International real estate consulting firm Cushman & Wakefield recorded take-up of 229,500 sq m in the Munich office market in the 4th quarter of 2021, bringing the full-year total to 681,300 sq m. This is 20 percent above the previous year's figure, but about 17 percent below the five-year average and 11 percent below the 10-year average (764,800 sq m).
Monthly prime rent rises to a new record high of 42.00 EUR/sq m
The achievable prime office rent has risen steadily since the 2nd quarter of 2021. At EUR 42.00/sq m per month, it is currently at the highest level ever measured and EUR 2.50 more than a year previously. In the past quarter, C&W registered six deals at this level in and around Munich's Altstadtring.
In addition, the weighted average rent has risen to EUR 23.60/sq m per month over the past twelve months. This is EUR 2.15 or 10 percent higher than the previous year's figure.
Take-up increases by 44,000 square metres in Munich's old town
A particularly strong increase in office space turnover was recorded in the old town, where around 56,900 sq m of space was let in 2021 as a whole, 44,400 sq m more than in the previous year. "This reflects the high demand for central locations within the Altstadtring," explains Hubert Keyl, Head of Office Agency Munich Cushman & Wakefield Germany, and adds: "In the course of the year, demand has become strongly differentiated regarding locations. Within the Altstadtring in Munich, demand is very high, while outside there is an accelerating decrease. As a result, the achievable prime rent has risen significantly, while rental prices in the rest of the city and in the Munich area has stagnated."
In the city centre (excluding the old town), 303,000 sq m of office space was let, contributing 44 percent of total take-up (2020: around 51 percent).
In non-central locations within the city boundary, offices take up was 176,400 sq m over the year, with the contribution to the total rising from 21 percent the previous year to 26 percent, while in the wider surrounding region it fell from 26 percent to 21 percent. Only 145,000 sq m of office space was let there over the past twelve months.
Three lettings of over 10,000 square metres in the 4th quarter
The largest deals in the 4th quarter were the letting of around 11,900 sq m in the Microcity project in Unterschleissheim to Versicherungskammer Bayern, the letting of around 11,100 sq m in the Lumen in the old town to Zooplus AG and the letting of about 10,200 sq m in the m.pire in Parkstadt Schwabing to the Schörghuber Group. These three leases account for a total of 16 percent of total take-up in the final quarter of 2021. A total of five deals each involving over 10,000 sq m were recorded in 2021, totalling 92,000 sq m. This is far below the level of the previous year, when more than 162,000 sq m of take-up was contributed by this size class.
IT and industrial sectors exhibit highest take-up
Companies from the IT sector once again exhibited the highest demand. 129 leases were concluded in this sector over the course of the year, for a total of 129,200 sq m, contributing 19 percent of total take-up. The city centre in particular was of interest to IT companies. 65 percent of the IT sector lease conclusions took place here. The industrial sector was in second place contributing 15 percent of take-up.
Vacancy rate rises to 4.5 percent
Absolute vacancy has increased by 256,700 sq m (36 percent) to the current 962,100 sq m representing a 4.5 percent vacancy rate (Q4/2020: 3.3 percent) in the past twelve months. The vacancy rate is growing particularly strongly in the region around Munich due to declining letting volumes: from 4.5 percent in the 4th quarter of 2020 to 7.6 percent now.
Construction activity remains at a high level
73,200 sq m of modern office space was completed in the Munich office market in the final quarter of 2021. Around 58 percent of this is still available. This brings the total annual completion volume for 2021 to 250,100 sq m (2020: 314,400 sq m). 1.4 million sq m of office space is also under construction and will be completed by 2025. Here, the pre-letting rate is currently at 45 percent. 57 percent of these development projects are located in Munich's city centre.