office - ehl · executive summary demand* | supply 2018 deliveries 280,000 sqm take-up 210,000 sqm...

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OfficeOffice Market ReportVienna |Spring 2018

2

Preface

In 2018 the Vienna office market will see the strongest production of new office

space in more than ten years. This development will bring new impulses for both

the letting and investment markets and also create interesting perspectives. The

completion of high-quality new construction projects will continue to stimulate the

interest of potential tenants in new office locations and set the stage for further

successful lettings. This favourable climate will also benefit the investment market,

which remains very popular with international investors.

Our experienced EHL team is pleased to help you develop the best real estate

strategy or identify the property that perfectly fits your needs!

Yours,

EHL — the office specialistThe EHL Real Estate Group has been one of the leading providers of property

services in Austria for many years. We offer a complete range of real estate services

throughout the entire property life-cycle as well as a successful international

network.

“We are seeing a greater focus on urbanity, flexibility and services in location decisions. Our office experts at EHL are pleased to provide you with comprehen-sive and structured advice for the lease of the right office space!“

EHL Market ReportsEHL market reports are updated regularly and provide a comprehensive evaluation

and overview of the real estate market.

“Indicators for office space demand in 2018 point towards a further strong year-on-year increase in momentum. Details on the key indicators and developments on the office and investment markets can be found in our EHL Real Estate Market Reports.“

Michael Ehlmaier FRICSManaging Partner

Stefan Wernhart MRICSHead of Commercial Properties

[email protected]

Thomas Schanda, MAHead of Market Research

[email protected]

3

Overview Office Market Vienna

Deliveries at record high At 280,000 sqm, the production of new space will

reach the highest level in more than ten years. A

number of large-scale projects including, among others,

the Austria Campus, THE ICON VIENNA and ViE are

scheduled for completion in 2018.

Higher average rentsThe economic recovery has driven companies to

increasingly focus on quality instead of cost aspects in their

search for office space. Most of the lettings are located

in prime new buildings, which has led to an increase in

average rents from EUR 14.30/sqm to EUR 14.50/sqm.

Increase in take-upThe substantial production of new space has been well

received by the market and, from the current point of

view, take-up is expected to top the 2017 level.

The investment market becomes more internationalOffice properties remain the most popular segment

of the Vienna investment market. A growing number

of investors who were previously not represented in

Austria are expected to enter the market in 2018.

Executive Summary

demand* | supply 2018Deliveries 280,000 sqm

Take-up 210,000 sqm

market indicatorsDeliveries strongly increasing

Take-up increasing

Vacancy rate slightly increasing

Prime yields slightly decreasing

rental ratesAverage rents slightly increasing

Prime rents stable

office marke Q1 2018 total space** Vrf***Office space in sqm 11,055,000 5,746,000

Vacancy rate 5.3% 5.4%

rents i first occupancy**** (in eur/sqm/m.)Prime locations 16.0-25.5

Quality locations 13.5-16.5

Standard locations 11.0-13.5

Prime rents 25.5

economic data austria 2018* Austria 5.5%

EU (28) 7.3%

Eurozone (19) 8.5%

Nom. GDP EUR bn. 387.9

Economic growth 3.00%

Inflation 2.00%

State budget deficit -0.40%

* Forecast ** All figures in the report refer to total office space consisting of modern office properties and office space in older buildings. *** according to Vienna Research Forum, www.viennaresearchforum.at**** EHL-average rent levels of 100 newly built or refurbished office buildings at various locations

Unemployment rate(Eurostat)

Office Market Vienna 2014—2018

*ForecastSource: EHL Market Research | Q1 2018

Deliveries in sqm Take-up in sqm

120,000

220,000

130,000

60,000

320,000

185,000

150,000

2014 2015 2016 2017 2018

200,000210,000*

280,0008%

7%

6%

5%

4%

Vacancy rate

300,000 sqm

225,000 sqm

150,000 sqm

75,000 sqm

4

Co-working spaces are currently experiencing an un-

disputed boom on the Vienna office market, and the

available office space is becoming significantly more

differentiated. In recent years, the market was char-

acterised primarily by numerous local initiatives which

successfully transformed smaller commercial proper-

ties into new space for creative freelancers from the

neighbourhood. Large, international providers with

corresponding space requirements are now sounding

out the Vienna market for the first time. One of the

forerunners is the established serviced office provider

Regus, which leased several sites for the implemen-

tation of its new co-working space concept in 2017.

