Office Market Report Vienna Autumn We live real estate

Office Market Report Vienna | Autumn 2016 We live real estate. EHL REAL ESTATE GROUP © SIGNA 2 THE ICON VIENNA | 1100 Vienna EHL is commissioned...
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Office Market Report Vienna | Autumn 2016

We live real estate.

EHL REAL ESTATE GROUP

© SIGNA

2

THE ICON VIENNA | 1100 Vienna EHL is commissioned with letting office space.

Preface Several major office properties are currently being built in Vienna. These outstanding construction projects will be completed as of 2017 and will not only markedly shape the city's skyline, but also revive the Vienna office market considerably. In the next three years there will be an extremely attractive range of ultramodern office space enabling tenants to find customised solutions apart from the mainstream. I invite you to take advantage of the EHL office team's competence and detailed market expertise for your location search to make an optimal, sustainable location decision. Michael Ehlmaier FRICS Managing Partner

Stefan Wernhart MRICS Head of Commercial Properties [email protected]

Alexandra Bauer MRICS Head of Market Research [email protected]

EHL - the office specialist

EHL market reports

For many years EHL Real Estate Group has been one of the leading providers of property services in Austria. EHL offers a complete range of real estate services throughout the entire property life-cycle, as well as a successful international network. Our retail and real estate specialists are pleased to assist you in realising your real estate plans.

EHL market reports are updated regularly and offer a comprehensive overview of the most important developments, facts and figures in the property markets in Vienna.

EHL is the exclusive Austrian partner of international property group Savills, providing its customers with property services across the globe.

EHL City map With the EHL City map you will find the most important office, retail and logistics properties at a glance, as well as detailed representations of the most important office locations in ­Vienna.

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Overview office market vienna

Office Market Vienna 2008 – 2016

Market Research | Q3 2016

0

2008

2009

2010

2011

2013

2014

230,000

200,000

130,000

170,000

2012

220,000

270,000

260,000 180,000

210,000

75,000 sqm

7%

6%

5% 60,000

Source

Vacancy Rate (%)

120,000

* Forecast

180,000

Take-up in sqm

220,000

250,000 185,000

150,000 sqm

190,000

Deliveries in sqm

220,000

225,000 sqm

8%

300,000

300,000 sqm

2015

2016*

4%

Executive Summary Deliveries to increase as of 2017

Average rents are rising

Following a record low of only 60,000 sqm this year, in 2017 150,000 sqm and in 2018 350,000 sqm of office space will be completed. This includes the 200,000 sqm Austria Campus, the 85,000 sqm THE ICON VIENNA and the 83,000 sqm QBC 1-4.

Most of the office space in the new top properties will be offered for between EUR 15 and EUR 20/sqm/m. Due to several pre-lets in this price segment the first half year shows an increase in the average rent for first-time occupancies to EUR 14/sqm/m.

Pre-lets reviving the market

Office dominates investment market

The office market is much more active than in the last few years. This is attributed to the first substantial pre-lets as well as several negotiations for leases for properties to be completed starting in 2017.

Despite the rising price level and declining yields, demand for office properties remains considerably high. Above all highly solvent international investors are entering the market and ensuring additional momentum.

Take-up | Deliveries 2016* Deliveries Take-up

Rents| First Occupancy** (in EUR / sqm/m.) 60,000 sqm

Prime locations

16.0 – 26.0

230,000 sqm

Quality locations

12.5 –16.0

Standard locations

Market indicators Deliveries

increasing

Take-up

increasing

Vacancy rate Prime yield

slightly decreasing

Average rents Prime rents

Economic Data Austria 2016 Austria 5.9 % Unemployment rate (Eurostat)

under pressure

Rental rates slightly increasing stable

8.0 –12.0

EU (28) 8.9 % Eurozone (19) 10.4 %

Nom. GDP EUR bn.

348.9

Economic growth

1.70 %

Inflation

1.10 %

State budget deficit

-1.70 %

Vienna Office Market | Key Figures Total Office Space in sqm

10,925,000

Vacancy rate

6.3 %

Prime rents (in EUR / sqm/m.)

25.5

* Forecast ** EHL-average rent levels of 100 newly built or refurbished office buildings at various locations *** All figures in the report refer to total office space consisting of modern office properties and office space in older buildings.

take-up | deliveries

© IC Projektentwicklung | OLN

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VIERTEL ZWEI, DENK DREI | 1020 Vienna EHL is commissioned with letting office space.

