2023-10-18 13:30:12
After a decade of crazy growth, the German commercial real estate market has entered a phase of sharp correction. According to figures from BNP Paribas Real Estate, the volume of transactions in office real estate fell by 76% in the first nine months of the year, compared to the same period of the previous year, to almost 4, 6 billion euros. The American real estate services group Jones Lang LaSalle reports that in the seven largest German cities, transactions fell by 36.3% over the same period. And the office vacancy rate in German metropolises rose to 5.5% in the first nine months, compared to just 4.7% in 2022 in the same period.
Several factors explain the trend. Added to the slowdown in the economy since the start of 2023 is a credit restriction, which is weighing on business investment. But, above all, we are observing an overall drop in demand for office space, a consequence of the generalization of teleworking since the Covid-19 pandemic. According to a recent survey by the Ifo institute, 61% of German companies currently allow their employees to work from home, particularly in large groups. A quarter of employees regularly take advantage of this opportunity.
According to industry experts, this trend is expected to continue. But the effects on the market are only just beginning, due to the long duration of office rental contracts – generally ten years. “For the moment, bosses are still hesitant: some want to bring their employees back to the office, others are testing teleworking solutions. Only where teleworking is most established do companies decide to reduce their space and set up in the most central locations of cities, which remain attractive. Most of the time, they tend to stay in their premises and refuse to expand, even when they are growing. And no one is embarking on a new construction project,” explains Christian Oberst, expert on real estate issues at the Cologne Economic Institute.
Development of the peripheries
Consequence: transactions on the market are few in number, many spaces struggle to find buyers if they are not well located. According to Bank DZ, purchase prices for commercial real estate have fallen by 10% compared to mid-2022, those of office real estate by 8%. Could this development result in a financial crisis, as feared in certain markets? “I consider that the risk is lower than in the United Statesputs Mr. Oberst into perspective. There, prices are falling by 20%, which is still very far from what we observe in Germany. »
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