We stand for Office
Office Market Report Vienna | Autumn 2021
We stand for real estate.
Introduction
Nearly two years after the start of the corona pandemic, the effects on the office market are clearly visible and here to stay. Digitalisation has swept across the working world in record time and created impulses for innovative and flexible office concepts. Social distancing as well as distance and hygiene rules are also serving as accelerators for the development of new office concepts. Hybrid working forms have become firmly entrenched in many branches and will also influence the office market in the coming months.
Major companies and corporations, in particular, are rethinking their office concepts and adapting them to meet the demands on a flexible and modern working world. In times like these, the right, sustainable location decisions are essential. Our EHL office specialists have the necessary know-how and are committed to help you develop your individual real estate strategy
Franz Pöltl FRICS Managing Partner EHL Investment Consulting GmbH
Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH
Stefan Wernhart MRICS Managing Director EHL Gewerbeimmobilien GmbH
Alexandra Bauer MRICS Head of Market Research EHL Gewerbeimmobilien GmbH
Thomas Schanda Head of Office Properties EHL Gewerbeimmobilien GmbH
Andrea Dissauer MRICS Managing Director EHL Immobilien Management GmbH
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Overview of the Office Market in Vienna
Executive Summary
Subdued demand for new rentals Rentals totalled approximately 105,000 sqm in the first three quarters of 2021 and, in addition, nearly 12,000 sqm were sublet. The pace of activity on the market increased substantially beginning at mid-ye- ar, and an increase in take-up can be expected in the coming months. Vacancies at record low The low production of new space in recent years has led to a steady decline in the vacancy rate. The current 4.4 % marks an extremely low level in inter- national comparison. However, this statistic does not include the space available for sublet.
Rents I First-time occupancy**** (in EUR/sqm per month) Prime location 18,0 - 25,5 Quality location 13,5 - 18,0 Standard location 10,0 - 13,5 Prime rents 25,5 Investments The interest remains strong in office properties with long-term rentals at top locations. German and Austrian investors are the main demand drivers here, whereby the very limited pipeline has had a negative impact on the offering. Production of new space influenced by refurbishments The production of new space was substantially lo- wer than the previous year at only 73,000 sqm in 2021 (2020: 125,000 sqm). Of special note is the year-to-year increase in the share of high-quality refurbishments, which currently represent 50 % of new space production.
Demand* | Supply 2021 Production of new space
73.000 sqm 160.000 sqm
Take-up*
Market indicators Production of new space
slight downward trend slight downward trend
Economic data for Austria 2021*
Take-up
Vacancies
stable stable
Austria 5.7 % EU (27) 7.1 % Eurozone (19) 7.7 %
Unemployment rate (Eurostat)
Prime yields
Rental prices Average rents
Nom. GDP EUR billion
395.4 3.4 % 2.7 %
stable stable
Economic growth
Prime rets
Inflation rate
* 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
11.486.050 5.888.179
Vacancy rate
4.4 %
3.9 %
Source: EHL Market Research | Q3 2021
Office Market Vienna 2017 - 2021
300.000 sqm
8 %
270,000
260,000
220,000
210,000
225.000 sqm
7 %
185,000
160,000*
150,000
150.000 sqm
6 %
125,000
73,000
75.000 sqm
5 %
45,000
Vacancy rate
0
4 %
2017
2018
2019
2020
2021
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Deliveries in sqm
*Forecast, Source: EHL Market Research | Q3 2021
Take-up in sqm
© IFAG
© redtenbacher
Hybrid working for numerous branches: the “new normal“
New working worlds serve as a driver for the market
The progress of vaccination campaigns has been reflected in the increasing return of employees from home office to in-office. Most companies will, however, offer employees a remote working option. Home office has become a professional “must have“ in many areas, and numerous companies have introduced innovative models to combine mobile and office-based work.
