Office Market Report Vienna | Autumn 2024

Market Report Autumn 2024

We stand for real estate.

Office Market Report

Preface

Against the backdrop of the current chal- lenging market environment, companies are being prompted to act with particular caution and to examine their location decisions with more scrutiny than before. While ambitious sustainability requirements and increasing ESG requirements have introduced more quality and innovation to the Viennese real estate market, they have also resulted in rising construction costs and rent prices. In this environment shaped

by unresolved tension, it is more important than ever to make the right location decision. Our EHL office specialists are on hand to give you the advice you need, with competence, expertise and a sense of responsibility. We consider our long-stand- ing customer relationships to be the best proof of the highest degree of integrity exercised by our specialists.

Michael Ehlmaier FRICS

Franz Pöltl FRICS

Managing Partner EHL Immobilien GmbH

Managing Partner EHL Investment Consulting GmbH

Stefan Wernhart MRICS

Alexandra Bauer MRICS

Managing Director EHL Gewerbeimmobilien GmbH

Head of Office Agency EHL Gewerbeimmobilien GmbH

Vienna | Autumn 2024

Overview of the office market in Vienna

Executive Summary

The main drivers behind location searches at pre- sent are energy efficiency, sustainability and a strong feel-good atmosphere. This development is further accelerated by ESG requirements and the EU taxonomy.

At around 91,000 sqm, the volume of new space produced this year is significantly higher than last year and is expected to con- tinue rising to around 121,000 sqm next year. The supply of high- quality properties being let for the first time has thereby increa- sed on a slow, yet constant basis. The vacancy rate has stabilised at a low level of 3.3 %, but is expected to rise slightly again in the medium term due to the avid construction of new builds. Production of new space & vacancy rate

Stable rent prices Following the recent hikes, rent prices have now stabilised, with prime rents currently amounting to EUR 28.00/sqm. The limited availability of modern office space in top locations has continued to exacerbate the pressure on prime rents.

Letting performance Due to the present market disequilibrium, we expect the volume of let office space to fall slightly to approx. 160,000 sqm this year. Prime locations remain subject to high excess demand.

With the overall market environment still strongly influenced by the shift in the interest rate landscape and the challenging economic situation in Austria and Germany, the investment market remains tough. However, despite the strenu- ous situation at hand, there are positive indications for the future, particularly in the office real estate sector, where investment activity is most active at present. Investments in core real estate and real estate with strong cash flow remain feasible. Investment

Office Market Report

Office Market Vienna 2020 - 2024

300,000 sqm

7 %

225,000 sqm

6 %

210,000

150,000 sqm

5 %

180,000

170,000

160,000*

126,000

125,000

75,000 sqm

4 %

90,700

66,700

45,800

3 % 3,3 %

2020

2021

2022

2023

2024

Production of new space in sqm

Take-up in sqm

Vacancy rate

*Forecast, Source: EHL Market Research | Q3 2024

Market overview

Office supply

Total market**

VRF***

Production of new space

90,700 sqm



Office space in sqm 11,696,600 m 2

6,070,827 m 2

Take-up*

160,000 sqm



Vacancy rate

3.3 %

3.38 %

Vacancy rate

3.3 %



Prime yields

5.0 %



Prime rets EUR/sqm/month

28.00 €



Nom. GDP EUR billion acc. to WKO

490.73



Forecast

All indicators are based on the total market (old and new buildings), unless indicated otherwise

Economic growth acc. to WKO

-0.6 %



*** According to the Vienna Research Forum, www.viennaresearchforum.at

Inflation rate acc. to Statistik Austria

2.3 %













Increasing

Slightly increasing

Stable

Slightly decreasing

Decreasing

Source: EHL Market Research | Q3 2024

Vienna | Autumn 2024

Challenges on the office market

Striking a balance be- tween ESG requirements and cost awareness

Current demand for new office space is strongly influenced by the need to imple- ment increasing ESG requirements. Compa-

Nevertheless, the quality of the fixtures, furnishings and location continue to only be reduced in exceptional cases.

The projects completed this year are characterised by their high standard of furnishings. Examples include the striking refurbishment of FRANCIS in the Althan Quartier (approx. 47,700 sqm), the new modern GRAND CENTRAL building in Floridsdorf (approx. 12,500 sqm) and the sustainable ROBIN Seestadt (approx. 10,000 sqm) in Aspern. Office space in the prestigious CARRÉ Muthgasse building (approx. 13,000 sqm) will also be placed on the market at the end of 2024 or beginning of 2025.

nies are seeking to introduce particularly employee-friendly and environmentally conscious concepts at their new office locations. To many companies, a relocation represents the opportunity to achieve innovative and future-orientated working environments, with priority always being given to sustainability and quality.

