We stand for Office
Office Market Report Vienna | Autumn 2023
We stand for real estate.
Introduction
The Vienna office market is currently being very strongly influenced and shaped by ESG. As a result, not only investors and landlords, but also prospective tenants are paying close attention to sustainability and innovation. Improved quality and sustainability remain the key drivers for relocation. Given the challenging economic environment, demand is pleasingly high and there is currently a manageable supply of high-quality first-time
occupancy space in well-developed locations. In some sub-segments and locations, there is evidence that supply and demand are not currently in sync. In a challenging market environment, it is particularly crucial to make successful long-term decisions. Our EHL office specialists will be very happy to advise you on the development of your individual and sustainable real estate strategy!
Franz Pöltl FRICS Managing Partner EHL Investment Consulting GmbH
Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH
Alexandra Bauer MRICS Head of Office Agency EHL Gewerbeimmobilien GmbH
Stefan Wernhart MRICS Managing Director EHL Gewerbeimmobilien GmbH
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Overview of the office market in Vienna
Executive Summary
New space production and vacancy rate at historic lows
Rising rent levels for modern first-time occupancy space
The low production of new space in recent years, which has reached just 45,800 sqm this year, has led to a steady decline in the vacancy rate. It is cur- rently at a very low level by international standards, at just 3.6 %. High pre-letting rate for new properties Just under 85 % of the office space due for comple- tion in 2023 and just under 45 % due for completion in 2024 is currently pre-let. Supply for short-term requests over 3,000 sqm is therefore very limited and in some locations severely restricted or non-existent.
Rents I First-time occupancy***(in EUR/sqm per month) Prime location 18.0 - 27.5 Quality location 14.0 - 19.0 Standard location 12.0 - 15.0 Prime rents 27.5 Like all other asset classes, office property is under price pressure. Older existing properties that do not meet ESG criteria are experiencing significant price declines and a gradual pricing in of energy upgrade measures. In contrast, new-build proper- ties that comply with the EU taxonomy are in high demand, although availability in Vienna is limited. Rents are generally rising due to high demand in prime locations, increased construction costs and persistently high inflation. Prime rents are rising to EUR 27.50/sqm. Investment
Demand* | Supply 2023 Production of new space
45,800 sqm 170,000 sqm
Take-up*
Market indicators (cf. 2022/2023) Production of new space
downward trend
Economic data for Austria October 2023* Unemployment rate (acc. to AMS)
Take-up
stable
Vacancies
downward trend
5.7 % 481.7
Prime yields
4.5
Nom. GDP EUR billion (acc. to WKO)
Economic growth real change in GDP (acc. to WKO)
Rental prices (cf. 2022/2023) Average rents
+ 0.4 %
leicht steigend leicht steigend
Inflation rate
8.0 %
Prime rents
* Forecast ** All indicators are based on the total market (old and new buildings), unless indicated otherwise *** According to the Vienna Research Forum,www.viennaresearchforum.at **** EHL Rent Index of 100 existing and/or refurbished office buildings at various locations
Office supply
Total market**
VRF***
Office space in sqm
11,649,000 6,044,927
Vacancy rate
3.6 %
3.8 %
Source: EHL Market Research | Q3 2023
Office Market Vienna 2019 - 2023
300,000 sqm
7 %
220,000
225,000 sqm
6 %
210,000
180,000
170,000*
170,000
150,000 sqm
5 %
126,000
125,000
66,700
75,000 sqm
4 %
45,800
45,000
Vacancy rate
3 %
0
2019
2020
2021
2022
2023
3
Deliveries in sqm
Take-up in sqm
*Forecast, Source: EHL Market Research | Q3 2023
© WOOW Studio
© IFAG
Focus on quality and sustainability stronger than ever
In a challenging economic environment, companies are currently examining and exploring the market very carefully, so decision-making processes are taking longer than they did two to three years ago. Energy efficiency, sustainability and the feel-good factor are the main drivers for current location requests. ESG requirements are giving this trend an additional boost. At a time when there is a shortage of skilled workers, a high-quality furnished office plays a key role in recruiting and retaining employees as a communicative focal point of the corporate culture. In terms of ESG requirements, employers are also more concerned than ever to offer their employees an innovative and pleasant working environment. Smaller but better is currently the motto of many location requests. While the demands on the quality and location of the building are increasing, the amount of office space required per employee is in many cases decreasing due to flexible and hybrid forms of working.
