In its short report about Cologne’s office space market presented at the start of the year, Greif & Contzen takes a look at the months ahead

While Cologne’s office property market was stable on the whole in 2024, its development has still been affected by various uncertainties. Stakeholders are sticking to their wait- and-see attitude, owing to a lack of confidence. Andreas Reul, head of the office properties division of Greif & Contzen Immobilienmakler GmbH, outlines the underlying conditions that had already affected take-up of space back in 2023 and continued to do so in 2024: “The consequences of inflation and rising construction costs are making investments in new builds and refurbishments less profitable and are causing rents to rise. Geopolitical tension and global economic instabilities contribute to a reduced willingness to invest, while competitive disadvantages are growing, and take-up of space is curbed due to the fact that many office users are affected by a challenging business environment.”

Around 210,000 square metres of space taken up in 2024
The take-up figure of around 210,000 square metres recorded for Cologne’s market at the end of 2024 was only five percent above the low level achieved in 2023. Many companies shied away from a relocation in recent months, despite believing that they need to offer their staff modern premises that are suitable for realising new workplace concepts. However, companies tend to hold on to their existing premises and to postpone moving into new office units, owing to the challenging economic environment and a desire to reduce costs.

Vacancy rate of 4.9 percent including space available for sub-letting
Vacant space increased by some 95,000 square metres to around 375,000 square metres since the start of 2024. Less attractive neighbourhoods and older buildings that no longer meet current ESG, sustainability and workplace requirements are particularly affected by an increase in vacant space. In addition to this, about 30,000 square metres are currently advertised for sub-letting. This corresponds to a vacancy rate of around 4.6 percent excluding or 4.9 percent including space available for sub-letting.

Differing trends in certain parts of Cologne
„“Availability of high-quality space in the city centre is still limited,” Andreas Reul points out. It is apparent that demand remains strong in centrally located areas, in particular in the city centre neighbourhoods on both banks of the river Rhine. More peripheral locations can benefit from good infrastructure and more favourable rental terms.

Development of rents
Andreas Reul describes the development of rents as follows: “On the whole, landlords have responded to the greater availability of existing space by offering incentives, while base rents were only reduced in individual cases and in particularly affected neighbourhoods.” The prime rent increased further from EUR 33.00 per square metre in 2023 to now EUR 35.00, due to the fact that a number of rental agreements were concluded in the high-price segment. The weighted average rent rose from EUR 19.60 to EUR 20.40 per square metre.

Outlook: no discernible impetus
Some 29 percent of office space taken up in 2024 were accounted for by the public sector and investments for owner-occupation, and it is quite possible that a few more large units will be taken up by public facilities in 2025. However, the experts from Greif & Contzen assume that the weak economic situation will continue to curb demand for space in the private sector this year, too. “There is currently no discernible impetus concerning take-up of space and no positive rent price developments can be observed, either,” Andreas Reul says. Vacancies could increase further as a result. While various sectors are facing challenges, Greif & Contzen’s representatives are certain that many companies urgently need to adjust their workplace concepts and to relocate to more modern premises where they can improve their work processes. They expect that this demand will be reflected in a greater number relocations once again, as soon as the aspects that have been causing uncertainty among office users diminish. This will also have a positive impact on refurbishment and construction projects.