In a market shaped by this ten- sion between cost awareness and the quest for higher quali- ty, many letting processes are currently much more complex and time-consuming than they were just a few years ago.

However, high demands in terms of the quality of fixtures and fittings inevitably lead to rising rent prices and higher furnishing costs. In a market shaped by this tension between cost awareness and the quest for higher quality, many letting processes are currently much more complex and time-consuming than they were just a few years ago. Plans, investment costs and their distribution between tenant and landlord are closely examined and subject to intense negotiation. For economic reasons, companies are now often electing to reduce the size of their office space. This approach has been made possible by the introduction of flexible and hybrid working models such as desk sharing, co-working spaces or reduced working hours.

Prime locations 18.0 - 28.0

Standard locations 12.0 - 16.0

Quality locations 14.0 - 19.0

In €/sqm/month | EHL Rent Index of 100 existing and/or refurbished office buildings at various locations First-time occupancy rents

Office Market Report

Completions 2024

Property

Address

Size

FRANCIS

1090; Julius-Tandler-Platz 3

47,700 sqm

GRAND CENTRAL

1210; Schlosshoferstrasse 17

12,500 sqm

ROBIN Seestadt

1220; Sonnenallee 28-30

10,100 sqm

DOCKS | VILLAGE IM DRITTEN

1030; Landstrasser Gürtel 49+51

9,000 sqm

Favoritenstrasse 73-75

1100; Favoritenstrase 73-75

6,800 sqm

Technologiezentrum Seestadt, TZ 3

1220; Seestadtstrase 27

4,600 sqm

Source: EHL Market Research | Q3 2024

Vacancy rates in European comparison (in %)

Prime rents in European comparison comparison (in EUR/sqm/month)

Budapest

13.9

London (Central + West End)

168.2

Bucharest

13.4

Paris (Central + CBD)

91.7

10.9

Warsaw

Milan

58.3

Paris (Central)

10.8

Munich

52.0

Frankfurt

49.0

Frankfurt

10.5

Madrid

9.9

Amsterdam

46.3

London (Central)

9.6

Berlin

45.0

Prague

7.9

Madrid

41.3

London (West End)

7.2

Warsaw

30.0

Munich

6.7

Prague

28.5

Milan

6.7

Vienna

28.0

Berlin

6.5

Budapest

22.5

Amsterdam

6.5

Bucharest

20.5

Vienna

3.3

Paris (CBD)

2.7

Source: EHL Market Research | BNP Paribas Real Estate | Q2 2024

Vienna | Autumn 2024

Office regions in Vienna

Inner City | Surroundings

Selected properties 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1010, Strauchgasse 3 1020, LeopoldQuartier OFFICE* 1040, Ensemble Schwarzenbergplatz 1090, FRANCIS

Vienna Office Regions

Rents

€ 16.0-28.0

Rents tendency



Supply



Demand



Main Railway Station | Quartier Belvedere 4 Selected properties 1030, DOCKS

Southern Region | Wienerberg

Selected properties 1100, myhive am Wienerberg

1030, LOOP Offices* 1030, Village Works* 1100, LAX 2B 1100, QBC 1100, The Icon Vienna 1100, Tower Canettistrasse 1110, LMNT Offices*

1100, The Brick 1120, Euro Plaza 1120, Inno Center 1230, Silo Next* 1230, Silo Plus 2345, Campus 21

Rents

€ 15.0-23.0

Rents

€ 12.0-18.0

Rents tendency

 

  

Supply

Demand



Northern Region

Vienna Donau City | Surroundings

Selected properties 1190, CARRÉ Muthgasse* 1190, Square 1

Selected properties 1220, Andromeda Tower 1220, Ares Tower 1220, DC Tower 1+2* 1220, IZD Tower 1220, Saturn Tower 1220, VIENNA TWENTYTWO*

1200, Millennium Tower 1210, GRAND CENTRAL 1210, Peak Vienna 1210, Plus Energie & Quartier 21* 1210, TwentyOne

Rents

€ 11.5-25.0

Rents

€ 13,0-28.0

Rents tendency

  

 

Supply

Demand



Seestadt Aspern

Airport City Vienna | Surroundings

Selected properties 1220, Campus West 1220, HOHO Wien 1220, ROBIN Seestadt 1220, SeeHub 1220, Seeparq 1220, Sirius 1220, Technologiezentrum Seestadt

