International real estate consultancy firm Cushman & Wakefield has noted take-up in the Hamburg office letting market of around 562,000 sq m for 2022. This corresponds to an increase of 19 percent compared to the previous year and represents the fourth-strongest annual result ever recorded by C&W for the city. In a quarterly comparison, the momentum was concentrated in the first three quarters (Q1: 131,000 sq m; Q2: 171,000 sq m; Q3: 173,000 sq m), whereas the fourth quarter closed with take-up of only 87,000 sq m.
Large deals ensure high take-up
19 major lettings accounted for around 200,000 sq m and thus 36 percent of total take-up in 2022 (2021: 11, 134,000 sq m, 28 percent). The strong result was largely due to deals of 5,000 sq m or more. The largest single deal was the leasing of 40,000 sq m in the Hanse Center in City Süd by Dataport in the third quarter.
Tobias Scharf, Head of Office Agency and Branch Manager of Cushman & Wakefield in Hamburg, explains:
"17 major deals in the first three quarters and further concrete major searches suggested a record year in Hamburg. However, the 4th quarter fell far short of expectations as several major occupiers’ lease negotiations remained inconclusive. In 2023, these will continue, which is why we can expect a strong start to the year."
Focus on location and fit-out quality
Companies set high priority on a good location and quality of fit-out when selecting office space in 2022 - also in order to position themselves advantageously in the competition for young talent. Thus, companies increasingly leased space in property development projects. As a result, the proportion of take-up in properties under construction or in planning was around 31 percent over the year. The 5-year average is only 20 percent.
As in previous years, letting activity was concentrated in the central locations. The Innenstadt (City Centre), HafenCity and City Süd submarkets accounted for more than half of total take-up, at around 287,000 sq m. This is 7 percentage points above the 5-year average.
Prime rent at a new high
With companies concentrating on central locations and modern office space, they were also prepared to accept a higher rent when leasing. This is confirmed by the leases signed at rents in excess of EUR 30.00/sq m/ month : while in 2022 around 85,000 sq m was let in this price segment via 36 leases, in the previous year there were only seven leases in this range, together totalling only some 7,000 sq m.
As a result, the prime rent reached a new high of EUR 33.00/sq m/month. Compared to the previous year, this corresponds to an increase of EUR 2.00 or around 6 percent.
The weighted average rent also reached a new record high at EUR 21.00/sq m/month across all building classes. This is EUR 3.10 euros and 17 percent higher than at the end of 2021.
Industry, transport and traffic remained the strongest sector in terms of take-up
The sector ranking presents a balanced mix. None of the eight sectors distinguished by C&W accounted for less than 5 or more than 20 percent of take-up. The segment with the highest take-up in 2022 was companies from the industry, transport and traffic sectors (61 deals; 104,700 sq m of office space). Close behind, and significantly boosted by the Dataport deal, were companies from the TMT sector (72 deals; 101,600 sq m).
Completions above 5-year average
In 2022, around 161,500 sq m of new and core-refurbished office space was completed in Hamburg. This is 9 percent above the 5-year average. The only property completed in Hamburg city centre was Connexion Office, with around 15,000 sq m of office space, in the 3rd quarter. It was almost fully let by the end of the year.
A total of around 541,000 sq m of office space is currently under construction, 35 percent of which is in the City Centre and HafenCity submarkets. 73 percent of this has already been let. In addition, there are concrete plans for development projects totalling 645,000 sq m with completion planned by 2027.
Availability of office stock increases slightly year-on-year
Compared to the previous year, the vacancy rate increased by 20 basis points and stood at 4.4 percent at the end of 2022. Absolute vacancy increased by 27,000 sq m to 665,000 sq m. Vacant existing space and space released by some companies for subletting could cause the vacancy rate in Hamburg to rise moderately further in 2023.