Quality offices in German B locations offer buying opportunity

Mispricing of high-quality offices in secondary German locations is creating investment opportunities, according to Jan Isaakson, head of capital markets at Newmark.

Speaking at the International Investors Lounge at EXPO Real 2026, Isaakson identified a gap between investors’ assumptions about future office demand and the prospects for buildings outside central business districts.

“If I would buy an asset, the most interesting part to me is the mispricing in offices and certain parts of the area, especially in B location,” said Isaakson.

The market had already experienced the impact of working from home, he argued. Vacancy across Germany’s leading cities stood at 9% and appeared to be stabilising.

Attention had now shifted to AI and its potential effect on office requirements. However, even in a hypothetical scenario in which vacancy rose to 20%, most space would remain occupied.

“So, even if we would double that to 20%, this means that actually 80% of offices are still let, right?”

Central business districts could account for only part of that occupied space, leaving a substantial role for good-quality buildings elsewhere.

“To me, yes, roughly 25% to 30% is in CBD locations, I get that. But besides that, it means that more than half of the rest is still good assets which will be let.”

For investors, the opportunity lay in identifying buildings whose prices gave insufficient value to their potential to be re-let or used again once current leases ended.

“And to me, this is actually the point most of the capital markets world is not getting because currently they are pricing it as just a discounted cash flow and with no re-usage.”

Isaakson challenged the assumption that location alone would determine a building’s longer-term usefulness.

“I don’t think that an A asset, a quality asset in a B location will not have any usage in five or ten years from now. I completely disagree.”