The ongoing decline in new office building construction in Germany will continue in 2023 and is expected to continue in 2024. This is a consequence of the construction crisis and the increasing use of home offices. The crisis is affecting various aspects of the construction industry, from material procurement to the completion of construction projects.
The number of building applications is declining nationwide, and some projects that have already been approved are being canceled. Preliminary results for building permits show a decline of 16.6%. In 2023, only 1,665 office and administrative buildings were approved, compared to 1,996 in the previous year. Building permits are an important early indicator of future construction activity. This development could have long-term effects on the entire real estate market, as working from home has become firmly established in the working world in the wake of the coronavirus pandemic and large numbers of offices are standing empty. Companies are divesting themselves of space and investors are shying away from buying office buildings. New construction is being dampened by higher interest rates and more expensive materials, although the rise in construction prices will slow in 2023.
In addition, the global shortage of raw materials is leading to significant price increases and delays. The construction industry also lacks skilled workers, which is causing delays in construction projects and increased labor costs. Global logistics have been severely disrupted by bottlenecks and delays in the supply chain. Transport problems and long delivery times are hampering the timely completion of construction projects.
Optimistic outlook despite uncertainty
Despite uncertainty, the results of a study also show signs of optimism. A third of those surveyed expect profitability to increase in 2024 compared to the previous year. However, the mood remains gloomy for the time being due to slow economic growth in Europe and concerns about a recession.
The kiteLoft Cologne is one of the few new buildings available
The KiteLoft Cologne office building is one of the newest buildings in the most modern commercial area in the north of Cologne. It is one of the few new buildings available on the Cologne office market. KiteLoft Cologne (link to property to be added) offers a total of 965 m² of office space on the 1st floor, 1,014 m² on the second floor and 625 m² on the fifth floor are available for rent. A suitable tenant is also being sought for the 190 m² restaurant area on the ground floor with 30 m² of outdoor space.
Source: www.zeit.de/wirtschaft/2024-03/homeoffice-baukrise-buerogebaeude-bauwirtschaft
