Total office space take-up in the first nine months of the year was 795,200 sq m, an increase of 22.6 per cent on 2018, and could surpass 1 million sq m by year end which would be another record, Savills data shows.
According to Jan-Niklas Rotberg, teamleader office agency Berlin at Savills Germany, three things stand out when trying to understand why the Berlin office market is the hottest in Europe.
Although the volume of completed office space will increase by 384,000 sq m in 2019 and by 782,400 sq m in 2020 at an above-average rate, 92 per cent and 67 per cent respectively of this space has already been pre-let. What has been particularly striking has been the large size brackets of deals, with 19 in the last 12 months being over 10,000 sq m.
The key driver behind this is that, with vacancies as low as 1.3 per cent, many companies are securing the opportunity for future growth, says Savills’ Jan-Niklas Rotberg. And while prime office rents in Berlin stood at €458.4 per sq m per annum for Q3 2019, this is still considerably lower than other European capitals such as London (West End: €1,454.4, City: €1,059.1), Paris CBD (€845), Stockholm (€727.7), Dublin (€700) or Milan (€600).
Jan-Niklas Rotberg explains:
“Berlin has always been the start-up capital of Germany, attracting 28.5 per cent of the 130 start-ups registered every month in the country in 2018, but it is increasingly attracting large corporates too. Examples this year alone include Sony Music relocating its offices from Munich to Berlin Schöneberg, with Savills advising, and Amazon announcing it will take 28 of the 35 floors of the ‘EDGE East Side Berlin’ office building which is currently being developed near the Warschauer Bridge. This will see Amazon’s employees in Berlin rise from zero in 2011 to almost 2,000 in 2019.
“Sony and Amazon are just two of the many overseas companies that are focusing on the German capital. Currently, many large tech corporates and start-ups from the US in particular are establishing a very strong presence in the city. We expect this to have a pull effect over the next few years, which will also bring other tech corporates and related companies to Berlin. As a result of these developments, there’s currently no end in sight for the booming Berlin office market.”