Market Report Spring 2024
We stand for real estate.
© k18 | ARE
02
Office Market Report
Preface
Despite the economic downturn, the Vien- nese real estate market is recording stable demand for high-quality and sustainable office properties. This applies to both the rental and investment market. The primary decision-making criteria in the development of real estate strategies re- main quality and sustainability optimization. The mismatch between supply and demand in the high-end segment is being further exacerbated by the restrictive financing conditions of the banks and the resulting lack of new office space being created.
The cloudy economic outlook means that companies are adopting more cautious strategies and being even more thorough in their work when deciding on where to locate. In this turbulent market environ- ment, it is particularly challenging to make successful long-term decisions. Our EHL office specialists are on hand to give you the advice you need, with competence, experience and a sense of responsibility! We consider long-term customer relationships to be the best proof of the highest level of integrity.
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 | Spring 2024
03
Overview of the office market in Vienna
Executive Summary
Energy efficiency, sustainability and quality optimisation are currently the main factors when searching for a location. The ESG requirements give this development an additional boost.
Although around 90,700 sqm of new office space was created this year, a significantly higher amount than in the previous year, the pace remains subdued and is exacerbating the mismatch be- tween supply and demand for attractive first-time lets. The vacan- cy rate shows a continuous downward trend and is currently 3.4%. Creation of new office space & vacancy rate
Letting performance The previous year showed strong momen- tum and a surprisingly positive result of around 180,000 sqm of let office space. Due to the mismatch between supply and demand, this year a slight reduction in letting performance is expected com- pared to the previous period.
Rising rental prices Rental prices are rising due to the mis- match between supply and demand in prime locations, higher construction costs and persistent inflation. The prime rent is EUR 28.00/sqm.
The investment market continues to suffer from the rise in interest rates, although there has been a noticeable decline in interest rates in the long-term segment since summer 2023 and the interest rate situation is currently inverse. Against this backdrop, there are signs of a rebound, with more and more investors beginning to explore the market, meaning that EHL remains confident about investment prospects in 2024. Investment
04
Office Market Report
Office Market Vienna 2020 - 2024
300,000 sqm
7 %
225,000 sqm
6 %
210,000
150,000 sqm
5 %
180,000
180,000
170,000
160,000*
126,000
125,000
75,000 sqm
4 %
90,700
66,700
3 % 3.4 %
45,800
0
2020
2021
2022
2023
2024
Production of new space in sqm
Take-up in sqm
Vacancy rate
*Forecast, Source: EHL Market Research | Q1 2024
Market overview
Office supply
Total market**
VRF***
Production of new space
90,700 sqm
Office space in sqm 11,675,100 sqm 6,077,926 sqm
Take-up*
160,000 sqm
Vacancy rate
3.4 %
3.47 %
Vacancy rate
3.4 %
Prime yields
4.5 %
Prime rets EUR/sqm/month
28.00 €
Nom. GDP EUR billion acc. to WKO
508.51
*
Forecast
**
All indicators are based on the total market (old and new buildings), unless indicated otherwise
Economic growth acc. to WKO
0.9 %
***
According to the Vienna Research Forum, www.viennaresearchforum.at
Inflation rate acc. to ORF in March
4.2 %
Increasing
Slightly increasing
Stable
Slightly decreasing
Decreasing
Source: EHL Market Research | Q1 2024
Vienna | Spring 2024
05
Hybrid forms of work and completions
Implementation of new working environments is still in full swing
“Smaller but better” is currently the motto of many companies when searching for the right location. While no compromises are usually made when it comes to the quality of equipment and location, some companies are reducing the size of their offices in the interests of efficiency. The
The trend remains unchanged that most companies are focusing on high-quality space when considering a new lease. Project developers are responding to this trend by planning and realizing particularly sustainable and high-quality office proper- ties.
