the third quarter of 2017, there are around 310,000 square metres of vacant office
space. This figure is expected to drop to around 300,000 square metres during the fourth
quarter, reaching a vacancy rate of 3.8 percent. The decrease is particularly noticeable in
the areas of Rheinauhafen, Kölner Ringe, Ehrenfeld and Deutz.
Vacancy rate development and forecast
2007 to 2017
9.5%
9.0%
8.5% 8.1% 8.0%
7.6% 7.6% 7.4%
8.0% 7.7%
7.5% 6.6%
7.0%
6.5% 5.7%
6.0%
5.5%
4.6%
5.0%
4.5% 3.8%
4.0%
3.5%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Greif & Contzen Research, Cologne, October 2017
Dynamic office locations
Deutz made it to first place among the submarkets, once again, with around 48,000 square
metres being taken up this year so far. The district came first in 2016 too, due to the major
lease concluded in MesseCity with Zurich Versicherung. Runner up so far is Mülheim with
more than 22,000 square metres. The five-year average has already been surpassed by
around 29 percent. Among the new tenants are the retail chains OBI and REWE who rented
large office units on Schanzenstrasse.
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 7 of 15
Office Space Market Cologne
October 2017
Overview of submarkets
Location Available space1 Vacant space Ø annual take-up² Benchmark
(m²) (m²) (m²) rent³ (€/m²)
Innenstadt (City Centre)
Bankenviertel 15,000 7,000 6,000 13 - 18
MediaPark 4,000 4,000 10,000 13 - 20
Rheinauhafen 19,000 19,000 9,000 16 - 20
Kölner Ringe 42,000 16,000 23,000 11 - 19
Deutz 63,000 14,000 26,000 10 - 19
Innenstadt Nord 52,000 37,000 31,000 11 - 18
Innenstadt Süd 21,000 8,000 11,000 9 - 16
Rheinufer Nord 2,000 2,000 8,000 14 - 20
Rheinufer Süd 12,000 12,000 8,000 12 - 17
Subtotal 230,000 119,000 132,000
Districts on the left bank of the Rhine
Innere Kanalstrasse 12,000 2,000 8,000 10 - 16
Ehrenfeld 19,000 14,000 21,000 9 - 13
Braunsfeld 114,000 46,000 12,000 10 - 13
Ossendorf 77,000 14,000 22,000 7 - 11
Köln Nord 50,000 14,000 12,000 7 - 10
Köln West 26,000 21,000 16,000 8 - 14
Köln Süd 30,000 26,000 22,000 8 - 13
Subtotal 328,000 137,000 113,000
Districts on the right bank of the Rhine
Gremberghoven 35,000 18,000 14,000 7 - 11
Mülheim 78,000 5,000 17,000 9 - 14
Kalk 7,000 1,000 15,000 8 - 15
Köln Ost 80,000 30,000 13,000 8 - 12
Subtotal 200,000 54,000 59,000
Total 758,000 310,000 304,000
¹ The supply of available space consists of vacancies, space under construction and a certain amount of space that
is still in planning stages.
2
Specified as average value of the past five years
3
The listed figures are base rent prices. Considerably higher or lower rents are occasionally agreed upon in
individual cases.
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 8 of 15
Office Space Market Cologne
October 2017
FOCUS TOPIC:
Potential for development 2018 to 2020
Due for completion in 2019: the building CLOUTH 104 with its historic brick façade © Clouth 104/HH Vision
An annual average of about 75,000 square metres of office space were completed between
2012 and 2016. Around 95,000 square metres are due for completion in 2017 and 90,000
square metres are expected to be completed in 2018. Among the biggest projects to be
completed in 2019 is the building CLOUTH 104, providing a historical reference and the
gateway to the mixed-use development area Clouth-Quartier. While a moderate increase
of construction activities can be observed, compared to the previous years, new office
space that is available in the market at short notice remains scarce, considering the great
demand and the high pre-letting rates. Companies that would like to move can choose
between only a small number of buildings in mint condition. If there are preferences for
particular locations, there may be little or no availability.
Completed office space (m²) development and forecast
2009 to 2018
300,000
250,000
200,000
150,000
100,000
50,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Greif & Contzen Research, Cologne, October 2017
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 9 of 15Office Space Market Cologne
October 2017
In order to be able to estimate the development potential of 2019 and 2020, large
construction measures that are currently being built and that have a number of construction
phases, must be considered. Furthermore, there are projects for which planning permission
has been granted or is likely to be granted shortly. Construction periods of 12 to 24 months
must be considered, in addition to the pre-letting rate that is usually required. These criteria
currently apply to a selection of around 40 property projects.
Current construction measures (selection)
Property / location Office space (sqm)* Completion
MesseCity (Deutz) around 120,000 2019 / 2021**
STRABAG headquarters (Deutz) around 17,100 2018
Federal Employment Agency (Ossendorf) around 19,500 2017
b3 campus köln (Kalk) around 19,000 2017 / 2018**
ONE Cologne (Innere Kanalstrasse) around 15,000 2018
CLOUTH 104 (Köln Nord) around 13,000 2019
GAG headquarters (Kalk) around 12,400 2018
Kaiser Hof (Innenstadt Nord) around 12,300 2018
KÖLNCUBUS süd (Kalk) around 12,000 2017
Haus Friesenplatz (Ringe) around 9,000 2019 / 2020**
* rental area of all construction phases, where applicable
**according to construction phases
Greif & Contzen Research, Cologne, October 2017
Owing to the fact that approval procedures, marketing and construction processes cannot
be accurately predicted, an indication of future construction volumes for the time beyond
2018 is subject to certain imponderable aspects. It is possible, however, to estimate the
potential, assuming that administrative proceedings are going to be favourable and that
tenants can be attracted successfully.
