Office Market Report Spring 2016 - DPC

Danube Property Consulting
OFFICE MARKET REPORT
SPRING 2016
Danube Property Consulting Immobilien GmbH
Experience counts…
Danube Property Consulting
Table Of Contents
Richard Lemon, BSc MRICS
Managing Director
MMag. Walter Huber
Managing Director
Foreword.................................................................................2
Vienna Property Market At A Glance.......................................4
Economy ................................................................................5
Vienna Property Market........................................................6
Take Up.................................................................................8
Rent Levels...........................................................................9
FOREWORD
Selected Lettings................................................................10
Vacancy..............................................................................10
Sub Markets........................................................................ 11
Danube Property Consulting Immobilien GmbH was founded in 2012 and was able to
quickly establish itself as a strong brand in the Austrian real estate market. Especially
Investment Market...............................................................22
in the field Office Agency and Investment, valuations and corporate solutions DPC
Another record year............................................................23
has become an important partner for owners and investors, as well as for tenants and
Continuing new demand.....................................................24
buyers.
Yield....................................................................................25
Transactions 2015..............................................................26
Danube Property Consulting is the exclusive alliance partner of BNP Paribas Real
Selected Deals 2015...........................................................27
Estate for Austria. The BNP Real Estate network guarantees access to international
Forecast 2016.....................................................................27
real estate markets and also to new sources of capital, such as investors from Asia or
the Middle East.
DPC has a strong national and regional team, and together with BNP a group with over
5,900 specialists, located across 150 global real estate offices in 30 countries.
Office Market Report Spring 2016
Danube Property Consulting
3
Vienna Property Market At A Glance
Total stock: approximately
Letting performance
11.02 million square meters
Economic growth was approximately 0.9 percent for 2015. Thus, GDP growth was higher than
in previous years.
Take up 2015 190.000 m²
For 2016 and 2017 economic growth is expected to increase to 1.5 percent thanks mainly to
more domestic demand.
2016 is expecting a slight
increase in rentals
Investment volume in 2015 reached
which is a new record
€ 3,6 billion.
Prime yields currently at 4,45%
Despite the forecast of economic growth, the unemployment rate will continue to rise in 2016.
After a rate of 5.8% (acc. Eurostat definition) in 2015, the value is expected to rise to 6.1 % in
2016.
Due to the sharp fall in crude oil prices, inflation in Austria slowed down in the first half of 2015.
From January to December 2015, the average inflation in Austria was just 0.9 percent. For
2016, inflation is expected to be an average of 1.7 percent, as a further decline in commodity
prices is unlikely, and the domestic demand is expected to increase in Austria.
Despite the increased uncertainty further recovery in the euro area is expected, from which
also Austria will benefit.
Vacancy rate
dropped slightly to
Economy
6.30%
Source: Bank Austria Economics & Market Analysis Austria, Statistik Austria
and remain under pressure
Rising rents
Increasingly
prime rent currently € 26.00/m² still slightly increasing
average rents remaining the same in 2015
large volume
transactions
Further
internationalization in the investment market
Austria Economic Forecast
Forecast
2010
2011
2012
2013
2014
2015
2016
2017
Economy growth (real, comp to pior year) (%)
1,9
3,1
0,9
0,2
0,3
0,9
1,5
1,5
Investments (%)
-2,1
6,7
1,3
-0,3
-0,2
0,9
2,8
3,2
Inflations rate (%)
1,9
3,3
2,4
2
1,7
0,9
1,7
1,9
Unemployment rate (%)
4,8
4,6
4,3
5,4
5,6
5,8
6,1
6,1
Employment (%)
0,8
1,9
1,4
0,6
0,7
1,0
0,9
0,9
Source: Bank Austria Economics & Market Analysis Austria (bearbeitet von DPC); February 2016
The transaction volume for 2016 is
expected to be similar to that of 2015
Office Market Report Spring 2016
Danube Property Consulting
5
Vienna
Property Market
Vienna Property Market
The Vienna real estate market is characterized by stability in international comparison. The
total stock is approximately 11.02 million square meters.
