Empty offices, rising rents - the office market in Berlin is characterized by opposites

Empty offices, rising rents - the office market in Berlin is characterized by opposites

The office market in Berlin is currently characterized by opposites. Due to the increased use of the home office, many offices are empty, while at the same time the prices are increasing in top positions. A survey by the IFO Institute in Munich shows that home office is part of everyday life in almost two out of three companies. In larger companies in particular, many employees use this option regularly and no longer spend several days a month in the office. This development means that many offices are still rented in the long term, but are nevertheless empty. Experts estimate that several hundred thousand square meters of unused office space could come onto the market in the future as soon as the rental contracts expire. Nevertheless, new offices are still being built in the city.

Another challenge for the office space market is the decline in risk capital for start-ups. In the past, many start-ups had rented large office space in order to be prepared for future growth. But since the turning point of interest, this source of financing has become rare, which means that fewer offices are in demand from start-ups.

Another factor that influences the Berlin office market is the structural change in City West. Due to the crises of the past few years, many shops have had to give up and are empty. The demand for office space affects the price: the greater demand, the higher the rental prices. This principle also applies in Berlin, whereby office space within the S-Bahn ring is about twice as expensive as outside. In addition, around 86 percent of office buildings in Berlin were built between 1870 and 2010 and have an energetic decline. Modern energy -efficient office buildings are therefore much more in demand.

An important trend on the office market is the increasing importance of sustainability rules, especially with regard to the climate neutrality of companies. Larger companies have to disclose what they do in the area of ​​the Environmental Social Governance (ESG) for sustainable management. This also affects the rental of office space. In order to get sustainable financing, companies must be able to prove that their offices correspond to certain sustainability criteria. This increases the demand for brand new office buildings with the latest ESG certificates.

A result of these developments at the Berlin office market is an increasing concentration on top sites and newly built office buildings. Office areas outside the S-Bahn ring are currently at a good 24 euros per square meter, while in the niche particularly sought-after sustainable inner city offices, the top rents could forecast be forecast by 2026. Due to the interest increase, investments in new offices have broken down by around 90 percent. The gross top return for offices is currently 4 percent, which is less attractive to investors. As a result, fewer new office projects are being developed, so that replenishment of sustainable inner city offices is expected to have largely dry up and the prices continue to rise.

It is expected that in other office buildings the vacancy will increase from 1.2 percent to 5.8 percent by 2026, which could lead to a slight price reduction. A vacancy rate such as in retail, where the vacancy is already over 15 percent, is not to be feared on the office market.

Overall, it can be seen that the office market in Berlin is currently characterized by opposites. While many offices are empty, rental prices rise in top locations. The trend towards sustainable office buildings and top spaces, while older office buildings in bad layers are less in demand. It remains to be seen how the Berlin office market will develop in the coming years.