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Wednesday, March 22, 2023

The office space market is recovering: Union Investment with a robust rental balance

The rental balance of Union Investment’s global office portfolio has recovered comparatively quickly from the corona pandemic. In the first half of 2021, a total of around 196,000 m² of office space was newly or re-let. Before the pandemic, in the first half of 2019, it was 156,000 m².

Overall, Union Investment kept the occupancy rate of its real estate portfolios at a high level in the first half of 2021, which was still characterized by the corona pandemic. Across all types of use and based on all actively managed real estate funds, the total occupancy rate based on income at the end of June 2021 was 94.5 percent.

The corona pandemic temporarily unsettled many office users. In the past year, rental decisions and expansion plans were postponed many times. In the meantime, however, market participants have become more optimistic again. Our successful rental balance this year also shows that properties in well-connected locations with modern, flexible and sustainable space remains in demand even in difficult times like these “, says Sven Lintl, Head of Asset Management Germany at Union Investment.
Working from home has gained in importance in the wake of the pandemic and will continue to play an important role in the everyday work of office workers in the future. However, this trend will not result in a significant decline in demand for office space in the medium to long term. “This is proven by experience in the Netherlands, among other things: the introduction of a right to work from home has not led to increasing vacancy rates in the office segment. Central office workplaces remain in demand,” said Cathrin Schwartz, Head of Asset Management Europe at Union Investment.

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The largest new letting in terms of area in the office portfolio took place in “The Plant Fürth”. A total of around 6,200 m² was newly allocated on the 54,000 m² campus. It consists of seven different buildings and is located directly on the renatured banks of the Pegnitz, on the city limits of Nuremberg. The complex has been part of the Urban Campus No. 1 special fund since 2016. “140 Broadway” in New York City ranks second among the top new leases. Around 4,700 m² were newly leased here in the first half of the year. The approximately 200 meter high office building in the Downtown Manhattan submarket is one of New York’s most famous skyscrapers. It has been part of the UniImmo: Europa portfolio since 2004. “The Plant Konstanz” follows in third place, also in the portfolio of the Urban Campus Nr.1 ​​special fund, in which around 3,480 m² were rented.


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