The supply of new office space in 2015 was significantly greater than in 2014 and amounted to
190,000 sqm. This was mainly due to the first phase of the Vienna Central Station (approximately
117,000 sqm) which was completed in 2015
There has been a growing trend in the renovation of older office buildings in secondary locations
and conversion to residential apartments, which often command a higher price.
Vienna
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
90.000 43.000 60.000 50.000 55.000 45.000
11,1 Mio
11,0 Mio
11,0 Mio
11,0 Mio
Vacancy
6,60% 6,60% 6,50% 6,50% 6,40% Prime Rent (€/m²)
25,50
25,75
26,00
26,00
26,00
26,00
Average CBD Rent (€/m²)
19,00 19,00 19,25 19,25 19,25 19,25
700
900
350
550
845
1.850
4,75% 4,70% 4,60% 4,60% 4,55% 4,45%
Turnover (m²)
Available Space (m²)
Volume Austria (Mio. EUR)
Prime Yield
11,05 Mio 11,05 Mio
6,35%
Quelle: DPC Research
7
Office Market Report Spring 2016
Danube Property Consulting
TAKE UP
RENT LEVELS
Take-up in 2015 was approximately 210,000 m², which represents a decrease of almost 20%
over the same period in 2014. Larger lettings were not common during 2014 and 2015. The
last quarter in 2015, a traditionally strong period, remained below expectations.
The prime rent remains stable. Average rents in good and high-quality properties as well as in
good to very good locations also remain stable.
Looking at the rentals at the sub-market level, the submarkets mainly of the Central Business
District CBD, the submarket south / Wienerberg and the Donau City were in the leading
position. But even the submarkets of Erdberg and the West recorded some positive rental
activity compared to the previous year.
In Q1 2015 take up was approximately 60,000 m², representing an increase of about 35% over
the same period in 2014. The rest of the year then fell short of expectations and the early 2015
forecasts for letting performance could not be fulfilled.
Take-up in 2016 is expected to be similar to 2015 and equate to approximately 200,000 m².
Larger lettings are expected to be more common during 2017 and 2018, when more new,
modern space comes onto the market.
In Q1 2015, there was a further increase to € 26.00/m² from .the end of 2014 ( Q4 2014: €
25.75/m² ). During the remainder of 2015 the prime rent remained stable.
The average rent in downtown (CBD) is approximately € 17.00/m² - € 20.00/m² .
The positive market development is also reflected in the average rents outside the CBD again.
The annual rent for high-quality properties in good to very good locations increased in the last
12 months by approximately € 0.25/m² to € 0.50/m².
In secondary locations, as well as in older office buildings, rents have remained relatively
stable.
Take Up and Top Rents
Forecast
Property Market
Top Rents
9
Office Market Report Spring 2016
Danube Property Consulting
SELECTED LETTINGS FROM 2015
Tenant
Ernst & Young
Austro Control
Vaillant
Global Blue
Mars
Alcatel
Beiersdorf
Sky
MSD
Zumtobel
Union Investment *
Electrolux *
Panalpina *
*serviced by DPC
Space in sqm
12,000
10,000
5,000
4,750
4,500
4,250
2,800
2,500
2,250
1,500
1,300
1,300
1,300
Zip code
1220
1220
1100
1200
1200
1220
1120
1200
1220
1220
1010
2345
1120
Object
IZD Tower
IZD Tower
Business Park Vienna
Rivergate
Rivergate
Saturn Tower
Euro Plaza Gebäude H
Rivergate
ARES Tower
IZD Tower
Börse
Campus 21
Euro Plaza BT C
Source: DPC Research
VACANCY
6,35%
The vacancy rate in 2015 was
which reflects
a decrease by 20 basis points compared to the end of
2014.
Property Market
The decrease is due to the low supply of new development
completions which have come on the market and also
the strong tenant demand for space.