The integration of new working models is often connected with the optical redesign of offices to create space for teamwork and communication. The physical office is becoming more of a point for meetings, workshops and training. Project developers and renters are reacting to these de- velopments with appropriately designed concepts and maximum flexibility for tenant customisation. One prominent example is the myhive concept by IMMOFINANZ with its high flexibility and stylish hotel atmosphere. The common areas (e.g. lobby, reception) are based on hotel and lounge con- cepts, and special services (e.g. coworking space, meeting points) are also offered. An additional aspect is the increasing attention given to the design of the exterior and open areas (e.g. green inner courtyard with seating areas).
Flexible working forms as an asset for employee satisfaction
Hybrid working is viewed by many companies as an effective means to recruit and retain employees. The introduction of more flexible working models was a frequently heard promise during the corona pandemic, and a number of companies plan to retain these options. Current examples include the banking and insurance sectors and the IT branch. However, the office remains the central location for work in most cases.
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Rental prices and vacancy rates
Development of rents 2011 - 2021
€ 30/sqm
€ 25/sqm
€ 20/sqm
€ 15/sqm
€ 10/sqm
€ 5/sqm
2014
2015
2016
2017
2018
2019
2020
2021
2011
2012
2013
Prime rents
Standard locations
Quality locations
Prime locations Source: EHL Market Research | Q3 2021
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 2021
Prime rents (in EUR/sqm/mth.)
Vacancy rates (in %)
117.1 Paris (CBD)
12.5
London (West End)
Warsaw
77.5
11.4
Bucharest
50.0
11.0
Milan
Milan
47.0
9.9
Frankfurt
Madrid
9.8
39.5 40.0
Berlin
Budapest
8.0
Frankfurt
Munich
38.3
7.8
Amsterdam
Prague
35.8
5.9
Madrid
Amsterdam
5.1
26.0 25.5
London (West End)
Budapest
4.5 4.4
Paris (CBD)
Vienna
23.0 23.0
Warsaw
Vienna
4.0
Munich
Prague
19.0
2.9
Bucharest
Berlin
Source: EHL Market Research | BNP Paribas Real Estate | Q3 2021
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1. Inner City | Surroundings
Vienna Office Regions The Vienna office market is divided into 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.
Top Properties 1010, Operngasse 6
1010, Deutschmeisterplatz 2 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1010, Hohenstaufengasse 9* 1010, Schreyvogelgasse 2* 1040, Ensemble Schwarzenbergplatz 1090, Francis* 1090, Doppio Due*
Mietpreise
€ 15,0–25,5
Mietentwicklung Nachfrage Angebot
2. Northern Region
Top Properties 1190, Skyline 1190, Square 1 1200, Millennium Tower 1200, Rivergate 1200, Optimum 1210, Peak Vienna 1210, Innovation Hub* 1210, Plus Energie Quartier 21*
U4
U5
Rents
€ 11.0–18.5
U3
Rents tendency Demand Supply
U2 U5
U4
A1
3. Western Region
Top Properties 1120, Arcade Meidling 1120, Forum Schönbrunn 1120, Linke Wienzeile 234 1120, U4-Center 1120, VIO Plaza* 1130, Hietzinger Kai 131 1130, Kai West 1140, Hackinger Straße 5 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
Top Properties 1100, myhive am Wienerberg
1220, Ares Tower 1220, DC Tower 1220, IZD Tower 1220, Saturn Tower
1100, The Brick 1120, Euro Plaza 1120, Inno Plaza 1230, Silo Plus 1230, Silo Next* 2345, Campus 21
1220, Tech Gate Vienna 1220, Vienna Twentytwo*
Rents
Rents
€ 11.5–18.0
€ 12.5–22.0
Rents tendency Demand Supply
Rents tendency Demand Supply
*Projekt
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6. Lassallestraße | Messe | Prater
Top Properties 1020, Austria Campus 1020, E-Zone 1020, Galaxy Tower 1020, Quartier Lassalle* 1020, Vienna Works 1020, Weitblick, Viertel Zwei*
Rents
€ 12.0–18.0
Rents tendency Demand Supply
A22
U1
7. Eastern Region | Erdberg
Top Properties 1030, Austro Tower 1030, Landmarx 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, QBC 1100, The Icon Vienna 1100, Tower Canettistraße 1110, LMNT Offices*
U3
A4
U1
10.