Office market picking up The development of the Vienna office market has been more positive in 2016 than in past years. The realisation of relocations planned for some time is primarily responsible for the revival of the market. Increased activity on the Vienna office market was already observed at the beginning of the year. The pre-leasing of the properties to be ready for occupancy as of 2017 is fully underway. The new properties in the area of Prater|Messe (e.g. messecarree Wien, DENK DREI, at Wienerberg (e.g. Euro Plaza) and

the premises around the Vienna Central Station (e.g. QBC, THE ICON VIENNA) report a considerable increase in demand. Advanced negotiations for leases with several major parties suggest a strong second half year and total take-up of approx. 230,000 sqm can be expected. This corresponds to an increase of 15 percent compared to 2015. The vacancy rate is currently 6.3 percent and will further decrease.

Completions 2016 | 2017 | 2018

2016

Property

2017

Size

Location

Smart Campus**

30,000 sqm

1110, Guglgasse

Hörbiger Headquarters**

10,000 sqm

1220, Seestadtstraße

Telegraf 7*

5,600 sqm

1060, Lehargasse

AK2 Arbeiterkammer**

4,000 sqm

1040, Plößlgasse 1190, Leopold-Ungar-Platz 2 und 3

SQUARE PLUS

38,000 sqm

Austrian Post Headquarters **

23,000 sqm

1030, Rochusmarkt

DENK DREI, VIERTEL ZWEI

23,000 sqm

1020, Vorgartenstraße/Trabrennbahnstraße 1030, Thomas-Klestil-Platz 13

ORBI Tower, CB21, TownTown

21,600 sqm

QBC 4, Quartier Belvedere Central

17,000 sqm

1100, Karl-Popper-Straße 4

Euro Plaza, Building Phase 6

12,700 sqm

1120, Wienerbergstraße 41-43

QBC 3, Quartier Belvedere Central

7,800 sqm

1100, Gertrude-Fröhlich-Sandner-Straße 3

messecarree Wien

4,600 sqm

1020, Ausstellungsstraße 50

200,000 sqm

1020, Lassallestraße 1

85,000 sqm

1040 | 1100, Wiedner Gürtel, Gertrude-Fröhlich-Sandner-Str. 3

Austria Campus

2018

THE ICON VIENNA QBC 1+2, Quartier Belvedere Central

43,000 sqm

1100, Wiedner Gürtel 3, 5 und 7

SILO Plus

11,000 sqm

1230, Lemböckgasse 57-59

SILO Next

9,000 sqm

1230, Lemböckgasse 57-59

HoHo

4,500 sqm

1220, Seestadt Aspern

HBF 1

4,200 sqm

1100, Gertrude-Fröhlich-Sandner-Str.

* fully let | ** owner-occupied Source

Market Research | Q3 2016

The table only includes those properties for which construction has already begun. Numerous projects for which construction will only commence when pre-let to a suitable degree are not included.

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development of rents | largest lettings | prime rents | vacancy rates

Development of rents 2008 – 2016 30 Prime rents 25 Prime Locations

20 15

Quality Locations

10

Standard Locations

Value from-to in EUR/sqm/m. * Forecast Source

Market Research | Q3 2016

5

2008

2009

2010

2011

2012

2013

2014

2016*

2015

Selected Lettings H1 2016 Tenant

Source

Market Research | Q3 2016

EHL Real Estate Group provides consulting services to tenants and/or lessors

Size

Property

Municipal administration of Vienna

11,000 sqm

1220, Seestadt Aspern

BDO Austria GmbH

10,500 sqm

1100, QBC 4

Sparkassen Versicherung AG

6,800 sqm

1020, faBricks

FCP-Fritsch-Chiari & Partner ZT GmbH

4,300 sqm

1030, City Point

Caritas of the Archdiocese of Vienna

3,500 sqm

1150, Pfeiffergasse 2

Austrian Federal Office for Immigration and Asylum

3,500 sqm

1030, MGC Office Park

WKO Inhouse

3,500 sqm

1100, QBC 4

Sigmund Freud Universität

2,900 sqm

1030, Kelsenstraße 2

TTTech Computertechnik AG

2,500 sqm

1040, Operngasse 21

Regus

1,800 sqm

1200, Millennium Tower

REWE International IT

1,500 sqm

1120, Euro Plaza 5

SIKA Österreich GmbH

1,400 sqm

1220, BIG BIZ

Hypo Alpe Adria

1,400 sqm

1010, Börse

STRABAG Property and Facility Services GmbH

1,400 sqm

1030, MGC Office Park

Knötzl, Haugeneder, Netal Rechtsanwälte

1,300 sqm

1010, Palais Herberstein

Prime rents (in EUR/sqm per month)