This new type of use is creating exciting impulses for

the Vienna office market. Co-working spaces are be-

ing integrated in new office developments in estab-

lished office clusters, but also offer interesting oppor-

tunities for older properties outside the conventional

office regions.

Urbane living- as well as established office locations Established office regions are no longer the focal

point of location searches, even for large international

providers. Properties in urbane and lively structures

close to the living environment offer added value, above

all with a view towards the start-up scene. Single tenant

usage is also an important factor for the maximum

flexibility of co-working space. This development is

illustrated by the market entry of a further international

co-working space provider, Talent Garden: in the first

quarter of 2018, EHL brokered a property with 5,000

sqm of usable space in Liechtensteinstraße in Vienna’s

ninth district to this innovative company for single-

tenant use.

Additional benefit in new office properties

Developers frequently reserve part of the usable

space in high-quality new construction projects for

co-working areas already during the planning phase.

For example, the concept of the ORBI Tower included

4,000 sqm for co-working spaces. Lettings to co-

working providers are not the only option in Vienna,

owner operations are also a viable alternative. The

level of rents in lettings to co-working providers

corresponds to the prices for conventional office

space. Developers can also generate added benefits

for their standard tenants with options that facilitate

the use of co-working space for short-term additional

requirements or the project-related letting of creative

areas which are often missing in traditional office

structures.

Key factors for the design of co-working spaces are,

in any case, flexible structures with optimal open-plan

concepts, creative rooms, generous communication

zones and open-space areas. These factors support

the network philosophy that plays such an important

role in co-working spaces.

Co-Working spaces enliven the market

© 2015 www.oln.at © Christian Stemper

5

Rent levels and vacancy rates

Development of rents 2011—2018

Inner citySurroundings

Rental rates in Vienna office regions

Prime locations

Quality locations

Standard locations

Prime rents

Prime rents (in EUR/sqm/m.) Vacancy rates (in %)

127.7 London (West End)

65.0 Paris

44.2 Milan

40.0 Frankfurt

35.5 Munich

33.3 Amsterdam

31.8 Berlin

31.0 Madrid

25.5 Vienna

23.0 Warsaw

22.0 Budapest

19.5 Prague

18.5 Bucharest

15.5 Bratislava

Vienna

London (West End)

2.8

2.0

Bucharest9.1

Warsaw14.0

Milan12.0

Madrid9.5

Budapest7.6

Prague7.8

Frankfurt8.1

Amsterdam7.4

Bratislava6.5

5.3

3.6

3.3 Munich

Paris (CBD)

BerlinSource: EHL Market Research | Q1 2018

Northern Region

WesternRegion

Southern Region

Wienerberg

Vienna DC Surroundings

Lassallestr. Messe Prater

SeestadtAspern

Eastern RegionErdberg

HauptbahnhofQuartier

Belvedere

2018

30 EUR/sqm

25 EUR/sqm

20 EUR/sqm

15 EUR/sqm

10 EUR/sqm

5 EUR/sqm

6

The Vienna office regions

The Vienna office market consists of several cluster

regions where office production is concentrated.

The following map provides an overview of the most

important office axes as well as indicators for the

supply, demand and development of rent levels.

