Office Market Report Stuttgart 2021/2022

The space take-up on the Stuttgart Office Market is recovering from the pandemic year 2020. The vacancy rate remains on a constantly low level. Office fit-out is becoming the most important factor in rental decisions.

By 31 December 2021, the space take-up on the Stuttgart Office Market achieved 157,200 square metres. This result signifies an 11% increase compared with the Covid-shaken previous year. The vacancy rate grew marginally from 3.1% in the previous year to 3.2% in 2021. This figure corresponds to a current space supply of ca. 280,000 square metres and an 8% increase in shortly available office space.

While these figures have not fundamentally changed in comparison with 2020, the requirements for office space have: compliance with ESG-standards is gaining further significance, as well as infrastructural factors such as glass fibre connections and public transport links – or the amount of operational and additional costs. These trends are profoundly described in the current Stuttgart Office Market Report by E & G Real Estate and the Economic Development Office of the City of Stuttgart.

The largest letting with ca. 11,200 square metres was concluded at Stuttgart-Zuffenhausen by government agency Bundesanstalt für Immobilienaufgaben (BImA).The second biggest lease was signed by Ed. Züblin AG for ca. 9,500 square metres at Stuttgart-Vaihingen. In neighbouring Stuttgart-Möhringen, educational provider Internationaler Bund (IB) closed a sale-and-lease-back transaction for ca. 8,000 square metres of office space.

Public tenants with greatest space take-up

In the past few years, the public sector has been playing a major role for office rentals in Stuttgart. Also in 2021, this occupier group has generated the largest space take-up with a total of 25,500 square metres. At the same time, the significance of industrial companies for office rentals, especially by automotive users, keeps waning. A positive trend can be observed in the service sector, above all IT and telecommunications companies. This occupier group accounted for the second highest space take-up with around 22,400 square metres of rented office space. In addition, also consulting companies have shown an increasing demand for office premises. Especially legal offices, but also personnel service providers have increased their footprint in new rentals.

New momentum, more space

The dynamics on the Stuttgart Office Market are picking up again. A total of 248 leases signed in 2021 not only beats the result from the previous year, but also from before the Covid-pandemic.

The highest space take-up on the Stuttgart Office Market comprising 46,000 square metres was recorded at the southern sub-market of Vaihingen/Möhringen. This shows that infrastructural factors such as the proximity to major traffic routes now play a significant role in rental decisions.

The CBD and Inner City of Stuttgart rank second in terms of space take-up confirming that high quality, modern office units will quickly find new occupiers.

In view of upcoming space release, especially the supply in northern and southern fringe locations will increase in the near future. The Office Market Report predicts a total of 271,600 square metres of newly built office space becoming available on the market. 47% of this space supply is already pre-let or will be taken up by owner-occupiers.

Solid rent levels

The mean value of all prime rents recorded in 2021 fell 2% short of the result in the previous year. One reason for this slight downward trend was the low number of leases signed in this price segment. This is mainly due to the shortage of such rental opportunities at the inner city of Stuttgart.

An average rent level of €16/m2 for the entire Stuttgart Office Market also signifies a minor decrease. This is not the result of a Covid-induced rental slump, bur rather due to the fact that many leases were concluded for existing space in fringe locations.

„Despite the homeworking revolution and a changing work-life-balance, the Stuttgart Office Market is seeing after two years of pandemic a low vacancy rate, an attractive space take-up and real estate investments in the billion range. This shows that the State Capital remain an attractive innovation and economic hub,” says Bernhard Grib, Head of the Economic Development Office of the City of Stuttgart.“To make sure that it stays this way, office and space concepts will need to become more flexible in the future, meeting factors such as New Work, Third Places, Workplace Health and Sustainability. Wherever possible, the City of Stuttgart will invest and promote digital transformation, climate action and social justice – for example, with a 200 million euro action plan comprising more than 50 different measures including energy efficient retro-fitting and more solar panels on residential, commercial and city-owned rooftops.”

„The dynamics in space demand are evident and will generate increasing space take-up,” adds Ulrich Nestel, Head of Office Letting at E & G Real Estate. „Modern requirements on office space such as flexible space layout, excellent technical fit-out, conformity with ESG-criteria and an upscale infrastructural environment need to be fulfilled, especially when it comes to winning qualified staff. In new build projects, much can be planned in. Owners of existing premises will need to amend their space offer in order to gain acceptable rental values.” In this way, a letting volume of 200,000 square metres may be achieved in the year 2022, according to the forecast by E & G Real Estate.

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