Cologne’s office space market mirrors Germany’s current economic situation: reluctant, insecure and lacking any strong positive impetus. In their latest market report, the property experts from Greif & Contzen explain what this means with regard to the supply and demand situation as well as to vacancies and rents in the local real estate market.

The economic situation continues to be tense and is forecast to stagnate rather than recover this year. North Rhine-Westphalia is not an exception here, and the economic performance is expected to improve only slightly, if at all, according to the figures published by the statistical office. No appreciable recovery of the economy can be observed, and the situation is characterised by a lack of growth stimuli.

Office space market in Cologne reflects overall economic situation
Cologne’s office space market reflects the general economic situation: “There is an increase in the amount of vacant space, a longer-term comparison shows that the 155,000 square metres of office space taken up in the first three quarters were a rather poor result, and hesitant demand could be observed especially in the first half of the year,” reports Andreas Reul, Head of the Office Properties Division of Greif & Contzen Immobilienmakler GmbH in Cologne. “Take-up did improve in the second half of the year, though. Three units of between 5,100 and 9,700 square metres each were let, causing take-up of space to increase considerably compared to the first two quarters.” Take-up of space was boosted in particular by the start of construction of a new building for Landschaftsverband Rheinland and by the City of Cologne buying the new build ROSSIO that is part of the MesseCity development. In addition to this, DEVK took up another 6,200 square metres in RheinparkMetropole, and the event organisers Smartvillage from Munich signed a rental contract for around 5,100 square metres in the Kupferloft building that is part of the Carlswerk site on Schanzenstrasse. This contract was brokered by Greif & Contzen.

Take-up of space below long-term average
Owing to the situation in the first two quarters, take-up was lower than in previous years, apart from 2023, which had been a weak year. In their latest report about Cologne’s office space market, the real estate experts from Greif & Contzen present a number of facts that illustrate the impact of the current overall economic situation on the local office space market. On the one hand, the vacancy rate has been increasing. While it was as low as 2.9 percent in 2020, Greif & Contzen expects it to rise to 4.8 percent by the end of this year. On the other hand, there are rental agreements concluded for high-price units, especially in construction projects: long rental terms and high rents can be considered signs of confidence and a positive outlook for the future. Provided that this type of contract actually exists, since just a small number of these have been recorded in Cologne in the year to date.

Few units let in the high-price segment
Rents have been telling the same story: only few high-price premium properties were let, which caused the prime rent to decrease from EUR 33.00 per square metre to around EUR 32.00, while the average rent weighted according to unit size dropped from around EUR 19.60 per square metre to around EUR 18.50. The highest rent realised in the year to date was EUR 38.00 per square metre. However, this was an exceptional and isolated case. Andreas Reul sums up the situation: “The overall economic situation gives rise to reluctance among office users and has led to delays in decision-making processes. This can be clearly observed in Cologne’s office space market.”

Cautiously optimistic outlook for the fourth quarter
The rental agreements concluded for large units in the third quarter show that not all office users are equally affected by the economic downturn, and that there are still companies that urgently need to realise change. The experts from Greif & Contzen expect that further units will be taken up in Cologne’s office space market before the end of the year. Decision-making processes for a number of large-scale lettings are well underway, making it likely that rental contracts for a number of large units will be concluded in the fourth quarter. This will include contracts for units in construction projects, and the average rent weighted according to unit size is therefore expected to go up again. However, the overall economic uncertainty is likely to persist, and many companies will therefore continue to be reluctant when it comes to signing rental agreements. “The market will continue to be on hold on the whole,” says Reul.