We stand for Office
Office Market Report Vienna | Spring 2022
We stand for real estate.
Introduction
The Vienna office market is once again demonstrating its well known ability to remain stable in economically challenging times. Indeed, positive results were achieved in both the rental and investment segments over the last few months in what was a difficult market environment. The corona pandemic has sparked a tremendous increase in innovation and quality that continues unabated. Remote working and working from home have become a matter of course in many
business sectors, and new working models that combine working from home and in the office have been implemented at a large number of companies. This development is reinforcing the ongoing trend towards “quality rather than quantity”, which in turn is generating dynamic momentum for the Vienna office market. Our EHL office specialists are committed to helping you develop 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 Market Research 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
Greater demand for rentals The volume of new office rentals totalled 170,000 sqm in a difficult market environment in 2021. Due to increasing dynamic developments as of late, take-up can be expected to either remain stable or increase slightly in 2022 as a whole. Vacancies remain at a record low The low production of new space in recent years has led to a steady decline in the vacancy rate, and the current rate of only 4.3% marks an extremely low level in international comparison.
Rents I First-time occupancy**** (in EUR/sqm per month) Prime location 18.0 - 26.0 Quality location 13.5 - 18.0 Standard location 10.0 - 13.5 Prime rents 26.0 The interest of core investors in office properties with long-term rentals at top locations remains strong. German and Austrian institutional 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 At approximately 126,000 sqm, production of new space was once again substantially higher than du- ring the first quarter of the previous year (Q1 2021: approx. 66,700 sqm). Of special note is the extraor- dinarily high share of refurbishments, which account for 82% of new space production at the moment. Investment
Demand* | Supply 2022 Production of new space
126,100 sqm 180,000 sqm
Take-up*
Market indicators Production of new space
increasing
Economic data for Austria 2021/2022*
Take-up
stable
Vacancies
slight downward trend
Austria 4.9 % EU 6.4 % Eurozone 7.0 %
Unemployment rate (Eurostat)
Prime yields
3.0
Rental prices Average rents
Nom. GDP EUR billion
403.4 4.1 % 2.8 %
slightly increasing slightly increasing
Economic growth
Prime rents
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 5,931,993
Vacancy rate
4.3 %
4.2 %
Source: EHL Market Research | Q2 2022
Office Market Vienna 2018 - 2022
300,000 sqm
8 %
270,000
260,000
220,000
210,000
225,000 sqm
7 %
180,000*
170,000
150,000 sqm
6 %
126,100
125,000
66,700
75,000 sqm
5 %
45,000
4 % Vacancy rate
0
2018
2019
2020
2021
2022
3
Deliveries in sqm
*Forecast, Source: EHL Market Research | Q2 2022
Take-up in sqm
© IFAG
© IFAG
Modernisation measures and quality on the rise in the Vienna office marke
The corona pandemic, which is now moving into its third year, has triggered an innovation and quality offensive on the Vienna office market. The establishment of flexible, remote forms of working on a large scale has significantly changed office-space requirements in general, as well as the specific demands users place on the office spaces they occupy. More specifically, physical offices are being transformed from places that focus solely on traditional forms of work into spaces for teamwork and communication. Remote working now a matter of course The increase in quality is due to the fact that the establishment of remote working means that physical offices are now facing strong competition from other locations where digitalisation makes it possible for people to work (e.g. at home, at a vacation home, etc.). In addition, certain modern requirements cannot be met in some existing office properties and spaces, and companies are therefore looking for new locations where new workplace concepts are easier to implement.
The common areas in modern offices are now based on hotel and lounge concepts. In other words, less space is reserved for directly assigned workstations, while more space is used for activity-based working and communication. The competition for the most sought- after talents is leading to new ideas and concepts The ability to offer flexible forms of working is viewed by some companies as an effective way to attract and retain employees in the race to acquire the best minds. The introduction of more flexible working models was a frequently heard promise during the corona pandemic, and a num- ber of companies plan to retain these options. However, the office remains the central location for work in most cases. Offices therefore need to be made very attractive places to work – places that offer a pleasant working environment and possibilities for collaboration, communication and team and company events.
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Rental prices and vacancy rates
Development of rents 2012 - 2022
€ 30/sqm
€ 25/sqm
€ 20/sqm
€ 15/sqm
€ 10/sqm
€ 5/sqm
2015
2016
2017
2018
2019
2020
2021
2022
2012
2013
2014
Prime rents
Standard locations
Quality locations
Prime locations Source: EHL Market Research | Q2 2022
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 2022
Prime rents (in EUR/sqm/mth.)