Submarkets Vienna
CBD
The CBD includes the 1st district of Vienna and the area directly adjoining Wien Mitte
and the Schwarzenbergplatz.
Along the Ringstrasse which surrounds the 1st District, there are magnificent historical
buildings, and numerous luxury hotels.
The district is generally characterized by mixed use and older restaurated historical
buildings. The mixed use buildings include some office buildings, many luxury hotels
and a lot of classic apartments.
The most expensive retail locations in the city are located in the CBD, especially in the
Kohlmarkt, Graben and Kärntner Strasse.
The largest modern office building of the CBD is the „Wien Mitte“, located on the southern
border of the 1st, within the 3rd district. In addition to office space, the property also
accommodates the largest inner-city shopping center, and includes a total of approx..
61,700 sqm of office space and approximately 30,300 m² of retail space.
Significant Buildings:
1010, Fleischmarkt 1 (ca. 15,000 m²)
1010, Renngasse 5 (ca. 3,500 m²)
1010, Gauermanngasse 2-4 (ca. 8,500 m²)
1010, Goldenes Quartier (ca. 10,000 m²)
1010, Palais Batthyány (ca. 3,500 m²)
1010, Rathausstraße 1 (ca. 9,000 m²) *
1030, Haus an der Wien (ca. 18,000 m²)
1030, Wien Mitte (ca. 61,700 m²)
*…Project
13
INNER DISTRICTS
SUB MARKET Main Railway Station
The inner districts have no coherent submarket, but are rather characterized by their
mixed use. Areas within this sub market, such as Mariahilferstrasse and Landstrasser
Hauptstrasse have a number of modern office buildings, and have also become the
main retail streets outside the CBD.
Situated around the newly reconstructed Vienna Main Railwaystation are located
a number of newly constructed office buildings, which include the LX2 and the Erste
Campus. Further office buildings will be realized, and will include for example The Icon
Vienna and the QBC.
The highest rents are achieved in the Mariahilferstrasse.
Significant buildings:
Significant buildings:
Submarkets
1040, Bureau am Belvedere (ca. 12,600 m²)
1040, City Star (ca. 12,500 m²)
1090, Vienna Poli Center (ca. 2,500 m²)
1100, First Campus (117,000 m²)
1100, Quartier Belvedere, QBC (80,000 m²) *
1100, The Icon Vienna, (74,200 m²) *
1100, LX 2 (17,000 m²)
*…Project
15
SUB MARKET SOUTH
SUB MARKET EAST (3rd AND 11th DISTRICT)
The submarket South is mainly focused along the Wienerbergstraße and Euro Plaza
in the 12th districe, together with Wienerberg (Twin Tower Business Park Vienna) in
the 10th district. It also includes the 23rd District which is characterized primarily by
industrial but with a growing number of newly constructed office buildings. Modern
offices include for example the Silo phase 1. Phase is 2 is expected to be realized in
the next few years.
The Vienna submarket east is situated between the center of Vienna and the eastern
city border. To the east of Vienna is located the international airport Wien-Schwechat,
which is a main factor why this part of the market is benefiting.
Submarkets
The 6th and final phase of the successful Euro Plaza project has commenced, and is
expected to be completed in early 2017.. The final phase will consist of 12,000 m². In
Business Park Vienna, the existing buildings are currently being refurbished to a high
standard.
Significant buildings:
1100 Business Park Vienna (100,000 m²)
1100 Vienna Twin Tower (70,000 m²)
1120 Euro Plaza (210,000 m²)
1120 Euro Plaza building phase VI (12,000 m²) *
1230 Silo offices (12.000 m²)
1230 Silo 2 + 3 (20,000 m²) *
*…Project
The office buildings have mainly develolped along the underground line U3. In addition
to the office campus TownTown other important office areas include the properties in the
area Gasometer and St. Marx, and the offices in the Modecenterstraße.
