22 January 2019
Union Investment achieves strong letting results in 2018
• More than half of lettings in Germany
• Renewals accounted for approximately 77 per cent
In 2018, Union Investment let or relet a total of 854,00 sq m of commercial real estate space. These results are comparable to last year’s level, when 867,000 sq m of space was let. At 56 per cent, the majority of the lettings related to properties in Germany. Other European locations accounted for 33 per cent, while non-European properties made up 11 per cent of total lettings in 2018. The new lettings and renewals provide the funds with aggregated annual net rent of approximately EUR 201 million.
Volker Noack, member of the management board at Union Investment Real Estate GmbH
Renewals dominate in Germany
In Germany, there was a clear focus on renewals with the aim of securing the long-term loyalty of existing tenants on high rents. Out of total lettings of 475,000 sq m, around 73,000 sq m were renewals – a 15 per cent share. The largest new letting was approximately 9,200 sq m of space at Riem Arcaden in Munich to hotel operator Motel One, which moved in following completion of work to extend the property. In addition, 5,300 sq m were let in the DAS ES! shopping centre in Esslingen and 3,200 sq m in a logistics centre in Norderstedt near Hamburg, while 2,200 sq m were let in Hannover to DIY and gardening store operator Bauhaus. Due to the existing high occupancy rate, new lettings mostly involved smaller spaces. The German office portfolio posted record occupancy of 98 per cent.
Higher new lettings rates in Europe and America
The proportion of new lettings was significantly higher in the other European markets, at 30 per cent, while non-European markets saw new lettings reach 40 per cent in 2018. In addition to eliminating various occupancy gaps, the new lettings generally provided the opportunity for rent increases in order to further boost the real estate funds’ income.
Results for the European markets outside Germany
In European countries outside Germany, Union Investment let or relet 286,000 sq m, the largest proportion of which was in the Polish market, accounting for 63,000 sq m. Alongside successful lettings of office space, this was chiefly due to the large shopping centres held in Poland by Union Investment. The high level of letting activity in the Benelux countries is also notable, with new lettings and renewals of 55,000 sq m. France follows in third place with lettings of 32,000 sq m, just ahead of Austria on 30,000 sq m. In Austria, the new lettings rate was particularly high, at approximately 50 per cent, with 7,000 sq m being newly let in the Euro Plaza 4 office property alone.
Letting performance in oversea markets
In the non-European markets, the USA dominated once again due to the size of the portfolio, with new lettings and renewals of 56,000 sq m, followed by Mexico with lettings totalling 28,000 sq m. In the USA, some 34,000 sq m of lettings were recorded in just three properties, namely 140 Broadway in New York, 111 South Wacker, Chicago and Ten 10th Street, Atlanta. Around half of this total related to new lettings. In the Asia-Pacific region, new lettings and renewals of approximately 5,000 sq m in Vision Crest Commercial in Singapore and approximately 3,000 sq m in office property Glass City Harumi were the largest lettings in 2018.