Office Market Report Vienna | Autumn 2021

We stand for Office

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

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

4 %

2017

2018

2019

2020

2021

Deliveries in sqm

*Forecast, Source: EHL Market Research | Q3 2021

Take-up in sqm

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.

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

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

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*

Rents

€ 11.0–18.5

Rents tendency Demand Supply

U2 U5

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

A23

Rents

€ 10.0–19.0

Rents tendency Demand Supply

A21

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

€ 11.5–18.0

€ 12.5–22.0

Rents tendency Demand Supply

*Projekt

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

7. Eastern Region | Erdberg

Top Properties 1030, Austro Tower 1030, Landmarx 1030, MQM 1030, ORBI Tower

1030, Solaris 1030, Tricore 1030, ViE 1110, OCG Office Campus Gasometer

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*

10.

Rents

€ 15.0–22.0

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

€ 9.5–22.0

€ 11.5–18.0

Rents tendency Demand Supply

*Project

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% •

Rentals 2021 (selected examples)

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

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.

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

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

31,400 sqm

5,700 sqm

Client

HIH

Privatinvestor

GLA

15,500 sqm

53,000 sqm Family Office

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

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.

The digital version of the report can be downloaded under www.ehl.at/research

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