Office Market Report Vienna | Spring 2023

We stand for Office

We stand for real estate.

Introduction

Triggered by the covid and energy crisis, a remarkable quality and sustainability offensive has taken place in the Vienna office market. Under the motto „small but nice“, many companies are currently looking for new office space that meets the demands of ESG taxonomy and presents the corporate culture to the outside world in the best possible and most authentic way. Office spaces are becoming increasingly hybrid, homely and digital. For investors and project developers as well as for landlords and

tenants, the topics of innovation, flexibility and sustainability have moved even more into the focus of their location decisions. Hybrid and energy-optimised new buildings and refurbishments are shaping the market more than ever before, bringing new dynamism and impetus. In a turbulent 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

Stefan Wernhart MRICS Managing Director EHL Gewerbeimmobilien GmbH

Alexandra Bauer MRICS Head of Office Agency EHL Gewerbeimmobilien GmbH

Andrea Dissauer MRICS Managing Director EHL Immobilien Management GmbH

Overview of the office market in Vienna

Executive Summary

New space production sinks to record low With a completion output of only approx. 45,800 sqm, space production in 2023 falls to a record low and thus exacerbates the excess

Rents I First-time occupancy****(in EUR/sqm per month) Prime location 18.0 - 27.0 Quality location 14.0 - 19.0 Standard location 12.0 - 15.0 Prime rents 27.0 Newly built top office properties remain a scarce commodity and are therefore currently most in demand among institutional investors. Complian- ce with ESG criteria and conformity with the EU taxonomy have become constant companions for investors and decisive purchasing criteria. Since many existing buildings do not yet meet these requi- rements, new opportunities are opening up for in- vestors to make these properties marketable again as part of a so-called „Manage to ESG“ strategy. This manifests itself in rising rents and a currently declining incentive rate. Investment

demand in the prime locations. Vacancy rate reaches historic low

The reduced production of new space in recent years has led to a continuously falling vacancy rate. Currently, it has reached a very low value of only 3.8 % compared to other countries. Landlord market in the top locations Demand currently exceeds supply in perfectly developed locations (city centre, main station).

Demand* | Supply 2023 Production of new space

45,800 sqm 160,000 sqm

Take-up*

Market indicators (cf. 2022/2023) Production of new space

downward trend

Economic data for Austria March 2023* Unemployment rate (acc. to AMS) Nom. GDP EUR billion* (acc. to WKO)

Take-up

stable

Vacancies

downward trend

6.2 %

Prime yields

4.0

480

Economic growth real change in GDP (acc. to WKO)

Rental prices (cf. 2022/2023) Average rents

+ 0.3 %

slightly increasing slightly increasing

Inflation rate

9.1 %

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

11,603,000 5,996,386

Vacancy rate

3.8 %

3.91 %

Source: EHL Market Research | Q2 2023

Office Market Vienna 2019 - 2023

300,000 sqm

7 %

220,000

225,000 sqm

6 %

210,000

180,000

170,000

160,000*

150,000 sqm

5 %

126,000

125,000

66,700

75,000 sqm

4 %

45,000

45,800

Vacancy rate

3 %

2019

2020

2021

2022

2023

Deliveries in sqm

Take-up in sqm

*Forecast, Source: EHL Market Research | Q2 2023

Hybrid office buildings bring dynamism and innovation

The topics of sustainability and quality optimisation are more than ever in the focus of location requests and are becoming decisive leasing factors. The shift to hybrid forms of working continues to progress and brings clear competitive advantages for flexible office buildings. Project developers are focusing even more on the construction of high-quality, architecturally modern and, above all, sustainable properties due to the new ESG policies. 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, with a special focus on sustainability and innovation. The hybrid timber construction project Muthgasse 109A has been let to the single tenant woom, and a number of well-known tenants, e.g. the aws Austrian Wirtschaftsservice, Brandl Talos Rechtsanwälte and many more, have already decided in favour of the Vio Plaza. In the next two years, further high-quality new buildings will be completed, such as FRANCIS in the Althan Quartier (approx. 40,000 sqm), Grand

Central in Floridsdorf (approx. 12,500 sqm), CARRÉ Muthgasse (approx. 5,500 sqm), ROBIN Seestadt (approx. 10,000 sqm) in the Seestadt and LeopoldQuartier (approx. 22,000 sqm) near the city centre. These aforementioned projects offer future users the opportunity to realise flexible, innovative and energy-optimised office concepts at locations with perfect infrastructure. New office concepts are more reminiscent of residential and hotel concepts than of classic offices. In times of a shortage of skilled workers, companies are responding more than ever to the wishes of their employees, paying particular attention to a pleasant working environment.