Rents
€ 15.0–22.0
1
Rents tendency Demand Supply
10. Airport City Vienna | Surroundings Top Properties
9. Seestadt Aspern
Top Properties 1220, Hoho Wien 1220, Campus West 1220, Technologiezentrum Seestadt
1300, Office Park 1 1300, Office Park 2 1300, Office Park 3 1300, Office Park 4 2320, Concorde Business Park
1220, SeeHub 1220, Mischa
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
Quality at the centre of location search
A clear quality offensive can now be observed on the Vienna office market, whereby the trend is moving towards a modern image and optimal em- ployee satisfaction. Demand is concentrated on innovative properties with perfect infrastructure and traffic connections.
Tenant demand is particularly high for locations in the inner city and adjoining vicinities, the region surrounding the main railway station, and the area around the Praterstern and the Wienerberg.
Take-up by regions*
4 %
6 %
Completions 2021
26 %
12 %
Property
Size Address
Austro Tower
28,000 sqm 3, Schnirchgasse 17 17,000 sqm 10, Canettistraße 5 14,500 sqm 1, Schottengasse 6-8 6,000 sqm 9, Peregringasse 2-4 5,200 sqm 2, Stella-Klein-Löw-Weg 8 2,000 sqm 1, Operngasse 6 53,000 sqm 2, Lassallestraße 5 24,000 sqm 2, Lassallestraße 1 14,800 sqm 21, Siemensstraße 87-89
12 %
Tower Canettistrasse Haus am Schottentor *
23 %
Doppio Due *
17 %
Tribüne Viertel Zwei *
Operngasse 6 *
Lassallestraße | Messe | Prater Main Railway Station | Quartier Belvedere Southern Region | Wienerberg Northern Region
Quartier Lassalle 2* Quartier Lassalle 1*
Twenty One/Innovation Hub
Inner City | Surroundings Eastern Region | Erdberg Other
Das Lebendige Haus *
9,000 sqm 1, Postgasse 8-10
Technologiezentrum Seestadt, TZ 3
4,800 sqm 22, Christine-Touaillon-Str. 11 3,800 sqm 4, Schwarzenbergplatz 2,500 sqm 1, Schreyvogelgasse 2
Lukoil- Headquarter* Schreyvogelgasse 2*
Take-up by sectors*
* Refurbishment
Source: EHL Market Research | Q3 2021
• 2%
4% •
5%
Rentals 2021 (selected examples)
8%
42 %
Tentant Size Address Austrian Workers‘ Compensation Board AUVA 9,100 sqm 10, myhive am Wienerberg waff – Vienna Employment Promotion Fund 7,400 sqm 2; Quartier Lassalle Austrian Public Employment Service 5,500 sqm 10; Favoritenstrasse 73 Red Bull Media House GmbH 5,240 sqm 2; Tribüne Viertel Zwei Research Company 6,000 sqm 21; TwentyOne Wien bpv Hügel Rechtsanwälte GmbH 2,800 sqm 1; Schreyvogelgasse 2 Infoscore Austria GmbH 2,300 sqm 10; QBC 1+2 Weidinger & Partner Wirtschaftstrainings- und Organisationsentwicklungsgesellschaft mbH 2,200 sqm 3, Franzosengraben 1 Industrieunternehmen 2,000 sqm 10; QBC 2 Die Berater Unternehmensberatungs GmbH 2,000 sqm 12; Wolfganggasse 58-60
12 %
13 %
14 %
Public sector Law firms, consultants, tax advisors Pharma and health Other Educational and trainings institutions Trade and services IT | high-tech Banking and insurance sector
Source: EHL Market Research | Q3 2021
*Take-up > 1,000 sqm included Source: EHL Market Research | Q3 2021
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Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q3 2021
Investment Market The real estate investment market in Austria and here, above all, the office segment witnessed a sharp rise in demand by private and institutional investors during the first half of 2021. The invest- ment volume of approximately EUR 1.7 billion was negatively influenced, above all, by a limited range of products and a shortage of available core pro- ducts in the office segment. This also explains the relatively low share of office properties (nearly 14 %) as a per cent of the total volume. In contrast, the share of residential and logistics properties rose to 37 %, respectively 12 %.
