Berlin Office Market Q1 2025

Overview

At the beginning of 2025, the Berlin office letting market reached a take-up of 113,600 sq m, around 25% less than in the first quarter of 2024 – making it the weakest start to the year on the Berlin office rental market since 2013. Nevertheless, the number of leases signed was above average at over 200. Over the past ten years, the average number of leases signed in the first quarter was just 160. This continues to show a clear trend towards smaller and medium-sized space leases in the German capital. The average transaction size in the first quarter of 2025 was around 550 sq m, while the average for the past five years was just over 1,000 sq m in the first quarter. In addition, no deals were registered in the size categories over 2,500 sq m in the first three months of 2025.

A sector comparison shows that the traditionally strong IT sector in Berlin was able to record the highest share of take-up at 15%. It was followed by consultants with around 9%. The public sector, which is otherwise strongly represented, did not account for a significant share of the take-up in Berlin in this quarter.

Trends

• The level of prime rent remained stable quarter-on-quarter at €44.50/sq m/month, which corresponds to a slight increase of 1.1% compared to the same period of the previous year
• By contrast, the weighted average rent fell by 3% year-on-year and stood at €27.25/sq m/month at the end of March – the polarization of the market thus continues, with rent reductions being seen for older properties in peripheral locations
• The vacancy rate at the end of the first quarter of 2025 was 7% (excluding sublet space), an increase of 1.3%-points compared to the previous year – accordingly, it has reached the same level as ten years ago
• Vacancy is also reflected in the increased amount of space in completed office properties that is still available: more than half of the 108,700 sq m of completed office space in the first quarter had not yet been absorbed by the market at the time of completion
• The prime yield for office properties in premium locations in Berlin remained stable compared to the previous quarter at 4.80% – compared to the first quarter of 2024, this represents a decline of 0.2%-points; by contrast, significant risk premiums can still be perceived in city-fringe and peripheral locations

The total take-up in 2025 is likely to be slightly below the levels of 2023 and 2024, due to economic challenges combined with structural change in the office sector in terms of changing usage behavior, increased demands on space quality and sustainability criteria. Furthermore, the focus remains on requests in the small to medium size segment. Consequently, the average size of office space rented is expected to remain below the 1,000 sq m-mark.

With a well-filled pipeline of over 580,000 sq m of office space for the remaining year 2025, with a pre-letting rate of around 41%, the vacancy rate will continue to rise slightly in the coming months. The peak will probably be reached in the course of the year, as the pipeline in the following years is falling, so that the decline in the completion volume and a more stable to better demand dynamic against the backdrop of an overall economic recovery will dampen the increase in vacancies.

The location and quality of office buildings are having an increasing influence on the Berlin office market. In particular, new and refurbished office buildings in micro-locations with good infrastructure will remain viable in the future. In decentralized locations and in outdated properties with low-quality space, rental price reductions and, in some cases, increased incentives can be observed. The prime rent in the CBD in properties with high-quality space will continue to rise slightly in the medium term. By contrast, the pressure on owners to modernize their older office portfolios according to ESG standards in order to remain competitive will increase.