We stand for Office
Office Market Report Vienna | Spring 2021
We stand for real estate.
Introduction
The corona crisis has had a significant influence on our working world during the past twelve months. Numerous developments that had only begun to emerge were accelerated and, to a large extent, transformed into concrete effects by the pandemic. The office world has experienced a boom in digitalisation and innovation during the shortest possible time. Demands by tenants and investors on office properties have changed substantially, and the necessary actions to meet these demands are now well underway.
The Vienna office market has also demonstrated its extraordinary stability in these corona times. In comparison with other major European cities, it has seen only limited losses since the outbreak of the pandemic and continues to present a very healthy and solid market environment. In times like these, it is even more important to make the right investment decision. Our EHL office specialists have the necessary know-how and are committed to help you develop your individual real estate strategy.
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
Franz Pöltl FRICS Managing Partner EHL Investment Consulting GmbH
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Overview of the Office Market in Vienna
Executive Summary
New rentals remain stable Sound rental performance during 2020 (approx. 210,000 sqm) against the backdrop of a difficult economic environment was followed by strong de- mand (approx. 47,000 sqm) for high-quality office space in the first quarter of 2021. Vacancy rate falls to new record low The low production of new space in recent years has led to a steady decline in the vacancy rate. In international comparison, the current 4.5% marks an extremely low level.
Growing focus on refurbishments Roughly 45% of the new space scheduled for com- pletion in 2021 (approx. 82,000 sqm) represents high-quality refurbishments in existing properties. Due to the limited supply of vacant sites, this trend will also influence the market in the future. Investment The interest remains strong in office properties with long-term rentals at top locations. German and Austrian investors currently dominate the mar- ket due to the corona-related travel restrictions. 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
Demand* | Supply 2021 Production of new space
82.000 sqm 180.000 sqm
Take-up*
Market indicators Production of new space
slight downward trend
Economic data for Austria 2021*
Take-up
stable
Vacancies
slight downward trend
Austria 5.8 % EU (27) 7.5 % Eurozone (19) 8.3 %
Unemployment rate (Eurostat)
Prime yields
stable
Rental prices Average rents
Nom. GDP EUR billion
396.22
stable stable
Economic growth
6.1 % 1.5 % -4.3 %
Prime rets
Inflation rate
Government budget deficit
Office supply
Total market**
VRF***
* 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 space in sqm
11,436,350 5,888,179
Vacancy rate
4.5 %
3.9 %
Source: EHL Market Research | Q1 2021
Office Market Vienna 2017 - 2021
300,000 sqm
8 %
270,000
260,000
220,000
210,000
225,000 sqm
7 %
185,000
180,000*
150,000
150,000 sqm
6 %
125,000
82.000
75,000 sqm
5 %
45,000
Vacancy rate
0
4 %
2017
2018
2019
2020
2021
3
Deliveries in sqm
*Forecast, Source: EHL Market Research | Q2 2021
Take-up in sqm
© Christian Stemper
© k18.at
Corona pandemic sets new impulses on the Vienna office market
The worldwide corona pandemic has triggered a deep-seated transformation in the working world. Large, profitable companies, in particular, are increasingly turning their attention to the re-orientation of their space requirements to be better equipped for future challenges.
In their function as a hub for teamwork and tangible corporate culture, they will set the stage for hybrid and flexible working in an attractive environment. The design of the common areas (e.g. lobby, reception area) is focused on hotel and lounge concepts with a range of special services (e.g. co-working space, concierge lobby, meeting points). Some companies have started to look for new space as a result of these added value factors and are sounding out the Vienna office market. Whether these searches actually lead to signed rental contracts will only become known later this year.
Growing popularity of hybrid and flexible forms of work
The past year brought a rapid increase in digitalisation and anchored hybrid working in many sectors. Flexible working models allow for a combination of mobile and office-based working. Companies and project developers are now challenged to implement these new demands in an appropriately designed and organised office world. The physical office of the future will become more of a point for communication and cooperation and, with modern office concepts, strengthen employees’ identification with their company.
Office worlds with living room character and a hotel atmosphere
Project developers and renters are reacting to these developments with even greater attention to suitably designed concepts. One example is the myhive concept by IMMOFINANZ, which is characterised by particular flexibility and a stylish hotel character.
The office of the future as a place for collaboration and corporate philosophy
The offices of the future will differ significantly from traditional concepts.
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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 | Q2 2021
Rental rates in Vienna office regions
€ 30/sqm
€ 25/sqm
€ 20/sqm
€ 15/sqm
€ 10/sqm
Lassallestr. Messe Prater
Southern Region Wienerberg
Inner city Surroundings
Main Railway Station Quartier Belvedere
Vienna Donau City Surroundings
Eastern Region Erdberg
Seestadt Aspern
Northern Region
Western Region
Airport City Surroundings
Source: EHL Market Research | Q2 2021
Prime rents (in EUR/sqm/mth.)