Rising rent level in the top segment

After a long period of stability, prime rents rose again last year and are now at EUR 27.00/sqm/ month for modern first-time occupancy space. A further increase in rents is to be expected, not only due to rising construction prices and persistently high inflation, but also due to the current quality offensive and the limited supply of modern first occupancy space.

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 | Q2 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 | Q2 2023

Prime rents (in EUR/sqm/mth.)

Vacancy rates (in %)

144.3

13.2

London (West End)

Bucharest

83.3

11.6

Paris (CBD)

Warsaw

56.7

11.3

Milan

Budapest

Frankfurt

10.8

48.0

Milan

44.0 45.0

9.9

Munich

Madrid

8.6 8.5

London (Central) Frankfurt

Berlin

41.3

8,4

Amsterdam

36.8

7.7

Madrid

Prague

6.2

28.0 27.0 27,0

Amsterdam

Prague

4.7

Munich

Warsaw

3.8

Vienna

3.5

26,0

Budapest

London (West End)

19.5

3.2

Bucharest

Berlin

2.4

Paris (CBD)

Source: EHL Market Research | BNP Paribas Real Estate | Q2 2023

1. Inner City | Surroundings

Vienna Office Regions 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.

Top Properties 1010, Deutschmeisterplatz 2 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1020, LeopoldQuartier* 1040, Ensemble Schwarzenbergplatz 1090, Doppio Due 1090, Francis*

Rents

€ 15.0–27.0

Rents tendency Demand Supply

2. Northern Region

Top Properties 1190, Muthgasse 9*

1190, CARRÉ Muthgasse* 1190, Muthgasse 109A* 1190, Square 1 1200, Millennium Tower 1200, Optimum 1210, Grand Central*

Rents

€ 11.5–18.5

1210, Peak Vienna 1210, Plus Energie Quartier 21* 1210, TwentyOne

Rents tendency Demand Supply

U2 U5

3. Western Region

Top Properties 1120, Forum Schönbrunn 1120, Linke Wienzeile 234 1120, O.A.X*

1120, U4-Center 1120, VIO Plaza*

A23

1130, Hietzinger Kai 137* 1130, Hietzinger Kai 139* 1140, Workstation Wien West

Mietpreise

€ 10.0–19.0

Rents tendency Demand Supply

A21

4. Southern Region | Wienerberg

5. Vienna Donau City | Surroundings

Top Properties 1220, Andromeda Tower 1220, Ares Tower 1220, DC Tower 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

€ 12.0–18.0

€ 13.0–22.0

Rents tendency Demand Supply

*Project

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

7. Eastern Region | Erdberg

Top Properties 1030, Donaukanal Offices* 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

10.

Rents

€ 15.0–22.0

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

€ 9.5–22.0

€ 11.5–18.0

Rents tendency Demand Supply

*Project

Completions | Rentals

Restrained new space production and limited supply

Both the production of new space at 45,800 sqm and the vacancy rate at 3.8 % will reach historic lows in 2023. Particularly in the prime locations in Vienna‘s city centre or around the main railway station, larger requests over 3,000 sqm can only be served to a very limited extent. Currently, around 50 % of the office space due for com-

pletion in 2023 has already been pre-let, so the situation remains tense. Some transactions are therefore shifting towards pre-letting the projects planned for 2024/2025, e.g. FRANCIS (approx. 40,000 sqm) and Grand Central (approx. 12,500 sqm).

