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Germany’s top seven office markets courting recession

Germany’s office market fluctuated between stagnation and recession during the second quarter of 2020 according to specialist lender pbb Deutsche Pfandbriefbank

The firm’s pbbIX real estate index, which tracks the seven largest office markets in Germany, fell from 0.50 to 0.09 index points.

“This second consecutive drop brings the index close to the zero line, meaning the German office market is on the edge of recession,” pbb said in a statement.

The firm explained that both the occupier and office investment markets are fluctuating somewhere between stagnation and recession as a result of the economic recession in Germany. However, they have not collapsed, the firm added.

Source: pbb Deutsche Pfandbriefbank

Although new lettings fell sharply in the 2nd quarter, low vacancy rates and relatively subdued construction activity meant rents remained stable.

Similarly, although investment in office properties continued to fall in Q2, they did not plummet because rents were stable and low interest rates enabled positive performance.

Berlin and Munich best performers

In the 2nd quarter, the pbbIX sub indices showed weaker developments for each of the individual markets. Berlin and Munich are currently the best performers, with index levels of 0.26 and 0.13 points respectively. However, Cologne’s office market is already slightly in recession with an index level of -0.05 points.

Cologne skyline. Photo: Eric Weber, Unsplash.