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Office Submarket

Definition:
Rents
Office rents are in Euro/sqm (net floorspace, gif definition) and valid for marketable office space, with good settings regarding technical outfit and layout, utilisable for small and medium sized lettings. Rents stated are net rents without accessory charges, and don't take incentives or other benefits into account. All rents refer to new lettings in new, modernised or existing, marketable office buildings. Rents given are nominal values.

Office rents are differentiated into Prime Rents and Average Rents for city-centre, city-fringe and suburban locations. For some cities there are additional rents for office agglomerations available.

The Prime Rent is defined as an average rent of the top 3-5 % of all lettings in each submarket, and not the most top rent realised. The Average Rent is an weighted average value of all rents within a submarket.

All average values are not strict mathematical means, modes or medians, but rather describe a typical, common rent level for each submarket.

Submarket Definitions
City-Centre: the city-centre office location is the classic, traditional inner city area, often encircled by a ring road originating from medieval borders. Usually this is the location with highest rents in a city.
City-Fringe: usually adjacent to the city-centre, along the core ring road, mostly shows second highest rent level.
Suburban: in contrast to city-centre and city-fringe locations this is no single location, but rather the 'rest' of the city with more isolated office buildings, not to be mixed up with 'office agglomerations'.
Office Agglomerations: these locations are defined by a significant number of office buildings forming the area, outside the city-centre, showing noticeable turnover and rents at city-centre level (sometimes even above). The range stated is an average for all 'office agglomerations' in a city. Technology Parks or Industrial Parks with office uses usually do not fulfil the criteria for 'office agglomerations' as they show significantly lower rent levels and often other uses like warehouses, logistics and production are dominating.

Yields
Net Initial Yields are defined as the ratio of net rent income and purchasing price including additional costs (taxes, notary costs, agents etc. ).
The rent income is based on attainable rents (for existing buildings) or estimated rents (for new buildings) in the first year after purchase.

               net income
net yield =  -------------------
              purchasing price

whereas:

               gross income
gross yield =  -------------------
              net purchasing price

purchasing price = net purchasing price + additional costs (Grunderwerbssteuer= tax on acquisition of real estate (3.5%-4.5%), Grundbucheintrag=entry in land registry (1.0%), notary costs & costs for appraisals (usually approx. 0.5%), costs for real estate agent (1-5%))

In particular cost for real estate agents, appraisals and notary costs may vary. The given percentages are theoretical but common values.

net income = gross income (= net rent income first full year) – non-transferable additional costs (approx. 9%).

rule of thumb: gross yield = net yield x 1.18

Net initial yields are average values for either central or suburban locations, showing different risk levels within a city. Strictly speaking these yields are only valid for mere office-use buildings, allowing at most 20% of retail space (ground floor) in city-centre locations.


Grunderwerbssteuer= tax on acquisition of real estate
Since 01/09/2006 the tax rate on acquisition of real estate can be set by each federal state individually. Pre 2006 the general tax rate was 3.5%.

&Changes of the Tax Rate (Grunderwerbsteuer) by State
Tax Rate in %from 1997Change as atNew Tax RateAnnotation
Schleswig-Holstein3.501.01.20146.5previously from 01/2012 5.0%
Hamburg3.501.01.20094.5
Lower Saxony3.501.01.20145.0previously from 01/2011 4.5%
Bremen3.501.01.20145.0previously from 01/2011 4.5%
North Rhine-Westphalia3.501.01.20156.5previously from 10/2011 5.0%
Hesse3.501.08.20146.0previously from 01/2013 5.0%
Rhineland-Palatinate3.501.03.20125.0
Baden-Württemberg3.505.11.20115.0
Bavaria3.5
Saarland3.501.01.20156.5previously from 01/2011 4.0%, and from 01/2013 5.5%
Berlin3.501.01.20146.0previously from 01/2007 4.5% and from 04/2012 5.0%
Brandenburg3.501.07.20156.5previously from 01/2011 5.0%
Mecklenburg-Western Pomerania3.501.07.20196.0previously from 07/2012 5.0%
Saxony3.5
Saxony-Anhalt3.501.03.20125.0previously from 03/2012 4.5%
Thuringia3.501.01.20176.5previously from 04/2011 5.0%

Annotation:
Differences between the data published in RIWIS and the data published by gif e.V. might occur. Intensive research by bulwiengesa AG and a different compositions of sources may result in different values, but generally both data is within the same market level.

Data:
annual values, 31.12.


Source:
The Office Market Data is based on empirical research and data collection performed by bulwiengesa AG.
In order to acquire the relevant base of information numerous real estate agents, banks, building associations, local economic development agencies and other semi-public and public organisations (IHK, Gutachterausschuss, ...) are interviewed. Additionally various press-releases and publications concerning the property market are analysed and taken into account. Based on this information and on the knowledge of bulwiengesa AG each value will be checked on plausibility and finally results in the value published in RIWIS.