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Weak third quarter for Frankfurt investment market, but strong logistics sector

Verena Bauer • 10/10/2022

According to international real estate consultancy firm Cushman & Wakefield, the transaction volume for commercial real estate and development projects on the Frankfurt investment market amounted to approximately EUR 4.0 billion in the first three quarters of 2022. Compared to the equivalent period last, this corresponds to a decline of 17 per cent. The first six months contributed the vast majority at EUR 3.4 billion. The 3rd quarter only contributed around EUR 635 million.  

Office segment predominates, logistics well above last year’s figure

At 77 per cent or around EUR 3.1 billion, office properties accounted for majority of transaction volume in the year to date. In the third quarter, a transaction volume of around EUR 335 million was generated by this asset class. The Eschborn market saw a high level of activity in Q3, with the sale of SKY Eschborn by property developer Cilon to investment manager ABG Capital for around EUR 110 million. In addition, Horizon Tower and KÖ 3 changed hands. Within Frankfurt's city boundary, Friedrich-Ebert-Anlage 54 in Westend and Kennedyallee 123 in Sachsenhausen were sold. Both properties are to be occupied by the buyers themselves. 

The investment volume in the logistics and industrial property segment in the first three quarters of 2022 amounted to EUR 480 million and has thus more than doubled compared to the previous year (EUR 220 million). The contribution to the total volume was around 12 percent. 


Investment marktet Frankfurt Q3 2022


Michael Fleck, Head of Capital Markets Frankfurt at Cushman & Wakefield, summarizes: “As the weak quarterly result shows, the effects of the significant increase in inflation and the changed financing environment have reached the Frankfurt real estate investment market. The uncertainty resulting from the volatility and the as-yet unforeseeable end of this phase mean that pricing is proving extremely difficult.”

Yields rise across all asset classes

The net initial yield for prime office properties in prime locations was 3.10 per cent at the end of Q3, and 5.00 per cent in non-central locations. Compared to the previous quarter, this corresponds to increases of 25 and 45 basis points, respectively. The high financing costs in combination with the geopolitical uncertainties will probably result in further yield increases by the end of the year. 

Prime logistics properties are currently trading at a prime yield of 3.60 per cent, which is an increase of 50 basis points compared to the end of June 2022. The prime yield for city centre commercial properties is quoted at 3.60 per cent at the end of the third quarter and has thus increased by 20 basis points. 

Result will fall short of last year

C&W expects that neither office transaction volume nor total CRE transaction volume will equal the results of 2021, which were approximately EUR 4.8 billion and EUR 5.9 billion respectively.


verena bauer
Verena Bauer

Head of Business Development Services, Germany • Frankfurt


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