Selected properties 1300, Office Park 1 1300, Office Park 2 1300, Office Park 3 1300, Office Park 4 2320, Concorde Business Park

Rents

€ 11.5-18.0

Rents

€ 9.5-22.0

Rents tendency



  

Supply



Demand



Office Market Report

Lassallestrasse | Messe | Prater

Eastern Region | Erdberg

Selected properties 1020, 2nd Central 1020, Austria Campus 1020, E-Zone 1020, Galaxy Tower

Selected properties 1030, ENNA* 1030, Landmarx 1030, MQM

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

1020, Lassallestrasse 3 1020, Quartier Lassalle 1020, Vienna Works 1020, Weitblick, Viertel Zwei*

Rents

€ 13.0-27.0

Rents

€ 11.5-19.5

Rents tendency



  

Supply



Demand



* Project

Western Region

Selected properties 1120, Forum Schönbrunn 1120, O.A.X* 1120, VIO Plaza 1140, Workstation Wien West 1150, Storchengasse 1

Rents

€ 10.0-19.0

Rents tendency



Supply



Demand



A22

U2 U5

A23

A21 A2 S1

Vienna | Autumn 2024

Rentals

Completion volume rises once again

Despite the expected doubling of the com- pletion volume compared to the previous year, the vacancy rate remains at a very low 3.3 % due to the high number of pre-lets. In 2025, we expect the completion volume to reach around 121,000 sqm, which could help to ease the market situation.

Rentals 2024 (selected examples)

Tenant

Address

Size

European Handball Federation

1030; Baumgasse 60A

6,000 sqm

Canon Österreich

1120; EURO PLAZA

4,500 sqm

Public Tenant

1010; Schottenring 14

3,700 sqm

University

1020; Walcherstrasse 11

2,800 sqm

Bernard Gruppe

1020; E-Zone

2,200 sqm

Cellectric Biosciences

1210; Central Hub

1,800 sqm

Ivoclar Vivadent GmbH

1090; FRANCIS

1,600 sqm

TUI

1300; Office Park 4

1,500 sqm

Public institution

1070; Mariahilferstrasse 116

1,200 sqm

AON

1090; FRANCIS

1,000 sqm

EHL provided consulting services to tenants and/or lessors.

Source: EHL Market Research | Q3 2024

Office Market Report

Take-up by regions

2 %

5 %

27 %

14 %

Inner City | Surroundings Eastern Region | Erdberg

15 %

Lassallestrasse | Messe | Prater

21 %

Northern Region

16 %

Southern Region | Wienerberg Vienna DC | Surroundings Airport City Vienna | Surroundings

Take-up by sectors

1 %

2 %

3 %

5 %

IT | high-tech Public sector

36 %

Educational and trainings institutions

Construction, real estate

19 %

Pharma and health Trade and services

Serviced office | Co-working Other Law firms, consultants, tax advisors

24 %

Take-up > 1,000 sqm included Source: EHL Market Research | Q3 2024

Vienna | Autumn 2024

References

Our office- reference projects

See our expertise in action with a small selection of our lettings. From ultra- modern office concepts to sustainable office solutions – discover which projects are part of our portfolio.

FRANCIS

VIO PLAZA

A medical institute (approx. 3,500 sqm) and Valmedica Althan GmbH (approx. 1,200 sqm) have decided to rent space in the FRANCIS. EHL acted in an advisory capacity on the tenant or landlord side.

Brandl Talos (approx. 2,400 sqm), ECOVIS Austria (approx. 2,800 sqm) and aws Austria Wirtschafts- service (approx. 5,500 sqm), among others, have decided to rent space in the spectacular VIO PLAZA. EHL acted in an advisory capacity on the tenant or landlord side.

GLA

47,700 sqm 1090 Vienna

GLA

22,000 sqm 1120 Vienna

District

Muthgasse 109A

EURO PLAZA

woom, the leading Austrian ma- nufacturer of children‘s bicycles, rents an innovative office building in timber construction at Muth- gasse 109 A (approx. 3,300 sqm) as a single tenant. EHL acted in an advisory capacity on the tenant and landlord side.

Amadys Telecom Austria GmbH (approx. 1,000 sqm), HPC IBK GmbH (approx. 400 sqm) and MTEL Austria (approx. 1,200 sqm) have opted for the Euro Plaza location. EHL acted in an advisory capacity on the tenant and/or landlord side.

GLA

3,300 sqm 1190 Vienna

GLA

26,500 sqm 1120 Vienna

District

Office Market Report

LOOP Offices

Central Hub | TwentyOne

The visionary office building (approx. 14,200 sqm) impresses with its striking appearance and ecological design. EHL is manda- ted on a co-exclusive basis and is in the middle of the marketing process.