Vacancy rates (in %)

104.0 London (West End)

15.5 Warsaw

65.5 Paris

15.0 Prague

41.0 Milan

15.0 Bratislava

38.0 Frankfurt

14.0 Budapest

35.0 Munich

13.3 Amsterdam

30.5 Amsterdam

13.0 Bucharest

27.0 Madrid

12.0 Milan

26.0 Berlin

10.4 Madrid

25.5 Vienna 22.0 Warsaw 19.0 Prague 18.0 Budapest

Source

Market Research | Q3 2016

8.8 Frankfurt 6.3 Vienna 6.1 Munich 3.9 Paris

18.0 Bucharest

3.2 Berlin

15.0 Bratislava

3.2 London (West End)

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Vienna office regions

© SPB Beteiligungsverwaltung GmbH

Inner city and directly adjacent locations

Rents EUR 15.0 -26.0 Rents tendency stable Demand stable Supply slightly decreasing

Top properties 1010, Rathausstraße 1* 1010, Goldenes Quartier Office 1010, Fleischmarkt 1 1010, Kohlmarkt 8 1010, Palais Herberstein 1010, Schwarzenbergplatz 3 1090, Wasagasse 2

© RPHI

Northern Region

Rents EUR 11.0 -15.5 Rents tendency stable Demand slightly increasing Supply increasing

Top properties 1190, Skyline 1190, Kay 29 1190, Square Plus* 1190, space2move 1200, Rivergate 1200, Millennium Tower 1200, Optimum 1210, Florido Tower

u5 u3 A1

© barus graphicdesign

Western Region

u4

Top properties 1120, Forum Schönbrunn 1120, Arcade Meidling 1140, Bergmillergasse 5 1140, Scheringgasse 2 Rents EUR 10.0 -14.5 Rents tendency stable Demand stable Supply slightly decreasing

A23

u6

© hnp architects

Wienerberg | Southern Region Top properties 1100, Business Park Vienna 1100, Vienna Twin Tower 1120, Euro Plaza 1120, Arcade Meidling Rents EUR 11.5 -18.0 Rents tendency stable Demand slightly increasing Supply slightly increasing

A21 A2

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Vienna Office Regions

Vienna DC | Surrounding Area

A22

u1

Rents EUR 12.5 -22.0 Rents tendency stable Demand slightly increasing Supply slightly increasing

S2

Top properties 1220, Ares Tower 1220, DC Tower 1220, Andromeda Tower 1220, Tech Gate Vienna 1220, IZD Tower

u2

© SIGNA

Lassallestraße | Messe | Prater

Rents EUR 12.0 -17.0 Rents tendency slightly increasing Demand slightly increasing Supply increasing

Top properties 1020, Green Worx 1020, Austria Campus* 1020, messecarree Wien* 1020, DENK DREI*, Viertel Zwei 1020, Galaxy 21 1020, e-zone

© IWS TownTown AG

Neu Marx | Erdberg 

A4

Central Station | Quartier Belvedere © zoom vp.at

S1

Rents EUR 11.5 -18.5 Rents tendency stable Demand slightly increasing Supply slightly increasing

Top properties 1030, Marxbox 1030, Doppio Offices 1030, Solaris 1030, ORBI Tower* 1030, MGC Office Park 1030, Media Quarter Marx

Rents EUR 15.0 -20.0 Rents tendency increasing Demand increasing Supply increasing



* Project

Top properties 1100, QBC* 1100, THE ICON VIENNA* 1100, Laxenburger Straße 36 1100, HBF 1* 1100, Favio

trend towards campus and cluster

© IC Development/Heinz Schmölzer

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VIERTEL ZWEI | 1020 Vienna EHL is commissioned with letting office space.

Trend towards campus and cluster The trend to concentrate modern office properties in perfectly developed locations has established itself more and more in the past years. At the moment this is benefiting primarily the Prater|Messe|Lassallestrasse axis (VIERTEL ZWEI|DENK DREI, messecarree Wien and the Austria Campus), the area around the new Vienna Central Station (Erste Campus, QBC, THE ICON VIENNA) and the Wiener­berg (Euro Plaza, Business Park Vienna| Vienna Twin Tower). These locations provide relevant reserves of space available to carry

out campus-style projects with spacious open areas and excellent infrastructure. Larger companies, in particular, appreciate the advantages of a campus and are taking the opportunity to combine their activities at one location (e.g. Erste Bank, Bank Austria, BDO, ÖBB). For these groups an increase in efficiency and improved working conditions are an important driver for changing locations. The combination of several locations generally enables significant savings in work processes.