TOP PROPERTIES

1100, Business Park Vienna

1100, myhive Twin Towers

1100, Office Provider

1100, The Brick - Biotope Offices am Wienerberg*

1120, Euro Plaza

1120, INNO Plaza*

4. Southern Region | Wienerberg

© IM

MO

FIN

AN

Z

Rents EUR 11.5 -18.0

Rents tendency

Demand

Supply

TOP PROPERTIES

1120, Forum Schönbrunn

1120, Arcade Meidling

1140, Bergmillergasse 5

1140, Scheringgasse 2

1150, BahnhofCity Wien West

3. Western Region

© b

arus

gra

phic

desi

gn


Rents tendency

Demand

Supply

TOP PROPERTIES

1190, Skyline

1190, Kay 29

1190, Square Plus

1190, space2move

1200, Rivergate

1200, Millennium Tower

1200, Optimum

1210, Florido Tower

2. Northern Region

© S

RE/

FOTO

STU

DIO

MEN

ZL


Rents tendency

Demand

Supply

© S

PB B

etei

ligun

gsve

rwal

tung TOP PROPERTIES

1010, Goldenes Quartier Office

1010, Fleischmarkt 1

1010, Kohlmarkt 8

1010, Georg-Coch-Platz 2

1010, Schwarzenbergplatz 3

1030, myhive Ungargasse 37

1040, Bureau am Belvedere

1. Inner city | Surroundings


Rents tendency

Demand

Supply

A2

A1

A21

u6

u4

u3

A23

u5

u4

u2 u5

u2

2.

1.

4.

3.

7

TOP PROPERTIES

1030, Marxbox

1030, Solaris

1030, ORBI Tower

1030, MGC Office Park

1030, ViE*

1110, OCG Office Campus Gasometer

7. Eastern Region | Erdberg

© IW

S TO

WN

TOW

N A

G


Rents tendency

Demand

Supply

TOP PROPERTIES

1020, Green Worx

1020, Austria Campus*

1020, messecarree Wien

1020, Denk Drei, Viertel Zwei

1020, Galaxy 21

1020, E-Zone

6. Lassallestraße | Messe | Prater©

IC D

EVEL

OPM

ENT

/ M

OPI

X


Rents tendency

Demand

Supply

TOP PROPERTIES

1220, Ares Tower

1220, DC Tower

1220, Andromeda Tower

1220, Tech Gate Vienna

1220, IZD Tower

5. Vienna DC | Surroundings

© e

xpre

ssiv

.at


Rents tendency

Demand

Supply

A22

u2

u1

S1

S2

A4

u3

u6

u1

u5

TOP PROPERTIES

1220, Hoho Wien*

1220, Campus West

1220, Technologiezentrum Seestadt,

Bauteil 2*

9. Seestadt Aspern

© A

TP A

RCH

ITEK

TEN

IN

GEN

IEU

RE /

TEL

EGR

AM

71


Rents tendency

Demand

Supply

TOP PROPERTIES

1100, QBC*

1100, THE ICON VIENNA*

1100, Laxenburger Straße 36

1100, HBF 1*

1100, Columbus Center

8. Hauptbahnhof | Quartier Belvedere

© S

IGN

A


Rents tendency

Demand

Supply *Project

6.

5.

9.

8. 7.

Record completions strengthen established office clusters

Deliveries will increase to 280,000 sqm in 2018,

with the major volume located in the Lassallestraße/

Messe/Prater region and areas surrounding Vienna’s

Hauptbahnhof. The overall vacancy rate will rise slightly

from 5.3 to 5.6 per cent towards year-end. For modern

office space as defined by the Vienna Research Forum

(VRF), the vacancy rate currently equals 5.4 per cent.

The vacancy rate according to the VRF is lowest in the

inner city and directly adjacent locations at 2.3 per cent

and highest in the northern region at 10.6 per cent.