Project developers are responding to this development by planning and building particularly sustainable and flexible office properties. This year, for example, the modern new buildings Vio Plaza (approx. 22,000 sqm) and Muthgasse 109A (approx. 3,300 sqm) as well as the striking URBAN GARDEN refurbishment in myhive on Wienerberg (approx. 15,000 sqm) will be completed. The occupancy rate of the 2023 projects is 85 % on average. In the next two years, other high-quality new buildings will be completed, such as FRANCIS in the Althan Quarter (approx. 47,700 sqm), Grand Central in Floridsdorf (approx. 12,500 sqm), CARRÉ Muthgasse (approx. 13,000 sqm) and ROBIN Seestadt (approx. 10,000 sqm) in Aspern. All of the above-mentioned projects already have pre-letting rates of at least 30 %.
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Rental prices and vacancy rates
Development of rents 2019 - 2023
€ 30/sqm
€ 25/sqm
€ 20/sqm
€ 15/sqm
€ 10/sqm
€ 5/sqm
2021
2022
2023
2019
2020
Prime rents
Standard locations
Quality locations
Prime locations
Source: EHL Market Research | Q3 2023
Rental rates in Vienna office regions
€ 30/sqm
€ 25/sqm
€ 20/sqm
€ 15/sqm
€ 10/sqm
Southern Region Wienerberg
Inner city Surroundings
Main Railway Station Quartier Belvedere
Vienna Donau City Surroundings
Lassallestr. Messe Prater
Eastern Region Erdberg
Seestadt Aspern
Northern Region
Western Region
Airport City Surroundings
Source: EHL Market Research | Q3 2023
Prime rents (in EUR/sqm/mth.)
Vacancy rates (in %)
149.6
14.4
London (West End)
Bucharest
83.3
12.6
Paris (CBD)
Budapest
56.7
11.4
Warsaw
Milan
10.2
48.0 47.0
Frankfurt
Milan
9.9
Munich
Madrid
45.0
9.2
London (Central) Frankfurt
Berlin
42.5
8.7
8,4
Amsterdam
37.0
7.7
Prague
Madrid
28.0 27.5 26.3 27.0
6.4
Amsterdam
Prague
6.0
London (West End)
Vienna
5.0
Munich
Warsaw
3.9
Budapest
Berlin
3.6
20.0
Bucharest
Vienna
2.1
Paris (CBD)
Source: EHL Market Research | BNP Paribas Real Estate | Q3 2023
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1. Inner City | Surroundings
Vienna Office Regions
Top Properties 1010, Deutschmeisterplatz 2 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1020, LeopoldQuartier* 1040, Ensemble Schwarzenbergplatz
The Vienna office market is structured in several cluster regions which form the focal points for new construction. The following map provides an overview of the most important office axes as well as indicators for the development of supply, demand and rental prices.
