Big challenges lay ahead for the German commercial real estate sector, as companies grapple with higher interest rates and sluggish economic growth. Demand for retail, office, industrial, and logistics properties is tightly interlinked
. January 2024 marked the
, according to the ifo Business Climate Index, a survey among 9,000 businesses in manufacturing, services, trade, and construction in Germany. This economic uncertainty has affected real estate investments, causing them to drop to a record low. In January 2024, the 12-month rolling value of real estate investments amounted to 29 billion euros –
.
How much does it cost to rent a commercial space in Germany?
On average, renting an office space in 2023 was the most expensive in the capital, Berlin, but when it comes to prime properties, Munich
outranked any other city in the country. An office in the top price segment in Munich cost 48 euros per square meter, which was more than double the average price in the city. The two cities also had the
most exclusive high street retail destinations: Munich’s Kaufingerstraße-Marienplatz and Berlin’s Tauentzienstraße. A new letting of 100 square meters on a ground level with a six-meter shopfront on Kaufingerstraße-Marienplatz cost a whopping 340 euros per square meter per month in 2023. Light industrial and logistics real estate is substantially cheaper, as it is usually located outside dense city centers. Hamburg, home to one of the biggest harbors in Europe, had
the second highest rent for prime logistics space, fetching 8.1 euros per square meter. The only city that outranked it was Munich, which is popular with its flourishing manufacturing industry.
Which property types are most in demand?
Of the three major property types in the commercial sector, retail real estate has had
the lowest fluctuation in take-up since 2020, an indicator measuring the volume of property transacted in the market. Meanwhile, offices have suffered a
dramatic decline in demand after the coronavirus pandemic brought the undisputed status of offices as the primary workplace to an end. The logistics sector, on the other hand, experienced a boost in demand during that period but ended 2023 with the
lowest take-up volume since 2014. In 2024, investors appear to be
most interested in residential real estate and offices.
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