Interest rates and inflation fears fuel demand
Cash flow-secure real estate, meaning proper- ties covered by long-term leases with top-quality tenants, represent the main focal point of investors’ interest. Their investment behaviour is increasing influenced by risk considerations, in particular efforts to maximise security, which has shifted yield issues into the background. This trend will continue because interest rates will remain very low – at least over the medium-term – and alternative investments like government bonds will not provide serious competition for real estate investments. Moreover, inflation – which has recently passed the 2 % mark – is another classical motive for inves- tors to increase their investments in real estate. A further decline in the current record levels to under 3 % can therefore be expected. The general decline in yields has, naturally, also benefited the lower quality segments, whereby risk prevention has led to a stronger differentiation within the various categories. Since the financing costs for real estate investments are still extremely moderate, the “cash-on-cash“ returns for investors remain very attractive – also in the lower quality segments.
The pandemic was reflected primarily in the inves- tors‘ regional origin – buyers from the Far East and Anglo-Saxon countries were not active at all on the Austrian investment market. However, the increase in vaccination rates and slow, but steady impro- vement in travel options lead to expectation of a return – even if moderate – by buyers from these regions. Generally speaking, private as well as institutional investors have increased, rather than reduced their real estate commitments during the pandemic. The result has been an increase in the already severe demand overhang and absolutely insufficient avai- lability of core office properties. Last but not least, this has naturally led to a further decline in prime yields and an increase in prices.
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© JAMJAM
© Daniel Hawelka
Market Activity
Selected investment transactions 2021
Property
Type of use
Size / sqm
Seller
Buyer
Europlaza
Office
28,500 DWS
ARE Austrian Real Estate
Square One
Office
27,300 Strabag RE
Warburg HIH
Nordbahnstraße 50
Office
15,500 REInvest
Family Office
Ikano Office Park
Office
11,600 Family Office
Family Office
Ghegastraße 3
Office
5,800 Immofinanz
Family Office
Canon Gebäude
Office
5,500 LHI
Octapharma
45% Anteil SCS
Retail
> 100,000 Unibail-Rodamco-Westfield
Crédit Agricole
AGM Portfolio
Retail
32,000 REWE
Metro
FMZ Taborland
Retail
10,200 Rutter Immobilien
KGAL
K2 Kittsee
Retail
9,614 Privatinvestor
LLB
FMZ Kolibri Knittelfeld
Retail
8,800 LLB Immo KAG
Betha Zwerenz & Krause
FMZ Klagenfurt
Retail
7,014 Union Investment
Family Office
MOOONS Hotel
Hotel
170 rooms Bridge Group / Moser Architects
REAL IS
Logistikzentrum Loosdorf
Logistics | Industry
50,000 Hofer
Family Office
Logistik Center Simmering
Logistics | Industry
47,000 WLS
Garbe Industrial
BENA Hubs
Logistics | Industry
32,000 BENA Hubs
Swiss Life
Gewerbepark Weikersdorf
Logistics | Industry
21,400 Granite REIT
Westcore
DHL Verteilerzentrum
Logistics | Industry
12,250 Karimpol
AEW Europe
DHL Express Linz
Logistics | Industry
9,000 Meir Logistik Center GmbH
Palmira Capital Partners
Amazon Verteilzentrum
Logistics | Industry
9,000 Exeter Property Group
Allianz
Seniorenzentrum Hoffmannpark
Retirement home
9,800 IMMAC GmbH
Auris Immo Solutions
