The office rental market in Bonn remained impressively stable in the second year of the pandemic. The Bonn team at Larbig & Mortag Immobilien recorded total rentals of around 141,000 m² of office space.
Looking back, this is the highest rental performance in the past ten years. The average rent is rising slightly, with prime and maximum rents also increasing. The public sector was once again the main driver of turnover on the Bonn office market, with the University of Bonn accounting for the largest single transaction.
The letting market
In 2021, the commercial real estate specialists at Larbig und Mortag Immobilien, an exclusive partner of the NAI apollo group, recorded a total of 96 lettings (2020: 98 deals) on the Bonn office market. 68 of these lease agreements were finalized by companies in the size range up to approx. 500 m². The largest single lease in 2021 was concluded by the University of Bonn with around 22,000 m² newly leased office space in the center of Bonn. In total, a space turnover of approximately 140,871 m² of office space was agreed upon in lease agreements. Compared to the previous year 2020, this represents an increase of around 47.0 percent (2020: 95,895 m²). This comparison illustrates how positive the overall year 2021 was and how crisis-proof the Bonn office market was. In the past five years, only 2018 achieved a comparable letting result. In that year, a letting performance of slightly over 120,000 m² of office space was recorded.
public administration remains the strongest sector
As in previous years, public administration continues to be the mainstay of the Bonn rental market. Users in this sector secured a total of around 71,017 m² (2020: 58,307 m²) of office space through newly concluded leases. This corresponds to a market share of just under 50.4 percent. In the coming months and years, the rental performance in Bonn will continue to depend on activities in the public administration sector. Thanks to the new federal government's clear commitment to Bonn as a federal city, the city of Beethoven will continue to be promoted and consolidated as the second political center of the Federal Republic of Germany. The largest single deal in this sector was already completed in the first half of 2021 in the property at Godesberger Allee 83-91, with around 18,620 m², by the Federal Agency for Real Estate (BImA). Speaking of BImA, five of the eight lease agreements for more than 5,000 m² were also concluded by the Federal Agency for Real Estate. These agreements alone correspond to a brokered space of around 59,000 m² of office space.
Vacancy rate at a record low
The vacancy rate at the end of 2021 was 1.87 percent. This corresponds to a vacancy of approximately 75,045 m² of office space. The significant reduction in the vacancy rate compared with the previous year (2020: 2.67 percent) is due to the extremely positive letting performance and the simultaneous low level of construction activity and completion of new space on the Bonn office market. With such a high letting result, there is simply no replacement space available. Even in the short and medium term, the vacancy rate is not expected to ease. Several large leases for over 5,000 m² are currently in final negotiations, so the resulting leases will further reduce vacancies in the first quarter of 2022. are in the final stages of negotiation, meaning that the resulting leases will further reduce the supply of vacant space on the Bonn office market in the first quarter of 2022.
Average rents rise slightly – maximum and prime rents also increase
The pressure on average rents predicted by Larbig & Mortag Immobilien has increased further in the course of 2021. The average rent is rising to EUR 12.99/m² and is up by EUR 0.50/m² compared with 2020 (EUR 12.49/m²). . In previous periods, the mix of different property qualities was already not comparable to previous years. Due in part to the coronavirus pandemic and the associated increased requirements for technical equipment in buildings, companies are focusing on high-quality office space. Leases significantly below the €10 mark are now almost exclusively being finalized for interim leases or in less sought-after submarkets. Maximum and prime rents are rising noticeably compared with the previous year. The highest rent was concluded in the Federal Quarter at EUR 24.00/m² (2020: EUR 22.82/m²), and the prime rent at EUR 22.53/m² (2020: EUR 21.61/m²), resulting from deals in the Bundesviertel and Bonn-Beuel submarkets.
City location by far the most sought-after submarket
In the annual interplay between the submarkets of the federal district and the city center (city center, north, south, and west), the latter was clearly the most sought-after submarket in the federal city with a rental performance of approximately 77,132 m² and a market share of around 54.75 percent. In Bonn's federal district, approximately 45,051 m² of office space was agreed under lease agreements. However, this result is on a comparable level to the previous year (2020: 40,525 m²). This clear picture is primarily due to large leases by the University of Bonn, which rented around 31,000 m² of space.
Forecast for 2022
The very good letting performance in 2021 was the result of many leases for over 5,000 m² and three large deals for over 10,000 m² of office space. Demand for high-quality office space is expected to remain strong throughout 2022 under the current circumstances. Large inquiries from the public sector are still to be expected, and the University of Bonn will continue to lease additional space in 2022. In addition to the renovation of the main building, the Rheinische Friedrich-Wilhelms-Universität Bonn is one of the most sought-after universities for national and international students thanks to its status as a center of excellence. Although the overall development of the pandemic at the end of 2021 is causing renewed uncertainty for many companies, the trend over the past period shows that, as the figures ease in the spring, there will be an increased demand for office space. Furthermore, public administration activities will continue to have a strong influence on market developments. Many space requests from the free market economy planned for 2020 and 2021 have been repeatedly postponed. At the same time, the respective users were able to extend their expiring leases slightly with short terms, so that the search will have to be restarted in the first quarter of 2022. The development of the vacancy rate remains critical and will continue to come under pressure over the course of the coming year. Some new construction projects will reach a stage in 2022 that will allow lease agreements to be concluded.