Selected Lettings 2017 | Q1 2018

EHL Real Estate Group provides consulting services to tenants and/or lessors. Source: EHL Market Research | Q1 2018

Take-up by sectors*

1%2%3%

4%5%

31%

20%20%

8%

6%

Take-up by regions*

*lettings of more than 1,000 sqm Source: EHL Market Research | Q1 2018

Inner city | SurroundingsHauptbahnhof | Quartier BelvedereEastern Region | ErdbergLassallestraße | Messe | PraterSouthern Region| WienerbergVienna DC | SurroundingsWestern Region

7%

4%4%

33%

26%

15%

11%

8

Completions | Largest Lettings

SVA 11,600 sqm 1030, Hintere Zollamtsstraße 1

TPA Steuerberatung GmbH 8,600 sqm 1100, THE ICON VIENNA

Talent Garden AT GmbH 4,900 sqm 1090, Liechtensteinstraße 111-115

WienIT EDV Dienstleistungs GmbH 4,900 sqm 1030, ORBI Tower

Otto Bock Healthcare Products GmbH 4,600 sqm 1110, Brehmstraße 12

Spaces Österreich 4,000 sqm 1030, ORBI Tower

Nestlé Österreich GmbH 3,800 sqm 1100, THE ICON VIENNA

thyssenkrupp Aufzüge GmbH 3,200 sqm 1230, Zetschegasse 11

Sonepar Österreich GmbH 3,200 sqm 1120, Gaudenzdorfer Gürtel 67

Wiener Sozialdienste 3,100 sqm 1020, E-Zone

SAE Institute GmbH 2,800 sqm 1010, Hohenstauffengasse 6

City of Vienna - MA 67 2,700 sqm 1100, Laxenburger Straße 36

Aon Jauch & Hübener GmbH 2,700 sqm 1010, Schwarzenbergplatz 3

TENANT SIZE LOCATION

Completions 2018 | 2019

* fully let **owner-occupied Source: EHL Market Research | Q1 2018The table only includes those properties for which construction has already begun. Numerous projects for which construction will only commence when pre-let to a suitable degree are not included.

2018

2019

Austria Campus 160,000 sqm 1020, Walcherstraße 1

THE ICON VIENNA 74,200 sqm 1100, Wiedner Gürtel 11

ViE/Lände 3 13,800 sqm 1030, Erdberger Lände 26A

Inno Plaza 11,000 sqm 1120, Pottendorfer Straße 23-25

HoHo Wien 8,000 sqm 1220, Seestadt Aspern

FUTUREbase 7,100 sqm 1210, Gieffinggasse 4

messecarree Wien 4,600 sqm 1020, Ausstellungsstraße 50

The Brick - Biotope Offices am Wienerberg 20,000 sqm 1100, Triester Straße 91

SILO PLUS 11,000 sqm 1230, Lemböckgasse 57-59

HBF 1 3,500 sqm 1100, G.-Fröhlich-Sandner-Straße

PROPERTY SIZE LOCATION

Public sectorIT | High-TechLaw firms and consultantsBanks and insurance companiesServiced Office | Co-WorkingTrade and servicesEducational and training instituionsOtherPharma and healthConstruction, real estate

The real estate investment market in Austria broke all

records in 2017. The exceptionally high transaction

volume of EUR 4.7 billion resulted, above all, from ten

spectacular large-scale transactions – each of which

clearly exceeded EUR 100 million. Office properties

were again the strongest segment by far with a 65 per

cent share of the total volume.

The year’s largest transaction was the sale of the Aus-

tria Campus by SIGNA to a special fund managed by

PGIM Real Estate for German and Swiss institutional in-

vestors. With a volume of more than half a billion euros,

this was also the largest single transaction ever realised

on the Vienna market. EHL supported numerous large

transactions in the office segment, including the sale

of THE ICON VIENNA at the Hauptbahnhof by SIGNA

to Allianz, the purchase of the DC Tower by the Ger-

man Deka Immobilien and the sale of the ORBI Tower in

TownTown to Bank Austria Real Invest.

Prime yields continue to decline

Demand is expected to remain strong in 2018, but the

previous year’s record will be difficult to match because

of the limited supply of large-volume, prime properties.