The striking “Central Hub” office project (approx. 50,000 sqm) is located in the middle of the up- and-coming TwentyOne business cluster. Completion is planned for the beginning of 2025. EHL has been mandated on a co-exclusive basis.

GLA

21,000 sqm 1210 Vienna

GLA

14,200 sqm 1030 Vienna

District

LMNT Offices

CARRÉ Muthgasse

The highly visible LMNT Offices project (approx. 19,000 sqm) is in a perfect strategic location between Vienna’s city centre and the airport and boasts a perfect price/performance ratio. EHL is mandated on a co-exclusive basis.

The prominent office building is characterised by its prestigious lobby and spacious roof terra- ce. EHL has been exclusively mandated to market one of the two components (approx. 5,700 sqm) and is in talks with several prospective tenants.

GLA

5,700 sqm 1190 Vienna

GLA

19,000 sqm 1110 Vienna

District

Vienna | Autumn 2024

Investment

Investmentmarkt

The real estate market is currently showing signs of uncertainty. High financing costs and rising construction prices are putting a strain on property developers. Ho- wever, ESG-compliant new buildings are less affected by these factors. EHL remains optimistic and sees potential for major transactions over the coming year.

Nevertheless, the real estate market is currently showing clear signs of uncertainty and reluctance among investors, especially compared to the years before the Ukraine crisis. The impact of interest rate hikes has significantly influenced the market, with due diligence, approval procedures and financing transactions taking longer as a result.

Property developers are the ones most acutely affected by the economic challen- ges. High financing costs, rising construc- tion prices and falling exit prices are forcing many to temporarily suspend construction projects. In the medium term, this could lead to a shortage of urgently required office space in attractive locations.

At the same time, ESG-compliant new buildings are less affected by the market distortion. By contrast, they are subject to lower price adjustments due to their compliance with current EU sustainability requirements. Older properties, on the other hand, are struggling with significant price markdowns as they often no longer meet investors’ rising expectations in terms of sustainability.

Prime yields on office properties in European comparison (in %)

8 %

8.0

7.0

6 %

6,.0

5.5

5.0

4 %

4.5

4.4

4.25

4.20

4.15

2 %

0 %

Source: EHL Market Research | BNP Paribas Real Estate | Q2 2024

Office Market Report

Nevertheless, the market remains active, especially in the office real estate sector, which is the strongest segment accounting

However, the reluctance of banks to provide new financing remains a major constraint on larger transactions.

is expected to further support this trend and potential interest rate corrections by the ECB next year will likely give the market fresh impetus.

for around 50% of the trans- action volume to date. This momentum is being driven by several major transactions and numerous deals in the range of EUR 20–60 million. Other transactions are already in the pipeline, indicating present demand for this asset class.

Nevertheless, the market re- mains active, especially in the office real estate sector, which is the strongest segment ac- counting for around 50 % of the transaction volume to date.

Another positive develop- ment is the growing interest in core real estate, especially among family offices and private foundations. These market players are taking advantage of the current market environment to invest in real estate with stable cash flows, which was not readily available in previous boom periods.

In recent months, investor scrutiny has increased significantly. EHL remains cautiously optimistic and expects some of the ongoing scrutiny to lead to major trans- actions both in the final quarter of 2024 and early next year. A convergence of price expectations between buyers and sellers

Referenzprojekte Investment

City Tower Vienna

ViE

EHL Investment Consulting bro- kered the prominent City Tower Vienna office tower in Marxergas- se in Vienna’s 3rd district, which is fully leased to the Republic of Austria and houses the Justice Centre Wien Mitte.

EHL Investment Consulting brokered the DGNB Platinum cer- tified office property with 14,100 sqm rental space and a multi- tenant structure with a strong credit rating in a top location and accessibility in Erdberger Lände.

GLA

14,100 sqm

GLA

26,600 sqm Immofinanz

Client

CA Immo

Client

Mariahilfer Strasse 121b

Gasgasse 1-7

EHL Investment Consulting bro- kered the office building, which is fully leased to the Republic of Austria and houses Fünfhaus District Court.

EHL Investment Consulting brokered the office building with around 4,300 sqm of usable space, including around three quarters of the office and a quarter of the retail space, which is almost completely leased to a number of renowned companies.

GLA

7,500 sqm S IMMO AG

GLA

4,300 sqm S IMMO AG

Client

Vienna | Autumn 2024

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