Vacancy rates (in %)
111.8 Paris (CBD)
11.3
London (West End)
Bucharest
75.0
10.1
Milan
50.0
9.9
Warsaw
Milan
47.0
9.0
Frankfurt
Madrid
8.0
39.5 40.0
Berlin
Budapest
7.8
Frankfurt
Munich
38.3
7.0
Amsterdam
Prague
36.3
5.7 5.8
Madrid
London (West End)
25.5 25.0
Amsterdam
Vienna
4.5
Vienna
Budapest
23.0 23.0
3.6
Warsaw
Paris (CBD)
3.0
Munich
Prague
19.0
2.4
Bucharest
Berlin
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2021
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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, Operngasse 6* 1010, Goldenes Quartier Office 1010, Haus am Schottentor 1010, Hohenstaufengasse 9* 1010, Schreyvogelgasse 2* 1040, Ensemble Schwarzenbergplatz 1090, Francis Vienna* 1090, Doppio Due*
Rents
€ 15.0–25.5
Rents tendency Demand Supply
2. Northern Region
Top Properties 1190, Skyline
1190, Square 1 1200, Rivergate 1200, Millennium Tower 1200, Optimum
U4
1210, Peak Vienna 1210, Twenty One*
U5
Rents
€ 11.0–18.5
U3
Rents tendency Demand Supply
U2 U5
U4
A1
3. Western Region
Top Properties 1060, Gumpendorfer Gürtel 2b 1120, Forum Schönbrunn 1120, Arcade Meidling 1120, U4-Center 1120, VIO Plaza* 1130, Kai West 1130, Hietzinger Kai 131 1140, Workstation Wien West
U2
A23
U6
Rents
€ 10.0–14.5
S1
Rents tendency Demand Supply
A21
A2
4. Southern Region | Wienerberg
5. Vienna Donau City | Surroundings
Top Properties 1220, Ares Tower 1220, DC Tower
Top Properties 1100, myhive am Wienerberg
1100, The Brick 1120, Euro Plaza 1120, Inno Plaza 1230, Silo Plus 1230, Silo Next* 2345, Campus 21
1220, Andromeda Tower 1220, Tech Gate Vienna 1220, IZD Tower 1220, Saturn Tower 1220, Vienna Twentytwo*
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, Quartier Lassalle* 1020, Galaxy 21 1020, E-Zone 1020, Weitblick, Viertel Zwei* 1020, Vienna Works
Rents
€ 12.0–18.0
Rents tendency Demand Supply
A22
U1
7. Eastern Region | Erdberg
Top Properties 1030, Austro Tower 1030, Solaris 1030, ORBI Tower 1030, Tricore 1030, MQM 1030, T-Center 1030, ViE 1110, OCG Office Campus Gasometer
S2
U6
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, Laxenburger Straße 36 1100, 1100 Columbus 1100, Tower Canettistraße 5 1110, LMNT Offices*
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
High-quality refurbishments define the space offering
AThe production of new space will remain com- paratively low at roughly 82,000 sqm in 2021, whereby a substantial component of 45% will be created by high-quality revitalisation projects. The importance of modernised properties will conti- nue to increase over the coming years due to the limited vacant areas in established business clus-
ters. In addition, sublet space is taking on a more important role in Vienna. The long-term implemen- tation of remote and home office has helped a number of companies to substantially reduce their space requirements. This vacant space is, in part, returning to the market.
Take-up by regions*
Completions 2021
Property
Size Address
7 %
Austro Tower
28,000 sqm 3, Schnirchgasse 17 17,000 sqm 10, Canettistrasse 5 14,500 sqm 1, Schottengasse 6-8 9,000 sqm 1, Postgasse 8-10 6,000 sqm 9, Peregringasse 2-4 5,200 sqm 2, Stella-Klein-Löw-Weg 8
11 %
Tower Canettistraße 5 Haus am Schottentor * Das Lebendige Haus *
50 %
Doppio Due *
Tribüne Viertel Zwei *
32 %
Operngasse 6 *
2,000 sqm 1, Operngasse 6
* Refurbishment
Source: EHL Market Research | Q2 2021
Main Railway Station | Quartier Belvedere Southern Region | Wienerberg Eastern Region | Erdberg Other
Take-up by sectors*
Rentals 2021 (selected examples)
• 4%
4% •
Tentant Size Address Austrian Workers‘ Compensation Board AUVA 9,100 sqm 10, myhive am Wienerberg Public Employment Service Austria 5,500 sqm 10, Favoritenstrasse 73 Dedalus HealthCare GesmbH 2,400 sqm 10, QBC 1 Infoscore Austria GmbH 2,300 sqm 10, QBC 1+2 Weidinger & Partner Wirtschaftstrainings- und Organisationsentwicklungsgesellschaft mbH 2,200 sqm 3, Franzosengraben 1 Die Berater 2,000 sqm 12, Wolfganggasse 58-60 Australian Embassy 1,200 sqm 10, The Icon Vienna Ready2order GmbH 1,100 sqm 3, Hintere Zollamtsstrasse 17 Unzer Austria GmbH 1,000 sqm 10, 1100 Columbus Shops&Offices
5%
7%
9 %
55 %
16 %
Public sector Educational and trainings institutions IT | high-tech Pharma and health Other Trade and services Banking and insurance sector
Source: EHL Market Research | Q2 2021
*Take-up > 1,000 sqm included Source: EHL Market Research | Q2 2021
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Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2021
Investment market The real estate investment market in Austria and here, above all, the office segment again demons- trated their attractiveness and crisis resistance in 2020. Although the year created major challen- ges for private as well as institutional investors, properties with a combined value of approximately EUR 3.5 billion changed hands. A comparison with the years from 2017 to 2019 shows a decline, but the overall results for 2020 are positive. Only a very limited number of investors reduced their real estate activities as a result of the corona crisis, but there have been substantial delays in transactions. Travel warnings and lockdowns have prevented the closing for many deals which should have been completed, and these transactions will now shift into the first half of 2021.
