Office Market Report Vienna | Autumn 2016
We live real estate.
EHL REAL ESTATE GROUP
© SIGNA
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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
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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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