By successfully designing and implementing the development of HafenCity, the City of Hamburg has achieved international prominence. Comprising of ten uniquely designed “quarters” on a total area of 157 hectares it completes the inner city as a supplementary counterpart. As an office submarket it continues to be one of the most attractive office locations in the city, with its prime rents still rising and vacancy falling sharply. Currently only 4.7 percent of the total approximately 540,000 square meters of office space is available to letting. Compared to five years ago, vacancy has reduced by almost 50 percent, which is mainly attributable to two factors. Firstly, continuous economic growth leads expansion efforts by a large number of companies and, and as a result, intensifies competition for rental space. On the other hand, little office space was or is being built speculatively, leading to greatly reduced availability. Above all, the continuously rising land prices (+7.6 percent p.a. on average over the last five years) and construction costs (+2.5 percent p.a.) are pushing up development costs and, ultimately, user costs i.e. rents. Nevertheless, Hamburg is regarded by companies and investors alike as a haven of stability which offers an attractive overall cost level compared to other office strongholds and is thus regarded internationally as an attractive business location.
Magic place for business
Whether it is media, education, IT or the financial sector, HafenCity has a flair which attracts companies of all sectors and usage classes. The eastern end of HafenCity expects some particularly spectacular development projects. The construction of Germany’s highest wooden tower is being watched with great interest, further “Edge HafenCity” will establish an impressive example newest generation smart buildings.
As part of HafenCity, at the gateway to central Hamburg and in the midst of future urban development areas, the planned Elbtower will be an unrivalled landmark building. The spectacular new piece of architecture will attract national and international companies from a vast number of sectors with its unique quality, outstanding architecture and offices space all the way up more than 230 metres or 58 floors.
At the moment, the achievable prime rent for first-class office real estate in HafenCity is € 25.00 per square meter per month. Especially within the last 24 months an increasingly dynamic development could be observed. Rents of up to € 29.00 per square meter per month have been achieved in HafenCity for top levels in first-class office developments. In Hamburg s’ landmark buildings and in prestigious locations, the achievable rent may be up to 25 percent above the prime rent. We expect the sustainably achievable prime rent over the entire market to attain a level of just under € 28.00 by the end of 2022 due to the great demand for modern space.
Elbtower in slim elegance
The Elbtower will shape the skyline of the city with its elegant silhouette. The city hall is currently Hamburgs tallest secular building at 112 metres, followed by the prestigious Elbphilharmonie concert hall at 110 metres. The Elbtower will the first building in Hamburg (beyond technical structures such as transmission towers) to exceed the 200-metre mark. After the Commerzbank Tower and Messeturm in Frankfurt, the Elbtower will be the third-tallest building in Germany, and represents another landmark of international significance for Hamburg following the recent opening of the Elbphilharmonie.
Office towers of big attractiveness
High-rise office buildings are currently also highly favoured by global real estate investors. Since 2014, almost € 78 billion has been invested in office towers worldwide, mostly located in the USA. In almost half of these transactions, the capital source was Asia. In Europe alone, , 58 transactions involving investment volumes of over € 500 million each have taken place, since 2007. The most active investment market in Germany is Frankfurt.
You might also be interested in “Project skyscraper – Complex Construction Projects in our Cities” by Stefan Stenzel.
By Marc Rohrer, International Partner and Head of Investment Hamburg
Marc Rohrer is International Partner in the Capital Markets Team and is based in Hamburg. As Head of Investment Hamburg, he is responsible for all types of real estate transactions in the city of Hamburg and the surrounding region, including Bremen, Flensburg, Hanover and Kiel. During his career, he has achieved a personal track record volume in excess of € 7.5bn, in both single asset and portfolio transactions.