Seniorenzentrum Tillmitsch
Retirement home
84 rooms IMMAC GmbH
Auris Immo Solutions
Zinshaus-Portfolio
Residential
16,360 CPI
aik
Wohnprojekt „Laaer Wald“
Residential
16,300 vermehrt Gruppe
Catella Residential
Quartier Reininghaus
Residential
12,360 Mischek / BE-WO
ZBI AG
Wohnprojekt „Rankencity“
Residential
12,300 UBM / NHD
GalCap Europe
Danube Flats Bauteil 2
Residential
10,000 Soravia & S+B Gruppe
Auris Immo Solutions
Wohncampus Reininghaus
Residential
7,310 Mischek / BE-WO
Hamburg Trust
Wohnprojekt „Das Herzog“
Residential
7,300 STC Swiss Town Consult
Corpus Sireo / Swiss Life
Grünstück 22
Residential
5,391 BUWOG
BVK
Felmayerpark Schwechat
Residential
5,000 Grossmann Immobilien
ARE Austrian Real Estate
Wohnprojekt „Kofferfabrik“
Residential
4,100 Sedlak Immobilien
Catella Residential
Wohnprojekt „Karl27“
Residential
3,500 Immola
GalCap Europe
Source: EHL Market Research | Q3 2021
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EHL References
Reference projects
Investment
Deutschmeisterpl. 2 This striking office building with its prestigious entrance and interior furnishings is perfectly suited for a single tenant. EHL is marketing the top-furnished office space on a co-exclusive basis. Euro Plaza 1 This modern office building at an established business location currently has roughly 2,200 sqm of vacancies. EHL is charged with the marketing Nordbahnstrasse 50 EHL brokered the 15,500 sqm, fully rented Nord- bahnstrasse 50 office property to an Austrian family office through an off-market deal. Square One EHL provided Warburg- HIH Invest Real Estate with extensive advising for the acquisition of the Square One, a nearly fully rented core property in the Muthgasse with roughly 31,400 sqm of rentable space and 354 parking spaces
myhive amWienerberg EHL was commissioned with the co-exclusive rental of the remaining space in the impressive Twin Tower office building and the marketing of the WBS 3-5, an innovative new construction project (completion in 2023). VIO Plaza The spectacular VIO Plaza buil- ding complex includes office and retail space with perfect furnishings and traffic connec- tions (completion in 2023). EHL is marketing this property on a co-exclusive basis and has al- ready started discussions with interested tenants. Quartier Lassalle – Quartier 2 EHL brokered the fully rented office property at Lassallestrasse 5 with over 53,000 sqm of rentable space to a German special fund in the second half of 2020. Ghegastrasse 3 EHL brokered this office property with nearly 5,700 sqm of rentable space and 80 parking spaces to a private investor. The property is located at the Arsenal, near Vienna’s new main railway station.
GLA
GLA
31,400 sqm
5,700 sqm
Client
Client
HIH
Privatinvestor
GLA
GLA
15,500 sqm
53,000 sqm Family Office
Client
Client
REInvest
Letting
Address 1., Deutschmeisterpl. 2 GLA 3,200 sqm
Address
10., Wienerbergstr. 3-5
GLA
20,000 sqm
on a co-exclusive basis. Office space is available starting at 300 sqm.
Address 12., Am Euro Platz 1-5 GLA 26,550 sqm
Address 12., Schönbrunner Str.230 GLA 22,000 sqm
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This report is a translation. In the event of doubt the German-language version is to be used.
The information and forecasts in this report are made without guarantee, warranty or liability.
Cover: © Telegram 71
The digital version of the report can be downloaded under www.ehl.at/research
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