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Berlin Q1 office lettings up 60% – 800,000+sq m 2021 total likely

Berlin lettings 23% over 10-year average. [Image: Stefan Widua/Unsplash]

Berlin office lettings increased 60% year on year in the first quarter of 2021, also exceeding the 10-year average by 23%, according to Colliers.

The firm said leases were signed on 193,000 sq m of space during the period, which was dominated by a series of large deals, each more than 10,000 sq m and totalling almost 80,000 sq m.

“We can describe the mood in the Berlin office rental market as extremely positive,” said Colliers Germany’s head of office lettings Berlin, Marcus Lehmann. “Not only the traditionally strong public sector, but also other players such as banks and IT companies determine the picture,” he added.

The vacancy rate has risen slightly but is still low at 2% – about 418,000 sq m of office space is currently available for short-term leasing in Berlin. “Individual companies are starting to offer sublet space, but subletting is not yet playing a defining role in the market,” Lehmann said.

Pre-letting market dominates

This year, about 560,000 sq m of office space will be completed in the city, but about 360,000 sq m is pre-let, a pre-letting rate of 64%. More than 1.2 million sq m of office space is currently in the pipeline for completion by the end of 2023.

Berlin office rents are showing the first signs of change owing to the effects of the Corona pandemic. While prime rents have fallen by less than 1% to €39.7 per sq m compared to the end of March 2020, average rents are currently €28 per sq m, 3% up on March 2020.

“Despite the corona pandemic, the start of 2021 continued to show a robust Berlin market,” Lehmann said, adding that there are a number of large enquiries as yet unsatisfied. “We therefore consider a space turnover of 800,000 sq m for the full year 2021 to be realistic,” he said, which would also be well above the 10-year average.