Boomtown Berlin: More Office Jobs, Floor Space Shortage, and Rising Rents

Berlin's office real estate market is booming

The supply in office accommodation in the city could soon dry up. That is because white-collar employment in Berlin will increase by another 62,000 jobs or 8.7 percent to a total of around 775,000 office jobs by 2020. They will thus account for four out of ten jobs here. The job growth in the city will generate a demand for up to 1.6 million square metres in additional office accommodation by 2020.

First signs of the trend have already emerged in recent years. At a rate of 24 percent, job growth in Berlin between 2005 and 2015 has outperformed even London Central (plus 23 percent). Main growth drivers include digital companies from the service sector and the TMT industry (technology, media and telecommunications companies).

Market data from the local office real estate market show which locations were favoured by the new employees for digital companies between 2005 and 2015: Berlin-Mitte clearly takes the lead with 33 percent, trailed by Prenzlauer Berg and Kreuzberg with 15 percent each.

Due to the strong demand on Berlin's office real estate market, the floor space supply has been drying up fast. The trend is reflected in the development of rents, too. During the past three quarters, the prime rent jumped from 24.00 euros/sqm up to 25.50 euros/sqm. This implies a growth rate of more than 6.3 percent – in less than a year. The trend is expected to continue through the end of 2016.

The positive trend will persist in the coming years, sustained mainly by start-ups and major digital companies. The anticipated growth between now and 2020 will create an industry structure in which technology, media and telecommunications companies, public administration and corporate services providers will claim a combined share of 43 percent.

Contact:
Andreas Schulten, schulten [at] bulwiengesa.de, phone +49 (0)30 – 27876820