Within the commercial sector, office accounts for more than half of the investment activity. In recent years, Germany’s largest city Berlin has continued attracting companies and talent and growing at an overwhelming speed. The city’s sprawl has also influenced the office market, taking the capital close to one million square meters in take up in 2019. Berlin’s runner-ups are the rest of Germany’s big 7 – Munich, Frankfurt am Main, Dusseldorf, Hamburg, Stuttgart, and Cologne, with a total of over four million square meters in office take up. A common effect of this high demand for prime office is the decrease of the property rents to property cost ratio, also referred to as yield hardening.
Another commonly known fact is that Germany’s economy is strongly reliable on manufacturing and export. This is easily noticeable in the distribution of light industrial and logistic take up – approximately 41 percent is in the manufacturing asset class, while 29 percent are in wholesale and retail. The distribution of industrial, storage, and logistics space in the biggest German cities provides an even more interesting perspective to the German economy and regional specificities. While Hamburg, which has one of the biggest harbours in Europe, has the dominant share of take up with logistics service providers and transport facilities, Munich and Stuttgart have an overwhelming share of industrial, production and craft businesses take up.
The beginning of 2020 has been a difficult year for retail not only in Germany but worldwide. The lockdown imposed to tackle the coronavirus (COVID-19) pandemic has forced many business to close. While it is still too early to determine how the crisis will impact different sectors, it is likely that there is a decline in investment volumes and transaction activity. None of the sectors is immune to the effects of the overall slowdown of economic growth due to the pandemic. Nevertheless, early observations show that the retail and leisure sectors are hit worse than residential real estate, which is traditionally less prone to volatility.