Take-up by location

Take-up by sector

9% 11%

1% 5%

8% 22%

13%

19%

20%

3%

8% 4% 4%

20%

16%

18%

19%

Central Station | Quartier Belvedere

Banking and insurance sector

Neu Marx | Erdberg

Management and business consulting

Inner city and directly adjacent locations

Social Services institutions

Wienerberg | Southern Region

Educational and training institutions

Lassallestraße | Messe | Prater

Food industry

Vienna DC | Surrounding Area

Construction and interior design

Northern Region

Pharma & medical technology

Western Region

Law firms & tax consultants Serviced Office Source

Market Research | Q3 2016

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Investment market

3.25

3.50

Paris

3.70

London (West End)

Munich

Madrid

3.75

3.80

4.00

Berlin

4.00

Frankfurt

Milan

Vienna

4.25

4.80

5.50

Amsterdam

Warsaw

Prague

Bratislava

Market Research | Q3 2016

Budapest

Source

Athens

Prime yields in %

Bucharest

5.50

7.00

7.25

7.50

8.00

Prime office yields across Europe

Investment market Office properties remain number one with investors In the first half of 2016 the office business was once more by far the strongest segment of the Austrian real estate investment market. Office properties accounted for 54 percent of the total transaction volume of EUR 1.3 billion and in absolute figures the revenue came to around EUR 700 million. At nearly 30 percent, offices were ahead of hotels, with retail playing a subordinate role in the first half of 2016 at less than 10 percent. The price level has continued to rise. The prime yield for office properties remains under pressure despite the fact that it is now lower than ever. It is currently 4.25 percent and declining. The most significant office transactions in the first half year included the sale of the nearly fully let IZD Tower to CBRE Global Investors and the sale of the Belvedere quarter's QBC 4, which is still under construction. QBC 4 is therefore the first sold property of a series of attractive office buildings which are currently being built north of the Vienna Central Station and will be completed beginning in 2017. Significant demand on the part of investors is expected for other properties now under construction at established cluster locations such as Viertel Zwei|Messe|Prater, TownTown, Euro Plaza or the Vienna Central Station.

The outlook for 2016 as a whole is optimistic: numerous negotiations concerning largevolume transactions in advanced stages of completion suggest the investment volume in 2016 will reach at least last year's record figure of EUR 3.45 billion, if not surpass it. The office segment is expected to profit disproportionately from the considerable interest in the Austrian investment market and will also be the strongest segment in the second half year. Share of international investors grows The new top properties will attract first and foremost the interest of international investors originating from the non-German-speaking world. Their market share continues to grow and in the first half year already reached 50 percent, despite the fact that these investors generally operate via an intermediary asset manager. This group of buyers is seeking almost exclusively large-volume transactions and, as a result, is reviving the market, particularly in the "three-digit segment". Highly solvent investors, especially from North America and Asia , are entering the Austrian market and driving prices upward. The uncertainty due to the "Brexit" is likely to propel this growth further, shifting capital flows to continental Europe, thus also to the investment location of Austria, which is considered a safe harbour.

investment market

© ZOOM VP

10

QBC 4 | 1100 Vienna EHL brokered the property to BDO.

