Thanks to three large leases, Cologne's office rental market is above the five-year average at the end of the first half of 2022. The average rent rises to €15.50/m²; the highest rent is €29.00/m².
The Cologne office rental market presented positive transaction figures for the first half of 2022. A total of 169,000 m² of office space was let, representing an increase of 25 percent. The average rent rose. The maximum rent did not reach the previous year's level.
The positive trend from the first quarter of 2022 was repeated in the second quarter, resulting in a half-year result for 2022 of 169,000 m² of office space, which is 25 percent above the same period last year (first half of 2021: approx. 126,000 m²). The result was driven by three large leases of over 10,000 m². The city of Cologne was the largest single tenant with approximately 45,000 m², followed by CBS University with 16,000 m² and the Kassenärztliche Vereinigung Nordrhein (North Rhine Association of Statutory Health Insurance Physicians) with 12,800 m². These three leases account for 45 percent of the half-year results. Larbig & Mortag Immobilien expects further large deals in the second half of 2022, again from the public sector.
Demand from private companies is also picking up slightly, driven by restructuring plans and new ways of working in the wake of the coronavirus pandemic. In the 1,000 m² to 10,000 m² range, 22 leases were evaluated. In this size range, Larbig & Mortag Immobilien was able to broker approximately 5,700 m² for Renault Germany in Cologne. The Cologne office market also scored highly thanks to its broad mix of industries and large number of SMEs and start-ups in the under 2,000 m² segment. This size category has historically been the reliable basis of the Cologne office real estate market.
Thanks to good letting performance, the vacancy rate has fallen slightly. It currently stands at just under 3 percent (first half of 2021: 4.4 percent). The selection of available office space for current rental demand has therefore declined slightly compared with the previous year.
The average rent at the end of the first half of the year was approximately €15.50/m². This figure is approximately 10 percent higher than the previous year's result (first half of 2020: €14.00/m²) and is attributable in particular to a higher number of lettings in the city center and Deutz. At €26.83/sqm, the prime rent is slightly below the previous year's figure of €27.20/sqm. The highest rent of €29.00 was achieved through the letting of approx. 450 sqm and is thus below the €30/m² mark.
Just under 150 lettings were recorded and evaluated in the first half of the year (H1 2022: 160).
Further developments will depend on the regional impact of the war in Ukraine and the resulting energy supply security. The risk of inflation and recession, rising interest rates, and the availability of skilled workers and materials are also causing uncertainty. On the landlord side in particular, these factors are leading to caution in the implementation of new construction projects or extensive renovation measures. This will further reduce the vacancy rate in the coming 12 months.
The experts at Larbig & Mortag Immobilien expect office space turnover to be slightly below the previous year's level of approximately 290,000 m² by the end of 2022. Rental prices will remain stable and continue to consolidate at a high level.
Larbig & Mortag Immobilien will calculate the final figures for the first half of 2022 in calendar week 27 and then publish them in a comprehensive market report.
