German growth squeezes office supply

Photo: MiradorTigre

Real estate investment manager Tristan Capital Partners warns that while unemployment is the lowest since the early 1990s, pent-up demand for office space will see a sharp tightening in supply.

The last few months have seen a remarkable increase in leasing activity, notes Ric Lewis, Tristan Capital's CEO, not just in the prime retail and office locations of bigger cities, but also in smaller markets all across the country.

"this is reflected in the 33 leases that we have either re-geared or signed for over 11% of the G3P fund’s total rental roll in just the past eight months," addS Ralf Nöcker, managing director of Tristan’s German Properties Performance Partners Fund (G3P).

The G3P Fund manages a diversified portfolio of 44 properties, of which roughly half are offices and 40% retail, based on income contribution, with a total floor area of 168,912 m2 located in Germany’s ‘Big-5’ cities and a range of regional centres.

The increase in German leasing activity has not been confined to prime locations in major cities, though. Secondary markets that were, until recently, seen as peripheral and less attractive have also been picking up speed, the company says.

With vacancy rates at multi-year lows, supply-shortages are probable in the next year or two.