Significant buildings:
11030, Orbi Tower (28,000 m²) *
1030, Doppio offices (7,500 m²)
1030, GATE 2 (31,000 m²)
1030, Triiiple *
1030, Marxbox (10,500 m²)
1030, Marx Square (50,000 m²) *
1030, MGC Office Park (50,000 m²)
1030, Town Town (128,000 m²)
1030, QBIK (12,200 m²)
1030, ZRS (13.500 m²)
1030, NXT Marx , (25,000 m²) *
1110, Marximum (40,000 m²)
1110, Office Campus Gasometer (50,000 m²)
*…Project
17
SUB MARKET NORTHEAST | DANUBE CITY
SUB MARKET PRATER | DANUBE
The Danube City is charachterised by the many office and residential towers, which
over the past 22 years have been developed.
The submarket Prater boarders the northern edge of the first district. It includes the
office axis Lassalle Street, the Praterstern, Nordbahnstraße and Dresdner Straße, as
well as the area around the Viertel Zwei and Vienna Congress Center in Prater.
In 2013, the DC Tower 1 was completed with approximately 66,000 m² and officially
opened in February 2014. This tower, with a total height of 250 m, is now the tallest
building in Vienna.
The submarket benefits from a very good connection to the underground network,
proximity to the city center and the direct motorway access and excellent infrastructure.
Submarkets
Significant items:
1210, Floridotower (36,000 m²)
1220, Andromeda Tower (35,000 m²)
1220, Forum Donaustadt (20,000 m²) *
1220, DC Tower 1 (44,000 m²)
1220, IZD Tower (63,000 m²)
1220, Saturn Tower (57,000 m²)
1220, Tech Gate (54,000 m²)
*...Project
The office project Viertel Zwei has developed in to a very good submarket in recent
years and are fully leased with almost a 100 % letting.
This submarket has evolved to an important location mainly through the underground
extension of the U2 line and the establishment of the new University of Economics and
also close proximity to the city center.
Furthermore, in this area of Vienna there are significant office buildings along Handelskai.
Above all, here is the Millennium Tower, as well as the objects Rivergate and Catamaran.
Significant items:
1020, 2nd Central Office at the park
(15,000 m²)
1020, Viertel Zwei (total: 92,000 m²)
1020, Denk Drei (22,500 m²) *
1020, Catamaran (40,000 m²)
1020, Austria Campus (approximately
200,000 m²) *
1020 Green Worx (19,000 m²)
1020 Messecarree (4,600 m²) *
1020, Smart Office (60,000 m²) *
1200, Rivergate (50,000 m²)
1200, Millenium Tower (m²)
*…Project
19
SUB MARKET WEST
SUB MARKET NORTHWEST
The sub market West is not known for having any established office location. The office
buildings are located primarily along the artery roads and in mixed use areas. Public
transport is well served by the metro line U4.
The sub market north west includes the 19th district is also one of the most popular
residential districts. Along the Danube Canal from Heiligenstadt to Spittelau has also
developed in to a good location for office and commercial buildings. Well known office
projects include the Skyline, space2move and Kay29. The existing two components of
the property space2move are to be extended by a further phase.
The most prominent office buildings are the two phases of Forum Schönbrunn.
In the 15th District the office properties are located around the Railwaystation West.
Due to the direct proximity to the inner districts, as well as the ideal public transport
access (train, subway U3 and U6) the highest rents for the submarket West can be
obtained here..
Significant buildings:
Significant items:
1190 Kay 29 (7,500 m²)
1190 Skyline (16,000 m²)
1190 space2move A + B (26,000 m²) in
1190 , space2move C (20,000 m²)
Submarkets
1120, Forum Schönbrunn 1 + 2 (31,000 m²)
1140, Bergmillergasse (8,000 m²)
1140, Breitensee Business Park (6,000 m²)
1150, BahnofCity Wien West (13,000 m²)
The location has a good connection to the city center and is well connected by public
transport with the subway line U4 and the station Heiligenstadt.
21
Another record year
2014 the total investment volume for Austria was approximately EUR 3.0 billion, a new record.