1090, Doppio Due 1090, FRANCIS*
Rents
€ 16.0–27.5
Rents tendency Demand Supply
2. Northern Region
Top Properties 1190, CARRÉ Muthgasse* 1190, Muthgasse 9* 1190, Muthgasse 109A* 1190, Square 1 1200, Millennium Tower 1210, Grand Central*
U4
1210, Peak Vienna 1210, Plus Energie Quartier 21* 1210, TwentyOne
U5
Rents
€ 11.5–20.0
U3
Rents tendency Demand Supply
U2 U5
U4
A1
3. Western Region
Top Properties 1120, Forum Schoenbrunn 1120, Linke Wienzeile 234 1120, O.A.X* 1120, VIO Plaza 1130, Hietzinger Kai 137* 1130, Hietzinger Kai 139* 1140, Workstation Wien West
U2
A23
U6
Rents
€ 10.0–19.0
S1
Rents tendency Demand Supply
A21
A2
4. Southern Region | Wienerberg
5. Vienna Donau City | Surroundings Top Properties 1220, Andromeda Tower 1220, Ares Tower 1220, DC Tower 1+2* 1220, IZD Tower 1220, Saturn Tower 1220, VIENNA TWENTYTWO*
Top Properties 1100, myhive am Wienerberg
1100, The Brick 1120, Euro Plaza 1120, Inno Plaza 1230, Silo Next* 1230, Silo Plus 2345, Campus 21
Rents
Rents
€ 12.0–18.0
€ 13.0–22.5
Rents tendency Demand Supply
Rents tendency Demand Supply
*Project
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6. Lassallestrasse | Messe | Prater
Top Properties 1020, 2nd Central 1020, Austria Campus 1020, E-Zone 1020, Galaxy Tower 1020, Lassallestrasse 3 1020, Nordbahnstrasse 50* 1020, Quartier Lassalle 1020, Vienna Works 1020, Weitblick, Viertel Zwei*
Rents
€ 13.0–21.0
Rents tendency Demand Supply
A22
U1
7. Eastern Region | Erdberg
Top Properties 1030, ENNA* 1030, Landmarx 1030, Marxbox 1030, MQM 1030, ORBI Tower
S2
U6
1030, Solaris 1030, Tricore 1030, ViE 1110, OCG Office Campus Gasometer
U2
Rents
€ 11.5–19.5
Rents tendency Demand Supply
8. Main Railway Station | Quartier Belvedere Top Properties 1100, LAX 2B 1100, QBC 1100, The Icon Vienna 1100, Tower Canettistrasse
U3
A4
U1
10.
Rents
€ 15.0–23.0
1
Rents tendency Demand Supply
10. Airport City Vienna | Surroundings Top Properties
9. Seestadt Aspern
Top Properties 1220, Campus West 1220, HOHO Wien 1220, Mischa 1220, ROBIN Seestadt* 1220, SeeHub 1220, Seeparq 1220, Sirius 1220, Technologiezentrum Seestadt
1300, Office Park 1 1300, Office Park 2 1300, Office Park 3 1300, Office Park 4 2320, Concorde Business Park
Rents
Rents
€ 9.5–22.0
€ 11.5–18.0
Rents tendency Demand Supply
Rents tendency Demand Supply
*Project
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Completions | Rentals
Landlord market in prime locations
Both the production of new space at 45,800 sqm and the vacancy rate at 3.6 % will reach historic lows in 2023. In 2024, completions will remain subdued at just under 110,000 sqm, so the situati- on will remain tense.
This will lead to rising rents and declining incen- tives in particularly sought-after locations, for example in and around the city centre, the main railway station, Praterstern and Lassallestrasse.