This year, for example, the striking FRANCIS refurbishment in the Althan Quartier (approx. 47,700 sqm), the modern new GRAND CENTRAL building in Floridsdorf (approx. 12,500 sqm), the innovative project DOCKS in VILLAGE IM DRITTEN (approx. 9,000 sqm) and the particularly sustainable ROBIN Seestadt (approx. 10,000 sqm) in Aspern will be completed. The difficult financing modalities and high construction prices are still causing new construction developments to be postponed. The situation is not expected to ease in the short term.
implementation of flexible and hybrid forms of work (e.g. desk sharing, co-working spaces, reduced working hours) is a very good way of achieving this while maintaining the same number of employees.
The trend remains unchanged that most companies focus on high-quality space when considering a new lease.
Reductions in office space are currently mostly taking place on a smaller scale. The massive downsizing of office space that was implemented after the Covid pandemic through the sustainable introduction of hybrid working environments at banks, insurance companies and IT groups has largely been completed. This means that the volume of space offered for subletting is also declining significantly. The sublet space in prime locations (e.g. around the main railway station) was quickly rented out in full. In the vicinity of the Praterstern, for example, ready-to-occupy office space is still available for rent in the top-equipped Vienna Works, which is very popular with tenants.
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
06
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 Guertel 49+51
9,000 sqm
Favoritenstrasse 73-75
1100; Favoritenstrasse 73-75
6,800 sqm
Technologiezentrum Seestadt, TZ 3
1220; Seestadtstrasse 27
4,600 sqm
Source: EHL Market Research | Q1 2024
Vacancy rates in European comparison (in %)
Prime rents in European comparison comparison (in EUR/sqm/month)
Budapest Bucharest
14.9
London (Central + West End)
155.2
13.4
Paris (Central + CBD)
88.9
10.4
Madrid
Milan
57.5
Paris (Central)
9,9 10.0
Frankfurt
49.0 49.0
Munich
Madrid
Milan Frankfurt
9.5 9.5 9.5
Berlin
45.0
Amsterdam
44.6
London (Central)
Madrid
40.0
Prague
7.2
Warsaw
29.0
Amsterdam
6.7
Prague
28.5
London (West End) Munich
6.3
Vienna
28.0
6.0
Budapest
26.3
Berlin
4.1
Bucharest
20.5
Vienna
3.4
Paris (CBD)
2.4
Source: EHL Market Research | BNP Paribas Real Estate | Q1 2024
Vienna | Spring 2024
07
Office regions in Vienna
Inner City | Surroundings
1
Top Properties 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1010, Strauchgasse 3 1020, LeopoldQuartier* 1040, Ensemble Schwarzenbergplatz 1090, FRANCIS
Vienna Office Regions
Rents
€ 16.0-28.0
Rents tendency
Supply
Demand
Main Railway Station | Quartier Belvedere 4 Top Properties 1030, DOCKS | VILLAGE IM DRITTEN 1100, LAX 2B 1100, QBC 1100, The Icon Vienna 1100, Tower Canettistrasse 1110, LMNT Offices* Rents € 15.0-23.0 Rents tendency Supply Demand
Southern Region | Wienerberg
5
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
Rents tendency
Supply
Demand
Northern Region
Vienna Donau City | Surroundings
7
8
Top Properties 1190, CARRÉ Muthgasse* 1190, Muthgasse 109A 1190, Square 1 1200, Millennium Tower
Top Properties 1220, Andromeda Tower 1220, Ares Tower 1220, DC Tower 1+2* 1220, IZD Tower 1220, Saturn Tower 1220, VIENNA TWENTYTWO*
1210, Grand Central 1210, Peak Vienna 1210, Plus Energie & Quartier 21* 1210, TwentyOne
Rents
€ 11.5-21.0
Rents
€ 13.0-22.5
Rents tendency
Rents tendency
Supply
Supply
Demand
Demand
Seestadt Aspern
Airport City Vienna | Surroundings
9
10
Top Properties 1220, Campus West 1220, HOHO Wien 1220, Mischa 1220, ROBIN Seestadt 1220, SeeHub 1220, Seeparq 1220, Sirius 1220, Technologiezentrum Seestadt
