Office market:
Subdued take-up in the first half of the year

05.07.2023 - Cautious assessment of the first half of the year, full report to follow in the fall. The economic challenges remain unchanged in 2023: Inflation, rising interest rates, increased energy costs, sometimes still fragile supply chains and the effects of the war in Ukraine.

All of this is leading to an overall sluggish economy in Germany. This environment is also affecting the regional real estate industry and continues to significantly slow down investment decisions on both the supply and demand side.

Developments and trends in the first half of 2023 point to another mixed year. This is the result of an exchange between local real estate experts from the companies on the figures, trends and assessments available to date. The experts are working together with the regional economic development agency and the consulting firm bulwiengesa AG to compile the Hannover Real Estate Market Report, which will be published at the end of September.

Initial results are already available for the office real estate market. After a very good take-up total of 165,000 square meters in 2022, office space take-up will only be around 35,000 square meters by mid-2023. Market participants expect prime rents to rise to at least EUR 19 per square meter by the end of the year.

The experts agree that only limited forecasts for the rest of the year and the other submarkets can be derived from the mid-year results.

The residentialreal estate market is facing tougher challenges, particularly in connection with inflation, rising interest rates and sharp increases in energy costs.

The hotel realestate market, on the other hand, is looking back on a significant recovery in overnight stays in 2022, hotels are gradually expanding their supply capacities again and are hoping for a further recovery this year.

Meanwhile, gaps are becoming more visible in all locations in the retailreal estate sector, even though people have returned to the city. And in the area oflogistics and productionproperties, there is a lack of space to meet the booming demand. Hovering over all submarkets is the debate on the sustainability of real estate, which has not only gained momentum through the discussions on the amendment of the Building Energy Act.

"We know what we can do in the Hannover Region and have been successfully focusing on our strengths as a location together with the regional real estate industry for many years. This is one of the reasons why Hannover has been able to expand and consolidate its position as an important real estate location in Germany. In times of uncertainty, the cooperative partnership between the players has proven its worth."

Ulf-Birger Franz, Head of Economic Affairs, knows that the regionally active real estate companies are nevertheless optimistic about the second half of the year

"Our real estate industry offers solutions for the major challenges in Hanover in cooperation with the municipal players, for example in the Alliance for Housing and to achieve the climate targets, as also highlighted at the Real Estate Arena 2023. This real estate market report, which is produced in cooperation with Hannover's real estate companies, is also an expression of this solution-oriented, partnership-based focus on the future"

Anja Ritschel, Head of Economic and Environmental Affairs of the City of Hanover

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 current plan is to publish the real estate market report on September 28, 2023 and present it at the international commercial real estate trade fair EXPOREAL in Munich from October 4 to 6, 2023. Further assessments of the current situation and forecasts in the office, logistics, residential, retail and hotel submarkets will then be available based on the market data available by then.

The 2023 real estate market report will then also be available for download at www.immobilienmarktbericht-hannover.de.