Commissioned by CORPUS SIREO, a recent empirica survey analysed the office markets of 14 major German cities that qualified for the “high potential” category, these being Bremen, Hanover, Münster, Essen, Dortmund, Bonn, Aachen, Wiesbaden, Mainz, Mannheim, Karlsruhe, Nuremberg, Leipzig, and Dresden. The survey is based on the evaluation of 550,000 real estate ads (online portals and dailies) from the years 2008 through 2011, as well as on the empirica employment forecast. The survey compares these major German cities with the traditional Class A locations Berlin, Hamburg, Munich, Cologne, Düsseldorf, Stuttgart, and Frankfurt am Main.

Stable Development in High-Potential Locations

The empirica survey shows that the office markets of most of the 14 major cities analysed develop along more stable lines than the classic top-seven locations. Half of the 14 regional locations reported vacancy rates below five percent, while the prime yield exceeds the six-percent mark in every location except Nuremberg and Bonn. Top rents ranged between approximately 12 and 13 Euros across locations, only Dresden and Leipzig being more affordable at just under 11 Euros. The survey period 2008 through 2011 showed steeper rent hikes in all 14 of these cities, and less volatile rent histories than those in the Class A locations. The stability of the high-potential locations becomes even more conspicuous in the long-term perspective, as the amplitude of the top rents is much lower than in the metropolitan regions. Here is why: The office markets at Class A locations are much more closely aligned with the cycles of the global economy trends, and fluctuate in sync with these. Office real estate in high-potential locations, by contrast, are less dependent on economic fluctuations, and better integrated into regional structures instead.

Particularly striking to see when compared to the metropolitan regions is the narrow spread of the rent rates in high-potential locations. The rent level at the majority of properties equals between five and ten Euros per square metre. By contrast, rents in the top segment of Class A locations are often triple the amount charged on a more affordable level. This comparison highlights the considerably higher degree of differentiation for office buildings in metropolitan regions.

Said Ingo Hartlief, CEO of CORPUS SIREO Asset Management GmbH: “That locations outside the Class A locations support the stabilisation of a given portfolio will hardly come as a surprise to German real estate investors. Foreign investors about to enter the German market, however, still automatically equate locations away from the top-seven locations with an opportunistic commitment. The empirica survey will correct this dated image of the German market.”

ABOUT CORPUS SIREO
CORPUS SIREO, based in Cologne, has 14.5 million square meters in commercial and residential real estate with an aggregate value of more than 15 billion Euros under management, and is thus Germany’s biggest provider of asset management services.
The company with a staff of around 560 professionals at eleven locations in Germany and Luxembourg is also the market leader in regard to the number of managed asset classes: Serving seven asset classes (office, residential, retail, logistics, healthcare, production/technology, others), CORPUS SIREO offers the broadest spectrum of all German asset managers.
Accordingly, even rival companies rate CORPUS SIREO as the chief competitor on the market. (These are the findings of the “Real Estate Asset Management Report 2011" by Bell Management Consultants.)
To investors, banks, and companies with proprietary real estate portfolios, CORPUS SIREO offers investment management and asset management services along the entire real estate supply chain. Moreover, the company acts as broker and project developer for owner-occupiers and investors.

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