Completions 2023

Take-up by regions*

• 3 %

Property Vio Plaza

Size Address

5 %

22.600 sqm 12; Schönbrunner Strasse 230 15.000 sqm 10; Wienerbergstrasse 3-5 4.700 sqm 10; Laxenburger Strasse 2B

6 %

29 %

myhive am Wienerberg, Urban Garden*

10 %

Gösserhalle* ** Muthgasse 109A**

3.500 sqm 19; Muthgasse 109A

19 %

* Refurbishment

Source: EHL Market Research | Q2 2023

** Fully let resp. owner-occupied

28 %

Northern Region Western Region IInner City | Surroundings

Rentals 2023 (selected examples)

Tenant

Size Address

aws Austria Wirtschaftsservice GmbH

5.000 sqm 12; Vio Plaza 3.500 sqm 9; Francis

Medical services

Woom GmbH

3.300 sqm 19; Muthgasse 109A

Take-up by sectors*

Brandl Talos Rechtsanwälte GmbH

2.400 sqm 12; Vio Plaza

Plus Training OG Medical services Medical services

2.300 sqm 19; Mooslackengasse 17 2.000 sqm 21; Grand Central 1.900 sqm 2; Lassallestrasse 3

7 %

11 %

AstraZeneca Österreich GmbH

1.500 sqm 12; Vio Plaza

33 %

NTB Solutions GmbH

1.400 sqm 3; Dietrichgasse 27-29

Stadt Wien

1.400 sqm 20; Big Biz 1.300 sqm 9; Francis

14 %

Valmedica Althan GmbH

SPIE CEMA Law office

1.100 sqm 23; Oberlaaer Strasse 331

15 %

1.000 sqm 1; Am Hof 13 1.000 sqm 12; Euro Plaza 1 1.000 sqm 22; HoHo Wien

20 %

SKG Netzwerktechnik GmbH

cbs Unternehmensberatung Austria GmbH

Pharma and health Public sector Law firms, consultants, tax advisors IT | high-tech Trade and services Educational and trainings institutions

EHL provided consulting services to tenants and/or lessors.

Source: EHL Market Research | Q2 2023

* Take-up > 1,000 sqm included Source: EHL Market Research | Q2 2023

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 has had a challenging but thoroughly satisfactory year overall in 2022. Although the transaction volume declined by around 10 % year-on-year, at just over EUR 4.1 billion it nevertheless remained well above the forecasts, some of which had been very pessi- mistic recently. The first half of 2022 was still in line with expectations. After a marked slump from the middle of the year, however, there was a noticeable recovery in the last quarter, so that a number of medium-sized transactions made up some ground before the end of the year.

the values of the top properties from the respective segments are comparatively less affected by price and demand declines than properties in weak loca- tions, with vacancies or technical deficits. Top properties that can score points with long-term leases with tenants of the best creditworthiness and 100 % linking of rents to the consumer price index are particularly in demand, as the annual rent increases counteract any loss in value due to the general rise in yields. Nevertheless, EHL is cautiously confident for the entire year 2023. At present, we are already regis- tering significantly more interest from investors than in autumn 2022 or at the beginning of the year. At present, however, the price expectations of potential buyers and sellers are still too far apart, so that few deals are being concluded at the moment. It will probably take some time until a new market equilibrium has formed. We expect transaction activity and closings to increase in the second half of the year. The general conditions are currently challenging in all areas of the investment market. However, it is foreseeable that the office asset class will continue to form a significant part of institutional investors‘ portfolios in the future and will enjoy corresponding demand.

The market has coped well with rising commodity prices, economic weakness, supply chain issues and the Ukraine conflict, but the ECB‘s change in interest rate policy and the subsequent significant increase in financing costs have had a strong nega- tive impact on both transaction activity and prices. Following the rise in interest rates in 2022, which continued in the 1st quarter of this year, there was a slowdown in transaction activity and a wait-and- see attitude among market participants on the one hand, and significant price differentiation with re- spect to property qualities on the other. Since this interest-driven development affects all segments, no use category can escape the trend. However,