Top 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
Rents tendency
Supply
Supply
Demand
Demand
08
Office Market Report
Lassallestrasse | Messe | Prater
Eastern Region | Erdberg
2
3
Top Properties 1120, Forum Schoenbrunn 1120, O.A.X* 1120, VIO Plaza 1130, Hietzinger Kai 137* 1130, Hietzinger Kai 139* 1140, Workstation Wien West 1150, Storchengasse 1 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*
Top Properties 1030, ENNA* 1030, Landmarx 1030, MQM 1030, ORBI Tower
1030, Solaris 1030, Tricore 1030, ViE 1110, Office Campus Gasometer
€ 13.0-27.0
Rents
Rents
€ 11.5-19.5
Rents tendency
Rents tendency
Supply
Supply
Demand
Demand
* Project
Western Region
6
Rents
€ 10.0-19.0
Rents tendency
Supply
U1
Demand
A22
S2
U6
07
U4
08
U2
02
U5
09
U3
01
U6
A1
06
U2 U5
U4
03
04
U3
05
U2
A4
U1
A23
10
U6
A21 A2 S1
Vienna | Spring 2024
09
Rentals
Rental market in the prime locations
At approximately 90,700 sqm, the completion rate will remain subdued in 2024, meaning that the vacancy rate will continue to fall and is currently at a very low level of 3.4%. With the exception of Paris, this is a historic low that we have not seen in any other European metropolis. This will lead to further increases in rents and falling incentive rates in the locations that are in particularly high demand.
Rentals 2024 (selected examples)
Tenant
Address
Size
European Handball Federation
1030; Baumgasse 60A
6.000 sqm
Canon Österreich
1120; EURO PLAZA
4.500 sqm
Sigmund Freud University
1020; Lassallestrasse 3
2.800 sqm
IWG Group
1010; Schwarzenbergplatz 2
2.300 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
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 | Q1 2024
10
Office Market Report
Take-up by regions
6 %
19 %
32 %
Eastern Region | Erdberg
20 %
Inner City | Surroundings Southern Region | Wienerberg Lassallestrasse | Messe | Prater
23 %
Northern Region
Take-up by sectors
4 %
4 %
5 %
33 %
9 %
Educational and trainings institutions
IT | high-tech
12 %
Construction, real estate
Pharma and health
Serviced office | Co-working
Other
13 %
20 %
Public sector Law firms, consultants, tax advisors
Take-up > 1,000 sqm included Source: EHL Market Research | Q1 2024
© Christian Stemper
Vienna | Spring 2024
11
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.
© Squarebytes
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
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
26,550 sqm 1120 Vienna
District
District
12
Office Market Report
Central Hub | TwentyOne
LMNT Offices
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.
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.
GLA
50,000 sqm 1210 Vienna
GLA
19,000 sqm 1110 Vienna
District
District
myhive am Wienerberg | URBAN GARDEN Urban Garden sustainably balances
ROBIN Seestadt
The city’s most sustainable work- space is located in the middle of the lakeside city, and offers maxi- mum room comfort and minimum energy requirements on approx. 10,000 sqm. EHL is mandated on a co-exclusive basis and is in the middle of the marketing process.
work and life on approx. 18,000 sqm. EHL has been mandated on a co-exclusive basis for the URBAN GARDEN and the striking Twin Tower, which is visible from afar. Myhive am Wienerberg has enjoyed high tenant demand for years.
GLA
18,000 sqm 1100 Vienna
GLA
10,000 sqm 1220 Vienna
District
District
Vienna | Spring 2024
13
Investment
Investment market
The Austrian real estate investment market started the first quarter of the year with lively interest, particularly from institutional investors. However, the situation on the investment market will certainly remain challenging in the coming months.
