Positive forecast for 2022: Berlin office market looks back on a surprisingly successful 2021

Berlin, January 19, 2022

| The Berlin office market is back on track for success. With the help of its in-house research team, Engel & Völkers Commercial Berlin has conducted up-to-date surveys of the office market. After a pandemic-related decline in 2020, take-up rose again last year, surprising industry experts with its positive result.

In 2021, leasing turnover was approximately 840,000 square meters, registering an increase of 5.0 percent compared to the previous year. The fourth quarter in particular contributed to the positive market development with a high level of market activity: A total of approximately 310,000 square meters were leased. Although the all-time high from 2019 could not be reached in 2021, the market is clearly on the upswing and the industry is also forecasting a positive development for the current fiscal year.

Vacancy rate remains below the fluctuation reserve

The Berlin-wide vacancy rate was around 3.0 percent in 2021, rising slightly as expected (2020: around 2.0%). However, this means that the current figure is still below the fluctuation reserve. The crisis year 2020 was preceded by a very low level of 1.4 percent, which currently remains unattained.

Rents and take-up on the rise again

Rental prices rose slightly year-on-year. However, the rapid development of prices that existed before the pandemic could not continue in 2021. The market experts at Engel & Völkers Commercial Berlin determined an increase in the monthly prime rent of almost 6.0 percent to 41.30 euros per square meter (2020: 39.00 euros/m²). The monthly average rent, on the other hand, also rose in 2021 by 8.0 percent to 28.10 euros per square meter (2020: 26.00 euros/m²). The good development in both prime and average rents is attributable on the one hand to the increased demand for office space despite Corona and on the other to the short supply of space

According to the market experts, take-up has not only risen in the classic office locations. Demand for space in Berlin's peripheral locations is particularly high. "While demand for office space in B and C locations was still quite restrained in recent years, a real turnaround can be seen there," explains Aissatou Frisch-Baldé, Head of Office Space at Engel & Völkers Commercial Berlin.

Current development pipeline cannot meet demand

Office space is still scarce in the German capital, although numerous projects are nearing completion. Market experts currently estimate the office space stock at 21 million square meters. Around 2.0 million square meters of office space are already planned up to and including 2024. 740,000 square meters alone will be completed as early as 2022. Of this, around 70 percent is currently pre-leased. "Due to continued high demand, the Berlin market will see an acceleration in new construction activity in the coming years. The accompanying increase in supply will also have an impact on the vacancy rate from 2022," adds Aissatou Frisch-Baldé.

"Despite another pandemic year, the capital has proven that it is becoming more and more important as a business location," Aissatou Frisch-Baldé summarizes the developments. For 2022, the industry expert expects demand to continue to rise and even office space take-up to reach 870,000 to 900,000 square meters.