Highlights
German Office Property Market 2024
Rising Rents and Stable Yields in Focus
Research view
German Office Property Market 2024: Rising Rents and Stable Yields in Focus
The German office property market in 2024 is marked by rising rental prices and stable prime yields. Despite economic uncertainties, the demand for office spaces in cities like Berlin, Munich, and Frankfurt remains robust. Discover why high-quality office properties continue to attract interest and which trends will shape the upcoming year.
Rising Rents on the German Office Property Market in 2024
The year 2024 was again characterised by weak economic performance and geopolitical uncertainties. Many companies acted cau-tiously, yet the German office property market in cities such as Berlin, Düsseldorf, Frankfurt, Hamburg, and Munich proved resilient. In particular, Berlin and Munich saw increased demand for large spaces over 10,000 square metres, partly driven by public sector leases, resulting in moderate rental price increases.
The author: Timo Graf
Real Estate Research Analyst @ Union Investment
Date: January 2025
Vacancy Rates Remain Moderate - Quality Still in Demand
Due to a higher completion rate of new office spaces, the average vacancy rate on the office property market across the five key locations rose by 90 basis points to 7.7% in 2024.However, premium office spaces continue to experience high pre-letting rates. Despite the limited supply of high-quality properties, prime rents in these cities increased by an average of 6.8% compared to the previous year.
Prime Yields Remain Stable
Prime yields for German office properties showed stability over the past year. After a slight increase in the first quarter of 2024, yields remained steady until the end of the year. The average prime yield across the top five office property market locations stood at 4.4% by the end of 2024.
Outlook: Growing Demand in Prime Locations
The demand for high-quality office spaces in prime locations is expected to further drive increases in prime rents on the office property market in 2025. At the same time, improved financing conditions following the ECB'sinterest rate cuts could stimulate transaction activity and put additional pressure on prime yields.