Take-up by regions*
Completions 2023/2024
Property VIO Plaza
Size
Address
7 %
22,600 sqm 12; Schönbrunner Strasse 230 15,000 sqm 10; Wienerbergstrasse 3-5 4,700 sqm 10, Laxenburger Strasse 2B
9 %
Myhive am Wienerberg URBAN GARDEN
26 %
Gösserhalle
10 %
Muthgasse 109A
3,500 sqm 19; Muthgasse 109A
FRANCIS
47,700 sqm 9; Althanstrasse
Twenty One/Central Hub
26,000 sqm 21; Siemensstrasse 87-89
12 %
22 %
CARRÉ Muthgasse Grand Central ROBIN Seestadt
13,000 sqm 19; Muthgasse 105
14 %
12,500 sqm 21; Schlosshoferstrasse 17
10,100 sqm 22; Seestadt
Western Region Inner City | Surroundings Northern Region Southern Region | Wienerberg Vienna Donau City | Surroundings Eastern Region | Erdberg Lassallestrasse | Messe | Prater
Source: EHL Market Research | Q3 2023
Rentals 2023 (selected examples)
Take-up by sectors*
4 % •
• 2 %
Tenant
Size Address
aws Austria Wirtschaftsservice GmbH
5,500 sqm 12; Vio Plaza 5,000 sqm 3; City Point
27 %
15 %
Public sector tenants Public sector tenants
3,700 sqm 1; Deutschmeisterplatz 2
Medical services
3,500 sqm 9; Francis
15 %
Woom GmbH
3,300 sqm 19; Muthgasse 109A
Austria Power Grid
3,100 sqm 22; IZD- Tower
20 %
ECOVIS Austria Wirtschaftsprüfungs- und Steuerberatungsgesellschaft m.b.H.
17 %
2,900 sqm 12; Vio Plaza 2,700 sqm 3; Orbi Tower 2,400 sqm 12; Vio Plaza
Gewista
Public sector Pharma und health Trade and services Law firms, consultants, tax advisors IT | high-tech Educational and trainings institutions Other
Brandl Talos Rechtsanwälte GmbH
Plus Training OG
2,300 sqm 19; Mooslackengasse 17
Stadt Wien
2,100 sqm 3; TownTown 2,000 sqm 21; Grand Central 2,000 sqm 12; Vio Plaza
Medical services Medical services
* Take-up > 1,000 sqm included Source: EHL Market Research | Q3 2023
EHL provided consulting services to tenants and/or lessors.
Source: EHL Market Research | Q3 2023
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Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2023
Investment market The Austrian real estate investment market recover- ed slightly in the third quarter of the year, achieving a thoroughly satisfactory result with a transaction
quality requirements. Institutional investors are also showing significantly more interest in these properties in the current market environment. It is worth noting that despite general reluctance from investors, there were some notable large transactions in excess of EUR 100 million. These include, for example, the sales of the Vienna Twin Towers to S IMMO, space2move to Raiffeisen Im- mobilien Treuhand and Saturn Tower to Amisola. EHL is cautiously optimistic for 2023 as a whole. We are already seeing significantly more investor interest than in previous months. However, the gap between potential buyers and sellers’ price expec- tations is currently still too wide in many cases, which means that fewer transactions are currently being concluded. It will probably take some time for the market to rebalance, but we do not expect the ECB to continue raising interest rates in 2024. However, the general conditions are currently chal- lenging in all areas of the investment market. In any case, the office asset class will continue to form a significant part of institutional investors’ portfolios in the future and will enjoy corresponding demand.