Vacancy rates (in %)
120.6 Paris (CBD)
12.7 12.7
London (West End)
Warsaw
77.5
Bucharest
50.8
10.6
Milan
Milan
47.0
Frankfurt
9.8
Madrid
43.0 43.0
9.2
Berlin
Budapest
8.5
Frankfurt
Munich
39.2
7.8
Amsterdam
Prague
36.0
6.0
Madrid
Amsterdam
5.4
26.0 26.0
London (West End)
Budapest
4.3 4.3
Vienna
Vienna
24.0 24.0
Munich
Warsaw
3.4
Prague
Berlin
19.0
3.1
Paris (CBD)
Bucharest
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2022
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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, Deutschmeisterplatz 2 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1010, Schreyvogelgasse 2* 1020, LeopoldQuartier* 1040, Ensemble Schwarzenbergplatz 1090, Francis* 1090, Doppio Due*
Rents
€ 15.0–25.5
Rents tendency Demand Supply
2. Northern Region
Top Properties 1190, Square 1 1200, Millennium Tower 1200, Rivergate 1200, Optimum 1210, Peak Vienna 1210, Grand Central*
U4
1210, TwentyOne* 1210, Plus Energie Quartier 21*
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, 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 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 Plus 1230, Silo Next* 2345, Campus 21
Rents
Rents
€ 11.5–18.0
€ 12.5–22.0
Rents tendency Demand Supply
Rents tendency Demand Supply
*Project
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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
€ 12.0–20.0
Rents tendency Demand Supply
A22
U1
7. Eastern Region | Erdberg
Top Properties 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
U3
A4
U1
10.
Rents
€ 15.0–22.0
1
Rents tendency Demand Supply
9. Seestadt Aspern
10. Airport City Vienna | Surroundings Top Properties
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
Production of new space influen- ced by refurbishments
High-quality refurbishments are playing an ever gre- ater role in terms of completions. Whereas in 2021 such refurbishments still only accounted for 33% of new space production, in the first quarter of 2022 their share of new space production reached the re- cord level of 82%. Refurbishments will also play a key role in future, given the low amount of land available for development near the centre of the city.
The FRANCIS complex in the Altan Quartier (45,000 sqm) and the URBAN GARDEN in myhive am Wienerberg (15,000 sqm) are well known examples of high-quality refurbishments. Both involve sustainable revitalisation projects that will be completed in 2023/2024.
Take-up by regions*
Completions 2022
6 %
7 %
Property
Size Address
Quartier Lassalle 2* ** Quartier Lassalle 1* **
54,000 sqm 2; Lassallestraße 5 24,000 sqm 2; Lassallestraße 1 14,800 sqm 21; Siemensstraße 87-89
19 %
44 %
Twenty One/Innovation Hub Das Lebendige Haus * Vienna Twenty Two (BT 1)
9,000 sqm 1; Postgasse 8-10
24 %
8,000 sqm 22; Dr.-Adolf-Schärf-Platz 1 6,000 sqm 9; Peregringasse 2-4 4,000 sqm 15; Felberstraße 80 3,800 sqm 4; Schwarzenbergplatz 2,500 sqm 1; Schreyvogelgasse 2
Doppio Due*
F80*
Lassallestraße | Messe | Prater Inner City | Surroundings Vienna Donau City | Surroundings Southern Region | Wienerberg Western Region
Lukoil- Headquarter* ** Schreyvogelgasse 2* **
* Refurbishment
Source: EHL Market Research | Q2 2022
** Fully let resp. owner-occupied
Take-up by sectors*
• 4%
6% •
Rentals Q4 2021 & Q1 2022 (selected examples)
26 %
20 %
Tenant
Size Address
ISS Facility Services GmbH
6,200 sqm 2; Quartier Lassalle 1
ATOS Österreich
5,200 sqm 22; IZD-Tower
23 %
Public sector tenants
2,200 sqm 2; Lassallestraße 9b
21 %
LeitnerLeitner
4,200 sqm 4; Ensemble Schwarzenbergplatz 1,900 sqm 2; Leopold Moses Gasse 4
Public sector tenants
Nuance Communications Austria GmbH
1,800 sqm 12; Euro Plaza 1
IT | high-tech Trade and services Public sector
Public sector tenants Healthcare sector tenant
1,500 sqm 13; Hietzinger Kai 131 1,100 sqm 13; Hietzinger Kai 131
Law firms, consultants, tax advisors Educational and trainings institutions Serviced office / co-working
Karl Storz Endoskop Austria GmbH
1,000 sqm 3; Tricore
Public sector tenants
1,000 sqm 2; Aspernbrückengasse 2
Source: EHL Market Research | Q2 2022
* Take-up > 1,000 sqm included Source: EHL Market Research | Q2 2022
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Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2022
Investment market The real estate investment market in Austria once again recorded a high transaction volume in the first quarter of 2022 and was also marked by a high level of demand among both private and institutio- nal investors. Despite the pandemic, which is still not over, and the escalation of the Ukraine crisis in February in Ukraine, investor interest in Austrian real estate shows no signs of letting up.