In 2015 this record was broken with transactions totaling approximately EUR 3.6 billion. In
2015 a number of significant transactions were recorded. For 2016, the signs are also very
good and a similarly high total investment is again expected.
Until recently the market was primarily dominated by domestic investors. During the past 2
years, the interest from international buyers has increased sharply. In addition to buyers from
Austria and Germany investors from Russia, the Middle East and Asia are also increasingly
active. International investors accounted in 2015 for around two-thirds of the total volume. In
large-volume transactions (> 100 million) international investors are very active.
The highest demand segment were office properties in the previous year. They accounted for
about 50 percent of the volume, followed by the retail segment with 25 percent.
Investmentmarkt
Investment Market
Office Market Report Spring 2016
Danube Property Consulting
Continuing new demand
YIELD
The investment volume in Q1 2015 was lower than in the same period during 2014. Noteworthy
is the 4th quarter, which accounted for more than half of the total transaction volume.
Office prime yields have continued to fall in the wake of high demand and were at the end of
2015 at 4.45%. Demand for real estate Vienna, and especially office properties, continues to
be high and the current very low interest rates continue to give the leverage focused buyers
an advantage. Given the low supply, particularly in the premium segment, it is assumed during
2016, that the yields will continue to be under strong pressure and the prime yield will fall below
4.30%.
Approximately 75% of Austria‘s total investment volume of 2015 was in the Vienna market.
The main focus of potential buyers was directed in recent years at mainly prime properties.
Demand is for prime properties with an excellent location, long lease terms and good tenant
covenant. Although demand is still high, the supply is very low with correspondingly high price.
In addition to classic institutional core investment, opportunity investments moved increasingly
into the focus of national and international buyers where a higher risk with higher yields can
be achieived. These include secondary locations and properties with potential for optimization.
Properties with appreciation potential, which can be optimized through long term and active
property management are in demand not only at national but also at international investors
again.
Demand from developers looking to convert former office buildings which are empty or are
poorly rented to residential properties has continued to increase. This trend has been steadily
growing during the past 3 years.
For non prime properties prices have also increased during the last 12 months. Initial yields
for well-let properties in good locations were between 4.80% and 6.00%. Properties in poorer
locations and with higher vacancy were sold with yields of between 6.00% and 7.50%.
Prime yields in the retail segment were also under pressure during 2015 due to high demand
and are currently at 3.85% for prime retail shops, at 4.50% percent for shopping centers and
6.00% for good retail parks. Little change is expected during 2016.
For logistic properties, prime yields have fallen slightly within the last year and now equate to
approx. 6.70%. For such properties, there is again very little supply.
Another focus of investor demand is for retail properties. Investors focus primarily on prime
and core properties and mixed-use properties in the shopping streets, shopping centers and
retail parks in good locations.
Investment Market
Also in demand are hotel investments. During 2015, 250 million euros were recorded on hotel
investment deals, exceeding the transaction volume of 2014 which was 230 million euros.
Demand in this segment is still high and a further increase is expected during 2016.
Approximately 5% of the investment volume is accounted for with logistics and industry (175
million euros). Again, the demand is high for well let and well located products but again very
little supply is available.
24
Office Market Report Spring 2016
Danube Property Consulting
DEALS 2015
DEALS 2015
The largest deal in 2015, with a volume of more than 500 million euros, was the sale of „Wien
Mitte“ by the Bank Austria to a consortium led by Morgan Stanley Real Estate. The transaction
took place in the 4th quarter.
Likewise, in the last quarter of the year, the „River Gate“ and the „House at the Vienna“ were
sold. Signa and Raiffeisen Leasing sold the office building Rivergate to a joint venture of the
Canadian Real Estate Fund Global Dream Horse and an Asian sovereign wealth funds by about
EUR 190 million. The office building „Haus an der Wien“ was sold in the Middle Zollamtsstraße
for around 94 million euros. The new owner is Allianz Real Estate Germany GmbH.