Selected investment transactions 2016 Property

Location

Type of use

Size

Seller

Buyer

IZD Tower

Vienna

Office

64,500 sqm

Signa

CBRE Global Investors

Florido Tower

Vienna

Office

36,000 sqm

Union Investment

Amundi

Tech Gate

Vienna

Office

27,000 sqm Wr. Städtische|Wien Holding|FFG

Strabag

QBC 4

Vienna

Office

16,700 sqm

UBM Development AG

BDO

Marximum Buildings 1+3

Vienna

Office

14,850 sqm

HOCHTIEF

ERGO

Solaris

Vienna

Office

10,200 sqm

Union Investment

Amundi

Neue Mitte Lehen

Salzburg

Office

9,480 sqm

UBM Development AG

Semper Constantia

Office Portfolio Vienna

Vienna

Office

6,860 sqm

IMMOFINANZ AG

private investor

Office Property R30

Vienna

Office

4,180 sqm

KGAL

private investor

Retail Park Stadlau

Vienna

Retail

7,670 sqm

private investor

Warburg HIH

OBI St. Valentin and Schärding

Austria

Retail

7,100 sqm

Supernova

private investor

Graz

Retail

5,000 sqm

Supernova

Family Office | private investor

Triester Straße 282-284

Vienna

Retail

3,690 sqm

IMMOFINANZ AG

private investor

Hilton Stadtpark

Vienna

Hotel

579 rooms

Raiffeisen Zentralbank

Villagio Group

Falkensteiner Hotels

Stegersbach

Hotel

143 rooms

Erste Bank

private investor

Falkensteiner Hotels

OBI Graz

Bad Leonfelden

Hotel

117 rooms

Erste Bank

private investor

RAMADA Hotel Grieshofgasse

Vienna

Hotel

123 rooms

Family Office | private investor

private investor

RAMADA Hotel Freitaggasse

Vienna

Hotel

106 rooms

Family Office | private investor

private investor

La Stafa

Vienna

Hotel

186 rooms

private investor

CBRE Global Investors

Hotel Imperial

Vienna

Hotel

138 rooms

Starwood Group

Al Habtoor Group

Hotel "The Ring"

Vienna

Hotel

68 rooms

Mohamed Al Jaber

Aina Hospitality Fund (Rothschild)

Graz | Vienna

Logistics

49,000 sqm

Aviva Investors

Tristan Capital Partners

Werndorf

Logistics

10,700 sqm

CCG Nord Projektentwicklung

Palmira

mixed 105,000 sqm

Swiss Town Consult

Signa | ARE

Aviva Logistics portfolio DHL-Portfolio Austria Forum Donaustadt

Vienna

conwert-Portfolio

various

mixed

30,720 sqm

conwert Immobilien Invest SE

Immovate

Linz

conversion

59,000 sqm

Republic of Austria

private investor

Vienna

conversion

28,250 sqm

ORF

Rhomberg Bau GmbH

Hiller barracks Funkhaus Vienna Source

Market Research | Q3 2016

EHL Real Estate Group provides consulting/services to sellers and/or buyers.

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RefereNCES

References Investment © EHL

R30

Total space 4,200 sqm ClientKGAL

EHL was exclusively commissioned by KGAL with the sale of the office property R30 and brokered a private investor. EHL was responsible for the due diligence as well as the sales process.

© EHL

Neue Mitte-Lehen EHL brokered the property Neue Mitte-Lehen in Salzburg, which was developed by UBM, to a special fund managed by Semper Constantia. Total space 9,500 sqm ClientUBM

© ZOOM VP.AT

QBC 4 | Karl-Popper-Straße 4 With QBC 4, EHL brokered the first of a series of newly developed office properties in the north of Vienna Central Station to the Austrian tax consultant and auditor BDO. Total space 16,700 sqm ClientUBM

Leasing © EHL

Austrian Academy of Sciences

Total space Client 

8,500 sqm Austrian Academy of Sciences

EHL leased around 8,500 sqm of office space in a high-quality existing property on Hollandstraße to the Austrian Academy of Sciences, which integrates several so far existing office locations.

© EHL

FCP-Fritsch-Chiari & Partner ZT GmbH

Total space Client 

4,300 sqm FCP-Fritsch-Chiari & Partner ZT GmbH

Fritsch-Chiari & Partner ZT GmbH, an international engineering firm, was advised exclusively by EHL in its search for office space and leased 4,300 sqm at City Point, close to the railway station Wien-Mitte.

© MGC

STRABAG Property and Facility Services GmbH

Total space Client

1,400 sqm STRABAG PFS

EHL supported the facility and property management service provider of the STRABAG Group when letting the 1,400 sqm office and warehouse space at MGC Office Park. With the move, STRABAG PFS merged two office locations.

This report is a translation. In the event of doubt the German-language report is to be used. The information and forecasts in this report are made without guarantee, warranty or liability. Cover: Zoom VP.AT The digital version of the report can be downloaded under www.ehl.at/research.

EHL is one of Austria‘s leading real estate service providers in the ­areas of commercial, residential and investment properties focusing on the marketing, development and valuation of real estate. EHL Immobilien Management is a part of EHL Real Estate Group and deals with the commercial, technical and infrastructural administration of real estate properties and offers construction management as well.

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