When the selected property projects are assessed based on these optimistic assumptions,
a theoretical potential of around 320,000 square metres each could be developed in 2019
and 2020. However, construction activities on this scale are not going to take place.
Considering even the fact that the average take-up of the past five years was 308,000
square metres, it is apparent that actual completion figures are most likely going to be much
lower. An oversupply with new buildings is prevented by the fact that the vast majority of
projects is not commenced unless there is an anchor tenant.
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 10 of 15Office Space Market Cologne
October 2017
Completion volume or potential in m² per time period, according to city districts
250,000
200,000
150,000
100,000
50,000
0
2015-2017
2015-2017
2018-2020
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
2015-2017
2018-2020
Innenstadt Kalk Ehrenfeld Lindenthal Porz Nippes Rodenk. MülheimChorweiler
Greif & Contzen Research, Cologne, October 2017
The spatial distribution of construction measures shows that the city centre is likely to
remain very significant over the next three years. There is theoretical potential for
completing around 170,000 square metres of office space, despite the scarce availability
in the construction land market. There is significantly less development potential in Kalk,
where the development of Deutzer Feld is almost complete.
The districts Ehrenfeld, Mülheim and to a lesser extend also Porz feature potential for
property projects that may distinctly increase their significance for Cologne’s office space
market. Whether this is actually going to occur, depends largely on whether companies
looking for office space are willing to accept space available in these locations.
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 11 of 15Office Space Market Cologne
October 2017
EMPLOYMENT MARKET AND OUTLOOK
Palais Langen © Greif & Contzen 2017
Employment continues to increase
The high demand for office space over the past few years is based mostly on the growth
of Cologne-based companies. This is illustrated by the development of the employment
market. The number of employees increased by around 73,000 individuals or by around 16
percent, between June 2010 and June 2016. A further increase is expected to occur in
2017.
Employees contributing to social insurance in Cologne, 2008 to 2017
600,000
550,000
500,000
450,000
400,000
350,000
300,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Landesdatenbank NRW, as of 30 June respectively
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 12 of 15Office Space Market Cologne
October 2017
Im Zollhafen 2-4 © Greif & Contzen 2017
Outlook: Good year-end results expected
The economic upswing continues. According to a number of research institutes, economic
performance is expected to increase by around 1.9 percent in 2017. Prognoses range
between 1.6 and 2.2 percent for 2018. Strong domestic consumption is an important driver
of the economy - both by the state and by private enterprises and households. Meanwhile
companies have also increased their investment activities. This is noticeably in particular
in the area of construction. While the ifo business climate index has fallen below the long-
term high achieved in summer, business sentiment is still very positive.
The sentiment indicator by the Chamber of Industry and Commerce showed in summer
that small and medium sized companies in the Cologne region tend to have an optimistic
outlook. There are generally favourable conditions that are likely to allow for an above
average take-up of space in the order of around 330,000 square metres to be realised by
the end of the year. This assessment is supported by a number of sustainable requests for
large office units. Jointly with 2011, this would be the second best year-end result for
Cologne’s office space market in the past decade. Furthermore, there is still potential for
rents to increase.
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 13 of 15Office Space Market Cologne
October 2017
If you have any questions, please contact:
Theodor J. Greif
Managing Director and Owner
GREIF & CONTZEN
Immobilien GmbH
Tel: +49 221 93 77 93 - 200
Email: gl@greif-contzen.de
Florian Schmidt
Head of Office Properties
GREIF & CONTZEN
Immobilienmakler GmbH
Tel: +49 221 93 77 93 - 340
Email: florian.schmidt@greif-contzen.de
Frank Pönisch
Managing Director
GREIF & CONTZEN
Beratungsgesellschaft mbH
Tel: +49 221 93 77 93 - 265
Email: frank.poenisch@greif-contzen.de
Dr. Jan Schubert
Consulting, Research
GREIF & CONTZEN
Beratungsgesellschaft mbH
Tel: +49 221 93 77 93 - 263
Email: jan.schubert@greif-contzen.de
Address: Pferdmengesstraße 42, 50968 Köln
© Greif & Contzen Beratungsgesellschaft mbH 2017, www.greif-contzen.de Page 14 of 15Office Space Market Cologne
October 2017
The information contained in this report is in part based on public sources, information
provided by third parties and our own calculations. We have compiled this information with
the greatest care and attention and are providing the information to the best of our
knowledge. However, any liability for the completeness and correctness of any of the
information, contents or citations contained shall be excluded. The information compiled
and provided in this report shall not establish any kind of consulting relationship with the
recipient.
© Greif & Contzen Beratungsgesellschaft mbH, 2017. All rights reserved. These
documents are our intellectual property and subject to our copyright. They are intended
solely for the recipient. Any form of reproduction, amendments or distribution to third
parties, in whole or in part, shall require our prior explicit agreement in writing. Where we
do not hold the copyright on grounds of third-party-copyright, we refer to the copyright of
the third party.
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