Office real estate market: slight recovery in the first half of the year

Even though the real estate market nationwide continues to be characterized by uncertainty due to the overall economic situation, the analysis of the real estate market in the first half of 2024 nevertheless gives cause for cautious optimism: falling energy prices and more reliable supply chains are having a positive effect on inflation rates.

Although the real estate market nationwide is showing rising vacancy rates and a reluctance to invest, particularly in the office segment, the latest developments and trends point to a slow recovery, at least in the regional market.

This is the conclusion reached by local real estate experts from the companies based on the figures, trends and assessments available to date. Together with the regional economic development agency and the consulting firm bulwiengesa AG, the experts are compiling the Hanover Real Estate Market Report, which will be published at the end of September.

Office real estate market

Initial results are already available for the office real estate market . By the middle of 2024, annual take-up is already over 50,000 square meters (first half of the previous year: 35,000 square meters, full year 2023: just under 85,000 square meters of office space).

Total take-up of 100,000 square meters and more by the end of the year therefore appears realistic. However, this would still be significantly below the average figure of around 140,000 square meters since 2019. However, market participants expect prime rents in the city to rise only slightly to EUR 21.50 per square meter by the end of the year compared to EUR 21 per square meter in the previous year.

Logistics and production

There is a lack of space in the logistics and production property sector to meet the continuing demand. After an average of around 400,000 square meters was taken up between 2018 and 2022, the figure fell significantly to around 280,000 square meters in the previous year.

A further decline to less than 150,000 square meters is expected for the current year. In addition to the supply of space, economic uncertainties and a lack of confidence in Germany as an industrial location are also playing a role for the players. A wait-and-see approach to new lettings can also currently be observed in the Hannover Region.

Together with around 30 partner companies from the real estate industry, the Hannover Region compiles data, trends and market sentiment on all submarkets in the region every year and prepares these together with the consulting firm bulwiengesa AG. The real estate market report will be published on September 30, 2024 and presented at the international commercial real estate trade fair EXPOREAL in Munich from October 7 to 9, 2024. Further assessments of the current situation and forecasts in the office, logistics, residential, retail and hotel submarkets will then be possible based on the market data available by then.

The Real Estate Market Report 2024 will also be available for download at www.immobilienmarktbericht-hannover.de after publication in September.