attractive prime office properties with long-term rentals to quality tenants have continued to rise, while the gap to average yields has increased. Risks are currently “penalised“ with high price discounts, among others because financing for properties outside the top segment has become more difficult and more expensive. Activities by investors from more distant markets have declined significantly due to the corona pandemic. Non-European buyers now represent a share of only two per cent. In contrast, German investors strengthened their dominant position with an increase in their market share to a record 51%. Austrian investors were responsible for about 42% and Swiss investors for 5%. The most active investors are currently found in the institutional segment, above all in special and mutual funds as well as pension funds. They were responsible for nearly 60% of the total transaction volume in 2020. Family offices and private investors as well as project developers tended to be more guarded due to the current situation, which was reflected in a share of roughly 17%, respectively approx. 11% of the transactions during the past year.
Prime segment supply remains limited, low interest rates drive demand Prime office properties currently represent the main point of interest for institutional investors. These properties are very rare, as is demonstrated by the strong demand and year-on-year decline in prime yields to a record low of 3%.
The development of prime yields is, however, only part of the picture. The prices for particularly
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© EHL
© JAMJAM
Marktet Activity
Selected investment transactions Q1 2021
Property
Type of use
Size / sqm
Seller
Buyer
Europlaza
Office
28,500 DWS
ARE Austrian Real Estate
Nordbahnstraße 50
Office
15,500 REInvest
Family Office
Ikano Office Park
Office
11,600 Family Office
Family Office
Canon Gebäude
Office
5,500 LHI
Octapharma
Bahnhofplatz 1
Office
4,750 Apleona Invest
Österreichischer Spezialfonds
Logistik Center Simmering
Logistics | Industry
47,000 WLS
Garbe Industrial
DHL Verteilerzentrum
Logistics | Industry
12,250 Karimpol
AEW Europe
Amazon Verteilzentrum
Logistics | Industry
9,000 Exeter Property Group
Allianz
Danube Flats Bauteil 2
Residential
10,000 Soravia & S+B Gruppe
Auris Immo Solutions
Wohnneubauprojekt Das Herzog
Residential
7,243 Haring
STC
Grünstück 22
Residential
5,391 BUWOG
BVK
Felmayerpark Schwechat
Residential
5,000 Grossmann Immobilien
ARE Austrian Real Estate
Seniorenzentrum Tillmitsch
Retirement home
84 rooms IMMAC GmbH
Auris Immo Solutions
K2 Kittsee
Retail
9,614 Privatinvestor
LLB
FMZ Klagenfurt
Retail
7,014 Union Investment
Privatinvestor
Source: EHL Market Research | Q2 2021
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EHL References
Reference projects
Investment
Austro Tower EHL advised DEKA Immobilien on the acquisition of the Austro Tower (32,000 sqm of floor space) by one of its managed special funds.
IKANO OFFICE PARK
EHL brokered the sale of this two-section office property in Vienna to an Austrian private investor.
GLA
GLA
32,000 sqm
11,600 sqm Privatinvestor
Client
Client
DEKA
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.
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.
GLA
GLA
53,000 sqm Family Office
15,500 sqm
Client
Client
REInvest
Letting
Tower Canettistrasse EHL was commissioned on a co-exclusive basis with the rental of luxury, first- time occupancy space at the heart of the flourishing business hot spot at Vienna’s main railway station. Quartier Lassalle EEHL was commissioned with marketing the 83,000 sqm of office space in this outstanding refurbished office building and success- fully achieved an occupancy level of nearly 80 % one year before completion.
Ensemble Schwarzenberg EHL received an exclusive commission for the rental of the elegant Palais am Schwarzenbergplatz. Offices starting at 800 sqm are available in this extraordinary, prestigious older building. myhive amWienerberg EHL was commissioned on a co-exclusive basis with the rental of the remaining vacant space in the Twin Tower and the marketing of the distinctive new construction project WBS 3-5 (completion in 2023).
Adress
Adress 4., Schwarzenbergpl. 14 GLA 8,000 sqm
10., Canettistraße 5
GLA
8,000 sqm
Adress
Adress 10., Wienerbergstr. 3-5+11 GLA 20,000 sqm
2., Lassallestraße 1+5
GLA
83,000 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: © k18 / SIGNA / ARE
The digital version of the report can be downloaded under www.ehl.at/research
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