volume of just over EUR 1 billion. However, the total investment volume recorded up to the end of September is almost 30 % below the correspon- ding figure for the same period last year due to the challenging environment. The main reasons for this are high inflation and the sharp rise in interest rates to combat inflation, which have fundamen- tally changed the capital market environment and the investment market. In addition, the economic outlook has become more pessimistic. The result is a rise in yields and a sharp decline in transactions. The Austrian market is thus in line with the overall European trend. Office lettings have been very strong in the first three quarters of the year and rents are rising. However, this can only partially compensate for investors’ rapidly increasing return requirements, which is ultimately leading to falling price levels. Older existing properties not compliant with the ESG criteria in weaker locations that do not meet investors’ sustainability requirements have been particularly hard hit, with prices falling significantly in some cases. The price adjustment is much more modest for new-build office properties that comply with the EU taxonomy and meet sustainability and
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© EHL
© EHL
Market Activity
Selected investment transactions
Property
Type of use
Size / sqm
Seller
Buyer
Twin Tower
Office
66,380 Immofinanz
S Immo AG
Space2Move
Office
52,000 Union Investment
Raiffeisen Immobilien Treuhand
Donaumarina Tower *
Office
44,350 SIGNA
UBM
Saturn Tower
Office
33,000 Quadoro
Amisola
U6 Center
Office
24,818 Westcore Europe
Privatinvestor
Erdberger Lände 40-48
Office
18,200 KGAL
Art-Invest
Green Worx
Office
17,000 Union Investment
ARE Austrian Real Estate
Bureau am Belvedere
Office
9,000 Immofinanz
Real Treuhand Immobilien
Space One | Technologie Park
Office
9,000 Konsortium von Privatinvestoren
GalCap Europe
High Five
Residential
16,862 STC/Roombuus
ZBI AG
Dresdner Strasse 90
Commercial housing
21,000 S+B Gruppe
Greystar
SkyLog Park
Logistics | Industry
18,000 DLH
DEKA
Cross Dock Upper Austria
Logistics | Industry
12,979 Meir Immobilien-Gruppe
KanAm Grund Group
Kika-/Leiner-Portfolio
Retail
n.a. SIGNA
Supernova-Gruppe
Apple-Gebäude Wien
Mixed use
3,060 SIGNA
JR Investment
Medicent Innsbruck
Other
7,500 SIGNA
Tiroler Wirtschaftskammer
*Development site
Source: EHL Market Research | Q3 2023
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EHL References
Reference projects
Investment
AMS Wagramer Str. EHL brokered the sale of the office building at Wagramer Strasse 224c, which is let long-term to the Austrian Public Employment Service, to NEXT Generation Invest.
Green Worx EHL brokered the Green
EURO PLAZA Amadys Telecom Austria GmbH (approx. 1,000 sqm) and HPC IBK GmbH (approx. 400 sqm) opted for the Euro Plaza location. EHL acted in an advisory capacity on the tenant and/or landlord side. Plaza building project, among others. EHL acted in an advisory capacity on the tenant or landlord side. VIO PLAZA Brandl Talos (approx. 2,400 sqm), Ecovis Austria (approx. 2,800 sqm) and aws Austria Wirtschaftsservice (approx. 5,500 sqm) opted to rent space in the spectacular new Vio Erdberger Lände 40-48 EHL brokered the fully let of- fice building on Erdberger Län- de with around 18,200 sqm of space and 220 parking spaces to Art-Invest Real Estate. Worx office and commercial building with around 17,000 sqm of usable space, situated in a prime location near the Praterstern at Walcherstrasse 6/Lasallestrasse 7A, to ARE Austrian Real Estate.
GLA
GLA
3.770 sqm Pine Asia
17.000 sqm
Client
Client
Union Investment
Bureau am Belvedere EHL brokered the fully let office building in an excel- lent location on Prinz-Eu- gen-Strasse with approx. 9,000 sqm of usable space to Real-Treuhand Immobi- lien.
GLA
GLA
9.000 sqm Immofinanz
18.200 sqm
Client
Client
KGAL
Letting
Muthgasse 109A woom, the leading children’s bicycle manufacturer from Austria, rents an innovative timber construction office building at Muthgasse 109 A (approx. 3,300 sqm) as a single tenant. EHL acted in an advisory capacity on the tenant and landlord side. FRANCIS A medical institute (approx. 3,500 sqm) and the modern medical institute Valmedica Althan GmbH (approx. 1,200 sqm) opted to rent space in the FRANCIS. EHL acted in an advisory capacity on the tenant or landlord side.
Address 12., Schönbrunner Str.230 GLA 22.000 sqm
Address 9., Julius-Tandler-Platz GLA 47.700 sqm
Address 19., Muthgasse 109A GLA 3.300 sqm
Address 12., Am Europlatz 1-5 GLA 26.550 sqm
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Cover: VIENNA TWENTYTWO | © k18/ SIGNA, ARE
The digital version of the report can be downloaded under www.ehl.at/research
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