This demand overhang is driving prices, and the prime

yields for office properties are therefore trending down-

ward. Prime yields equalled roughly 3.75 per cent at

year-end 2017 and a further decline towards 3.5 per

cent can be expected during 2018. This situation is

increasing the interest of many investors in secondary

quality segments that promise slightly higher yields.

The supply of available prime properties is very limit-

ed, especially in the office segment, because many of

the projects scheduled for completion this year were

already sold through forward deals in 2017. Market

activity in the residential segment, above all in special

forms like housing for students or senior citizens, can

be expected to increase during 2018. This segment

saw extensive interest on the part of German investors

during the past year, a trend which will also continue

in 2018. The demand for logistics properties is also in-

creasing, in particular for properties for the so-called

“last mile“, which will become more attractive over the

medium-term due to the growth in online retail reve-

nues.

International investors on the move

The strong momentum on the Austrian real estate in-

vestment market has been supported by rising interest

on the part of financially strong international investors

who were hardly active in Austria to date. Asian inves-

tors, in particular, are appearing in growing numbers.

In addition to the German investors who have clearly

dominated the market in the past, they will play an in-

creasingly important role in the future.

Investment market

Source: EHL Market Research | Q1 2018

9

Investment market

Prime office yields across Europe (in %)At

hens

7.50

Buch

ares

t7.

25

Buda

pest

5.75

Brat

isla

va6.

50

War

saw

5.00

Prag

ue4.

85

Amst

erda

m3.

75

Mila

n3.

50

Fran

kfur

t3.

70

Berli

n3.

00

Mun

ich 2.

90

Mad

rid3.

25

Lond

on (W

est E

nd)

3.25

Paris

3.00

Vie

nna

3.75

10

Market activity

Source: EHL Market Research | Q1 2018

© SIGNA © IWS TOWNTOWN AG

Selected investment transactions 2017 | Q1 2018

ECO Portfolio Austria Office I Retail 104,000 sqm Hanse Merkur Grundvermögen conwert

Austria Campus Vienna Office 100,000 sqm PGIM Real Estate Signa

THE ICON VIENNA Vienna Office 81,500 sqm Allianz Signa

DC Tower 1 Vienna Office 74,500 sqm Deka BAI

OMV-HQ (Hoch Zwei I Plus Zwei) Vienna Office 43,000 sqm Deka S Immo AG

Obere Donaustraße 23-27&29 Vienna Office 40,000 sqm Reitenburg GmbH Deka

Millennium Tower Vienna Office 38,000 sqm Art-Invest Real Estate Morgan Stanley

UBM-Portfolio Austria Office | Hotel 37,300 sqm Private investor UBM Development AG

ORBI Tower Vienna Office 23,500 sqm Bank Austria Real Invest IWS TownTown AG

qbik Vienna Office 17,790 sqm Bank Austria Real Invest Savills Investment Management

Marximum Building 2+4 Vienna Office 15,980 sqm Swiss Life Hochtief

Skyline Vienna Office 15,770 sqm KGAL Savills Investment Management

Seeparkcampus West Vienna Office 15,500 sqm Erste Immobilien KAG Kerbler Group

IKANO Office Park Wr. Neudorf Office 11,690 sqm Private investor Private investor

Lindenpark Linz Linz Office 4,000 sqm German private trust RHW Immobilien

Wagramer Straße Vienna Office 3,770 sqm Pine Asia Asset Management Construct

Retail portfolio Austria Retail 70,000 sqm BVK ADIA

ZIB Salzburg Salzburg Retail 16,650 sqm Private investor Immofinanz AG

ELI - Shopping Center Liezen Retail 15,000 sqm KGAL Rutter

Hornbach Stadlau Vienna Retail 13,000 sqm Leasinvest Private investors

Retail park Stadlau Vienna Retail 11,000 sqm Leasinvest Private investors

EKZ Hietzing Vienna Retail 9,420 sqm INVESTER United Benefits Private investors

Leiner Flagshipstore Mariahilfer Str. Vienna Retail 7,370 sqm Laura Privatstiftung Steinhoff

