Total Year 2017: Letting performance held back by lack of office space in Stuttgart

As forecast during the course of the year, after two successive record-breaking years the Stuttgart office market failed to reach a new record in 2017. Despite a significant fall, of 38% compared to 2016, letting take-up of 268,000 sqm in 2017 was still some 15,000 sqm above the 10-year average. What stood out was that the third quarter was the strongest, with take-up of 107,000 sqm, followed by the first quarter with 75,000 sqm. Take-up was lowest in the second (41,000 sqm) and fourth quarters (45,000 sqm).

Stuttgart’s main problem continues to be the disparity between the sustained high demand and the wholly insufficient supply of office space. Vacancy fell again during the fourth quarter to its current level of just 167,000 sqm. Based on a total office stock of 7.8million sqm, this equates to a vacancy rate of 2.1%. A letting performance of up to 250,000 sqm appears realistic for 2018 due to the increasingly worrying scarcity of space.  

Prime rent reaches record level

The prime rent rose from €24.00/sqm in the previous quarter to €24.30/sqm/month, the highest ever achieved in Stuttgart. The average rent rose from €13.60/sqm/month to €13.70/sqm. The reasons for the rising rents were the deteriorating supply situation and the increase in building costs and land prices. It is expected that office rents will continue to grow over the coming months. New-build projects will not alleviate the lack of available space over the short to medium-term, as a high proportion of this space is already prelet. 

The two largest lettings in 2017 were both to Daimler. The group began by announcing an owner-occupier deal in a planned new-build in Leinfelden-Echterdingen; the second was a letting of 11,500 sqm in Stuttgart-Vaihingen. The third largest signing was the letting of 11,300 sqm to CMS Hasche Sigle in the Calwer Passage project developed by Ferdinand-Piëch-Holding. The most active sectors were manufacturing, consultancies and the IT sector. The most active office submarket in Stuttgart was Leinfelden-Echterdingen due to Daimler’s owner-occupier deal. This was followed by the Vaihingen/Möhringen submarket and Stuttgart City Centre.