24 January 2020
Union Investment strengthens portfolio by letting over one million square metres of space in 2019
• New lettings and renewals of 1.1 million square metres in 21 countries
• Around 66 per cent of lettings accounted for by Germany
• 14 per cent of total space newly let or relet
Union Investment let or relet a total of 1.1 million square metres of commercial real estate space in 2019. That corresponds to an increase of around 30 per cent on the previous year and represents approximately 14 per cent of the space currently under management. At around 66 per cent, the majority of the lettings related to properties in Germany. Other European locations accounted for 24 per cent, while non-European properties made up roughly 10 per cent of total lettings. From a fund perspective, the new lettings and renewals represent annual net rent of around EUR 263 million. The overall occupancy rate across all actively managed real estate funds, based on income, is 96.8 per cent.
“We let around 1.1 million square metres out of the approximately 7.7 million square metres of commercial real estate space held in the portfolio, thanks to excellent teamwork. Arranging lease renewals and follow-on leases often involves just as much effort as new lettings, and in most cases we succeeded in increasing the profitability of the properties through successful letting. We have thus once again delivered for our investors in a highly impressive manner.”
Volker Noack, a member of the management team at Union Investment Real Estate GmbH
New lettings account for around 22 per cent of the overall total for 2019, corresponding to 243,000 sq m of commercial real estate space.
New lettings in the German office portfolio
Due to the extremely high occupancy rate in the German office property portfolio, new lettings tended to be minimal here. The 4,100 sq m of space let in H19 in Düsseldorf was the largest single letting. Also particularly noteworthy are the new lettings in the Munich region. The three office properties Maximilian 35, Park.Gate and IT-Port in Unterschleißheim each account for new lettings of between 2,200 and 2,800 sq m. Looking at the DACH region as a whole, important new lettings here included some 4,000 sq m of space at Euro Plaza 4 in Vienna.
Key results in international office markets
New lettings activity was also exceptionally high in France, where some 43,000 sq m of new lettings represent a rate of nearly 74 per cent. The main drivers were the two newly completed development projects Grand Central Paris Saint-Lazare and EKLA Business in Lille, which together contributed around 31,000 sq m of new lettings. The biggest new lettings in the non-European markets are attributable to the 111 South Wacker office property in Chicago, with some 4,900 sq m, and the Shibuya Prime Plaza office building in Tokyo, with around 2,900 sq m. Another highlight is the letting of approximately 30,000 sq m at 555 Mission Street in San Francisco. Here it proved possible to retain existing tenants Deloitte and DLA Piper, among other successes.
New lettings in the retail portfolio
New lettings of Union Investment’s retail properties in 2019 were mainly associated with major initiatives undertaken as part of active portfolio management. This is particularly true of Riem Arcaden in Munich, with new lettings of 8,800 sq m following recent expansion of the complex, Wandsbek Quarrée in Hamburg, with new lettings of around 8,000 sq m, and Rhein-Galerie in Ludwigshafen, where some 3,200 sq m were newly let. Also notable is the letting of around 4,500 sq m of space in the Rheinpark Center in Neuss, near Düsseldorf. In terms of international retail holdings, two examples can be cited in the context of the ongoing development of the Manufaktura shopping centre in Lodz, Poland, with some 4,100 sq m of new lettings, and the K shopping centre in Kortrijk, Belgium, with around 2,000 sq m.
Logistics and hotels make significant contribution
Logistics and hotel properties made an exceptionally strong contribution to the lettings figures in 2019. Overall, Union Investment let or relet some 248,000 sq m of space in six logistics properties in Germany. In the hotel segment, 83,000 sq m were let, driven in particular by the successful 30-year lease extension for the InterContinental Berlin.