Hamburg Office Market Q1 2025

Overview

With a take-up volume of 114,600 sq m, the Hamburg office letting market proved robust despite the existing economic uncertainties and exceeded the previous year's very weak result by 34%. Office occupiers with space of up to 1,000 sq m were particularly unimpressed by the continuing uncertain economic environment. Their dynamism remains undiminished and rental contract decisions are being made quickly. Larger occupierss, on the other hand, are reacting more cautiously in the current market situation, meaning that stay-versus-go analyses are taking considerably longer. Nevertheless, four transactions above 5,000 sq m were concluded in the first few months. As in the previous year, the public sector was also active at the start of the year - among others, the Personnel Office concluded a lease for 7,800 sq m in the City submarket. However, the largest transaction of 13,400 sq m was the letting by Hamburg Commercial Bank in Ajour (formerly Klöpperhaus) in Mönckebergstrasse. As a result, one third of the total volume was accounted for by the City submarket, followed by HafenCity (8%) and St. Pauli/Altona (also 8 %). Overall, the trend of demand being strongly limited to the central submarkets and only a few transactions being concluded in peripheral clusters is continuing.

The prime rent increased by 3% year-on-year and, as in the previous quarter, stood at €36.00/sqm/month. The weighted average rent did not change compared to the previous year and remained at €21.00/sqm/month. Compared to the end of 2024, however, the weighted average rent in the CBD increased by 4% due to the transaction volume in the city and stood at €25.69/sqm/month at the end of the quarter.

The vacancy rate rose by 0.4 %-points year-on-year to 4.0% but was down again slightly compared to the previous quarter - at the end of the year, the vacancy rate was 4.1%. As a result, Hamburg continues to have very low vacancy rates compared to the other German Top 5-markets.

Trends

• The number of new inquiries increased again in the first quarter, but is still 37% below the previous year's result - The focus remained on the City and HafenCity submarkets
• The active sectors included industry, construction (17%), public services (12%) and banks and financial services (14%) - The current weighting is due to individual large transactions and will be relativized again in the course of the year
• The flight to quality continues, around 60% of the take-up volume was accounted for by offices with a high-quality fit-out, only 5% rented space with below-average fit-out, but with good transport links
• The weighted average rent (rolling three months) is €22.79/sqm/month and thus 11% above the 10-year average - However, rental agreements at prime rents continued to remain unavailable due to the lack of supply in the first quarter
• Due to the current geopolitical uncertainties the prime yields for office properties remained stable, at 4.90% in the CBD, 5.30% in the city fringe and 6.30% in the periphery

The continuing geopolitical uncertainties are also slowing down the momentum on the Hamburg office market this year. The economic barometer for Hamburg's economy is not forecasting an upturn this year, and personnel and investment plans are correspondingly subdued. The construction industry in particular has an unchanged to negative assessment of the expected business situation in 2025. This is also reflected in the continued lack of speculative new construction projects. Most of the construction projects already underway are on schedule and will be completed by 2026, with 62% of the 459,000 sq m already pre-let or occupied by owner-occupiers. From 2027, the pipeline will dry-out dramatically, which will exacerbate the excess demand on the Hamburg office market for modern, ESG-compliant office space. 

The shortage of supply is already evident in the central submarkets in particular; within a year, the vacancy rate in the City has fallen by 1.2%-points to 3.1% and in HafenCity by 0.7 %-points to 4.5%. With the completion of Überseequartier and the associated Luv and Lee office towers, the submarket will become even more attractive. Some of the project developments in the CBD that have come to a standstill could be resumed this year and added to the project pipeline; a rapid absorption of this space on the market is to be expected.

The sustainably achievable prime rent will continue to rise over the course of the year, as further rental agreements are expected to be concluded in the remaining speculative construction projects in the CBD.

The result for the first half of the year will be comparable to the take-up of the past six months, as the same fundamental trends will continue to dominate the market. A more positive momentum on the Hamburg office market is expected from the second half of the year.