Market Activity

Selected investment transactions

Property

Type of use

Size in sqm

Seller

Buyer

U6 Center

Office

24,818 Westcore Europe

Private investor

Donau Business Center

Office

23,000 CA Immo

Investor consortium

Erdberger Lände 40-48

Office

18,200 KGAL

Art-Invest

Green Worx

Office

17,000 Union Investment

ARE Austrian Real Estate

Silo Plus

Office

10,400 Strabag RE/Erste Immorent

Erste Immo KAG

Büro am Belvedere

Office

9,000 Immofinanz

Real Treuhand Immobilien

Space One | Technologie Park

Office

9,000 Konsortium von Privatinvestoren

GalCap Europe

Stolberggasse 26

Office

6,122 UBM

Family Office

Lassallestrasse 7

Office

6,000 Zürich Versicherung AG

Bank Austria Real Invest

High Five

Residential

16,862 STC/Roombuus

ZBI AG

Lavater 2

Residential

15,967 Invester United Benefits

Bank Austria Real Invest

Gross-Enzersdorfer Strasse 66-72

Residential

14,700 ARWAG

Erste Immo KAG

Grosses Glück

Residential

10,000 Invester United Benefits

Wealthcore

Lorenz-Mandl-Gasse

Residential

6,884 Private investor

Catella Residential

Theresiengasse 2

Residential

4,500 Realtrade Immobilien Gruppe

Quantum

LEO 19

Residential

4,054 Private investor

Wealthcore

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

Eagle Portfolio

Retail

50,000 Pfeiffer Beteiligungs GmbH

Soravia

Haid-Center Linz

Retail

35,000 ECE Real Estate Partners

Institutional investor consortium

Trinity Park Linz

Development property

60,000 Private investor consortium

Vermehrt Gruppe

TLAPA

Mixed use

11,560 Vermehrt Gruppe

LLB

art&garden

Mixed use

10,700 Family Office

GalCap Europe

Source: EHL Market Research | Q2 2023

EHL References

Reference projects

Investment

Muthgasse 109A woom, the leading children‘s bicycle manufacturer from Austria, rents an innovative office building in timber con- struction at Muthgasse 109 A (approx. 3,300 sqm) as a single tenant. EHL acted in an advisory capacity on both the tenant and landlord side. EHL acted in an advisory capacity on the tenant or landlord side. FRANCIS Psychosoziale Dienste Wien (approx. 3,500 sqm) and the modern medical institute Val- medica Althan GmbH (approx. 1,200 sqm) have decided to rent space in the FRANCIS. Green Worx EHL brokered the Green Worx office and commer- cial building with around 17,000 sqm of usable space, located in a prime location near the Pra- terstern at Walcherstraße 6/Lasallestraße 7A, to ARE Austrian Real Estate. art&garden EHL brokered the sale of the mixed-use building en- semble with 10,700 sqm of usable space, located in the Karmeliterviertel district, to the real estate asset and investment manager GalCap Europe.

Erdberger Lände 40-48 EHL brokered the fully let office building on Erdberger Lände with around 18,200 sqm of space and 220 par- king spaces to Art-Invest Real Estate.

GLA

10,700 sqm Family Office

18,200 sqm

Client

KGAL

U6 Center EHL brokered the sale of the U6 Center with a total lettable area of almost 25,000 sqm from West- core Europe to a private investor.

GLA

17,000 sqm

25,000 sqm

Client

Union Investment

Westcore Europe

Letting

HOHO Vienna Through EHL, cbs Unterneh- mensberatung Austria and andys.cc Coworking Center have decided to rent the stri- king wooden high-rise HOHO Vienna. others, have chosen to rent in the spectacular new building project Vio Plaza. EHL acted in an advisory capacity on the tenant or landlord side. VIO PLAZA The aws (approx. 5,000 sqm) and Brandl Talos Rechtsanwälte (approx. 2,400 sqm), among

Address 12., Schönbrunner Str.230 GLA 22,000 sqm

Address 9., Julius-Tandler-Platz GLA 40,000 sqm

Address 19., Muthgasse 109A GLA 3,300 sqm

Address 22., Janis-Joplin-Promenade 26 GLA 10,000 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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