Rental price development for commercial real estate

The development throughout Germany, in individual region types and locations as well as for 16 major cities is considered. The rental price developments are estimated on the basis of a hedonic rental price model in order to eliminate distortions caused by changes in locations, property qualities and other characteristics. In addition, descriptive indicators such as median rents and median offer terms as well as supply figures are used. The main findings of the investigation are as follows:

• Overall, office rents increased by 5.9 percent and retail rents by 6.2 percent in 2022 compared to the previous year. This means that rental price growth in both submarkets is below the inflation rate of 7.9 percent.
• Looking back over the last 4 years (2018 = 100), the annual average rental price development for retail properties is in line with the consumer price development of 3.2 percent per year (13.5 percent over 4 years), while the office rent development is slightly higher with an annual average growth of 4.4 percent per year (18.8 %). However, regional differences must be taken into account, which are discussed in more detail in the report.
• The marketing period for retail space has been declining again for several quarters and has normalized, which is also due to a decline in supply. In the office market, on the other hand, there are only slow adjustments to the marketing periods, also because a significant part of the offers still has very long offer terms.
• Retail rents rose particularly sharply last year in Frankfurt/Main, Berlin and Düsseldorf. Especially in the retail market, however, rebound effects can be observed, which make individual annual results difficult to interpret. Since 2019, rents have risen overall in Stuttgart, Frankfurt and Cologne. Overall, however, the results of 16 individually evaluated metropolises tended to be  below the national average, which, in combination with falling location premiums, points to changes in the retail market.
• In the office market, rents have risen sharply, especially in Leipzig, Hanover and Duisburg, and since 2019 also in Leipzig, Berlin and Cologne. Unlike in the retail market,  central location still seems to be of great importance.