In summer 2015, the developer 6B47 acquired the Bank Austria building on Vienna‘s FranzJosef station for around EUR 115 million. According to the new owner a demolition and
reconstruction of the property with an effective area of approximately 69,400 square meters is
conceivable.
Objekt
Adresse
Wien Mitte
1030 Landstraßer Hauptstraße 1a
Bergkristall
Größe
(m²)
Verkäufer
Käufer
Mio.
95,000
BAI
Morgan Stanley
>500
1090 Julius Tandler Patz 3
69,400
Wölbern Invest
6B47
155
Rivergate
1200 Handelskai 92
51,000
Signa
Dream Global
190
Space2move
1190 Muthgasse 24-34
50,000
RHPI
Union Investment
185
Fischapark
2700 Wiener Neustadt
46,000
SES
Allianz
Gate 2, BT 2
1030 Guglgasse
31,500
BAI
Wertinvest
Pier 50
1200 Brigittenauer Lände 50-54
22,000
KGAL
FLE
46
Semper
Constantia
32
105
FMZ Alt Erlaa
1230 Anton-Baumgartner-Str. 40
20,000
WarburgHenderson
Green Worx
1020 Lassallestraße 7a
19,000
S+B
Union Investment
50
Nordbahnstraße
1020 Nordbahnstraße 50
15,700
BA Real Invest
CORPUS SIREO
43
Haus an der Wien
1030 Vorderen Zollamtsstraße 13
14,300
Signa
Allianz
94
Brehmstraße
1110 Brehmstraße
14,000
Morgan Stanley
HIH
21
Galleria Danubia
3520 Hainburg
14,000
Halpin GesmbH
KGAL
Österr.
Investorengr.
Warburg HIH
InterCity Hotel
1070 Mariahilfer Straße 122
9,100
k.A.
53
Mariahilferstraße 122, with the main tenant Vienna Intercity Hotel was acquired by the Hamburg
fund Warburg-HIH Invest Real Estate GmbH by an Austrian investor group for about 53 million
euros.
In early 2015, the Courtyard by Marriot was sold by S IMMO AG for approximately EUR 35
million to the German fund Deka.
The largest transactions outside Vienna include the sale of Bruckner Office Centers in Linz and
the business center railway station in Graz. Both properties were purchased by the Austrian
fund Immo Kapitalanlage AG (ImmoKAG).
Investment Market
Notable retail deals in the shopping center and retail park area last year were next to „Wien
Mitte - The Mall“ et al the sale of Hainburger Fachmarktzentrum Galleria Danubia to KGAL
Group. The retail park Alt Erlaa in Vienna-Liesing was sold by Warburg-Henderson to Semper
Constantia ImmoInvest Gmbh.
26
Investment Market
FORECAST 2016
High demand, low supply, low interest rates and high
liquidity available will continue to exert pressure on
yields and lead to a further rise in prices. The investment
volume will experience a similar pace to 2015.
The first sales in 2016 have also been completed. Allianz
Real Estate GmbH have increased their share in the
shopping center Fischapark in Wiener Neustadt to 49.5
percent. Joint venture partners are SES Spar European
Shopping Centers.
Also earlier this year the shopping mall City Gate in
Vienna-Floridsdorf was sold to Warburg HIH Invest Real
Estate GmbH. The seller was the truncated group.
Danube Property Consulting Immobilien is a real estate service provider for Commercial
and Residential Real estates as well as Investment properties with the focus on marketing
and valuations.
• Leasing
• Selling
• Valuations
• Corporate Solutions
• Investment
• Development Consulting
• Project Management
• Market Research
• Office buildings
• Investment objects
• Residential
• Shopping Center
• Retail
• Industrial
• Land
• Hotel Real Estates
Danube Property Consulting Immobilien GmbH
+43 (0) 1 904 94 50
+43 (0) 1 904 94 50 – 14
[email protected]
Babenbergerstraße 9/7, 1010 Wien
dpcreal.at
The information and forecasts in this report are made
without guarantee, warranty or liability. February 2016