again from Austria and Germany, as many potential buyers from the Far East and Anglo-Saxon coun- tries, for example, chose not to travel in light of the restrictions that remained in effect during the cold months of the new year. However, we can expect that as the weather gets warmer, travel restrictions and other restrictions will be eased, leading to a moderate increase in the number of buyers from outside of Europe. Along with the high demand in the top segment in each asset category, it has become noticeable that institutional portfolio owners are now more interes- ted in portfolio streamlining, among other reasons due to the EU taxonomy and the ESG guidelines. Over the medium term, this will lead to a situation in the office segment especially in which properties that cannot meet the more stringent EU require- ments will be put on the market and sold to asset managers whose business models involve optimi- sing energy efficiency and improving sustainability in purchased properties (“manage to ESG”). Yields, which have been continuously declining as of late, will begin moving more or less sideways over the next few months, while prices in the top segment in each asset category will increase at a lower rate than has been the case over the last few months.
Transaction volume over the first three months of 2022 amounted to approximately EUR 900 million. It should be noted here, however, that a large num- ber of the transaction processes initiated at the be- ginning of the year are still being implemented, and the associated volume will therefore not appear in the statistics until after the second quarter. Investors focused in the first quarter on office pro- perties. These accounted for some 54% of all inves- tment and were followed by institutional residential projects (30%) and mixed residential-commercial buildings (11%). Only a few transactions were recor- ded in the retail and hotel segments during the first quarter of 2022. Each of these asset categories accounted for approximately 2% of all transactions. Several transactions are currently in the pipeline here, however, which is why investment volume in these segments as well should rise again as the year proceeds. Due to the ongoing pandemic, most investors in the first quarter were once
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© Hawelka
© Hawelka
Market Activity
Selected investment transactions
Property
Type of use
Size / sqm
Seller
Buyer
SQUARE 1
Office
27,300 Strabag Real Estate
Warburg HIH
Workstation Wien West
Office
17,900 Nuveen Global
Private investors
Allianz Tech Center
Office
12,000 RPHI
Swiss Life Asset Managers
Solaris
Office
10,200 Amundi
GalCap Europe
Grabenhof
Office
10,000 ÖBV
Ärztekammer Wien
Dresdner Straße 82
Office
4,600 Union Investment
Quadoro
TLAPA Haus
Mixed use
11,600 Vermehrt Gruppe
LLB Immo KAG
art & garden
Mixed use
10,600 Aucon Real Estate Group
GalCap Europe
Industriegrundstück Wöllersdorf
Logistics | Industry
2,730 Arcelor Mittal
Local Developer
WE Paket Körner-Kaserne
Residential
5,520 CC Wien Invest
LLB
Goldener Hirsch
Residential
2,850 Kokon Immobilien Invest
GalCap Europe
Simmeringer Hauptstraße 50
Residential
1,640 Private investor
Private investor
aspern urban waterfront Pier 01
Residential property
33,000 Wien 3420 aspern Development AG
N/A
aspern urban waterfront Pier 05
Residential property
30,630 Wien 3420 aspern Development AG
N/A
aspern manufactory
Commercial property
17,910 Wien 3420 aspern Development AG
N/A
Source: EHL Market Research | Q2 2022
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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. FRANCIS This modern office building at a well-established business location is currently being extensively refurbished at a high level of quality, with work scheduled to be completed in 2024. EHL is marketing the building on a co-exclusive basis. Workstation Wien West EHL brokered the Work- station Wien West office property at Linzer Straße 221 - 223 (approx. 17,900 sqm of rentable space, 192 parking spaces) to a private group of investors. approximately 11,600 sqm of rentable space and 120 parking spaces. TLAPA Wien This new building at the site of the former TLAPA department store at Favoritenstraße 73- 75 was brokered by EHL to the LLB open-end real estate mutual fund. The building has
URBAN GARDEN EHL was commissioned with the co-exclusive rental of the remaining space in the impressive Twin Tower office building and the marketing of an innovative new construction project known as URBAN GARDEN, myhive amWienerberg (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. Square One EHL provided Warburg-HIH Invest Real Estate with extensive advice relating to the acquisition of Square One, a nearly fully rented core property in the Muthgasse with roughly 31,400 sqm of rentable space and 354 parking spaces. Allianz Tech Center EHLbrokered thisoffice propertyat LinzerStraße225 andhasbeen let to theAllianz Elementarversicherung insurance companyona long-termlease, to aSwissLifeopen-end real estate mutual fund. Thepropertyhas 12,000sqmof rentablespaceand 206parkingspaces.
GLA
GLA
11,600 sqm
12,000 sqm
Client
Client
Vermehrt Gruppe
RPHI
GLA
GLA
17,900 sqm
31,400 sqm
Client
NuveenReal Estate
Client
HIH
Letting
Address 1., Deutschmeisterpl. 2 GLA 3,200 sqm
Address
10., Wienerbergstr. 3-5
GLA
15,000 sqm
Address 9., Julius-Tandler-Platz GLA 45,000 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: © WOOW Studio
The digital version of the report can be downloaded under www.ehl.at/research
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