Westbahnhof A3 Vienna Retail | Hotel | Office 25,000 sqm Real I.S. AG Acron

TrIIIple Turm 3 Vienna Student housing 670 rooms Corestate Capital ARE Development | Soravia

The Fizz Student Hotel Vienna Student housing 633 rooms International Campus Stonehill Developments und Pegasus

Milestone Graz Graz Student housing 386 rooms Union Investment ARE Development

PROPERTY LOCATION TYPE OF USE SIZE BUYER SELLER

11

ORBI TOWER

EHL brokered the sale of the 102

metre ORBI Tower in TownTown,

Wien-Erdberg, to Bank Austria Real

Invest. The transaction took place

through a structured sale process

in the form of a forward deal.

Investment

THE ICON VIENNA

EHL advised Allianz on the purcha-

se of THE ICON VIENNA through a

forward deal and was responsible

for the commercial due diligence

audit.

DC TOWER 1 EHL advised DEKA Immobilien on

the purchase of the DC Tower 1

from Bank Austria. This tower, with

74,500 sqm of rentable space, is

nearly fully let to well-known com-

panies from the service sector and

IT branch.

UBM-PORTFOLIOEHL brokered a portfolio of seve-

ral office properties in Graz and

Vienna plus a hotel to a group of

Austrian private investors.

Reference projects

© S

IGN

A

GLA 81,500 sqm

Client Allianz Real Estate

© IW

S TO

WN

TOW

N A

GGLA 23,760 sqm

Client IWS TownTown AG

© D

C T

OW

ERS

| M

icha

el N

agl

GLA 74,500 sqm

Client DEKA Immobilien

© U

BM

GLA over 37,000 sqm

Client UBM

EHL References

PIONEER INVESTMENTS AUSTRIA

EHL brokered 2,700 sqm of office

space on the Schwarzenbergplatz

to Pioneer Investments Austria, a

member company of the Amundi

Group.

Leasing

DENTSU AEGIS

The communication agency Dentus

Aegis leased 2,600 sqm of modern

office space in the Denk Drei /Vi-

ertel Zwei. EHL supported Dentsu

from the market evaluation up to

the signing of the lease.

THYSSENkRUPP thyssenkrupp leased a prime

refurbished, single-tenant-

building in Vienna-Liesing as

its new Austrian headquarter.

EHL provided thyssenkrupp with

comprehensive advice from the

market evaluation to conclusion of

the lease.

CITY OF VIENNA — MA 67

The city of Vienna leased approx.

2,700 sqm of office space in

Laxenburger Straße. EHL advises

the owner on the marketing of the

property and supported the con-

tract negotiations.

© IC

Dev

elop

men

t |O

ffice

Le

Nom

ade

GLA 2,600 sqm

Client Dentsu Aegis Network

Austria GmbH

GLA 2,700 sqm

Client Pioneer Invest-ments Austria

GmbH

© 2

017

MA

KA

PLA

N

GLA 3,200 sqm

Client thyssenkruppAufzüge GmbH

© P

ETER

STR

OBL

Fo

tost

udio

GLA 2,700 sqm

Client MA 67

www.ehl.at

EHL Immobilien GmbHPrinz-Eugen-Straße 8–10, 1040 Vienna| T +43-1-512 76 90 | [email protected] | www.ehl.at

Our view is always directed ahead:

As one of Austria’s leading real estate service providers, we strive to optimise our consulting

performance and continue expanding our portfolio.

Rental

Sale

Administration

Valuation

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Residential properties

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Investment properties

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Hotel

We stand for real estate.www.ehl.at

This report is a translation. In the event of doubt the German-language report is to be used.

The information and forecasts in this report are made without guarantee, warranty or liability.

Cover: © SIGNA

The digital version of the report can be downloaded under www.ehl.at/en/marktberichte

office - ehl · executive summary demand* | supply 2018 deliveries 280,000 sqm take-up 210,000 sqm...

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