A comparatively large number of properties and transactions are currently under review, with due diligence, approvals and financing taking considerably longer than before the interest rate hikes began. The transaction volume actually completed in the first three months of the year to date was neverthe- less manageable at just under EUR 500 million due to longer review periods and the comparatively small individual property volumes.
Project developers are still struggling to overcome challenges on several levels. As financing remains expensive, construction prices are high and exit prices have fallen, new projects cannot effectively be started and, in some cases, ongoing construction sites have to be discontinued. The consequences are obvious: Over the coming months and years, it will become clear in many areas that there is a massive
shortage of urgently needed apartments, for example, and that high-quality offices in subway locations are in short supply. We are seeing particularly strong price adjustments in the office sector for older, non-ESG-compliant existing properties that no longer meet the requirements of investors or the specified EU directives with regard to sustainability and decarboniza- tion.
Prime yields on office properties in European comparison (in %)
8 %
8.0
6 %
6.5
6.0
5.3
4.95
4 %
4.5
4.5
4.5
4.25
4.25
4.2
4.15
4.0
2 %
0 %
Source: EHL Market Research | BNP Paribas Real Estate | Q1 2024
14
Office Market Report
In the area of as-new, taxonomy-compliant properties that meet the sustainability and quality requirements, the price adjustment is much more moderate, especially as there is a widespread shortage of supply in this area. However, due to the lack of new project developments in the process of completion, interest is primarily focused on existing properties, most of which do not yet meet the taxonomy criteria, but generally offer a corresponding yield premium. Core properties are currently enjoying strong demand from family offices and private foundations, which are taking advantage of the current capital market environment to secure properties that do not come onto the market during boom phases.
In particular, the high level of interest rates, the gloomy economic outlook and the widespread reluctance of banks to provide new financing are responsible for the still weak transaction volumes. However, what has changed noticeably compared to previous months is investors‘ auditing activities. It is noticeable that many investors expect interest rates and yields to fall over the course of the year and want
to take advantage of the currently still good market environment to make purchases, even if it is not certain that the bottom has already been reached. EHL is cautiously optimistic for the coming months. The ongoing purchase reviews will be reflected in a number of transactions, some of which are remarkable, as the difference in the price expectations of potential buyers and sellers is also slowly
disappearing in many cases. Although it will probably take some time for the new market equilibrium to form, we assume that the ECB will begin to adjust interest rates downwards in the second half of the year at the latest, which should have a positive impact on the invest- ment market.
It is noticeable that many in- vestors expect interest rates and yields to decline over the course of the year and want to take advantage of the currently still good market environment for acquisitions
Investment reference projects
IP One
City Tower Vienna
EHL Investment Consulting bro- kered the sale of the modernized, historic office building IP One in Hasengasse in Vienna‘s 10th district to an Austrian private investor.
EHL Investment Consulting bro- kered the prominent City Tower Vienna office tower in Marxer- gasse, which is leased to the Republic of Austria and houses the Justice Centre Wien Mitte, to United Benefits Holding.
GLA
6,746 sqm S Immo AG
GLA
26,600 sqm Immofinanz
Client
Client
Erdberger Laende 40-48
Bureau am Belvedere
EHL Investment Consulting brokered the fully leased office building in an excellent location on Prinz-Eugen-Strasse with ap- prox. 9,000 sqm of usable space to Real-Treuhand Immobilien.
EHL Investment Consulting bro- kered the fully let office building on Erdberger Laende with around 18,200 sqm of space and 220 parking spaces to Art-Invest Real Estate.
GLA
9,000 sqm Immofinanz
GLA
18,200 sqm
Client
Client
KGAL
Vienna | Spring 2024
15
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EHL Gewerbeimmobilien GmbH Prinz-Eugen-Strasse 8–10, 1040 Vienna T +43 1 512 76 90 office@ehl.at www.ehl.at
Cover: TwentyOne | © HNP architects The information and forecasts in this report are provided without guarantee, warranty or liability. The digital version of the report can be downloaded under www.ehl.at/research.
We stand for real estate.
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