Banking Giants Shake Up Frankfurt's Record-Breaking Real Estate Scene
- Bank dealings experience historic peaks in Frankfurt's financial district
Big moves from financial heavyweights Commerzbank and ING are injecting fresh energy into Frankfurt's stagnating office market. According to real estate broker Jones Lang LaSalle (JLL), unprecedented office space rentals - an impressive 200,000 square meters from January to March this year - sets a new first-quarter record. That's more than double the amount from the same period last year!
The lion's share of these record numbers can be attributed to Commerzbank, which plans to lease the Central Business Tower, a high-rise located in Frankfurt's financial district, starting in 2028. Approximately 3,200 employees currently working from decentralized locations will relocate to the impressive 73,000 square meter space. Alongside this, ING has announced its intention to move its headquarters to Frankfurt's Ostend in 2028, securing around 32,000 square meters for the move.
Suat Kurt, head of Frankfurt's branch of JLL, looks to the future, forecasting, "For nearly a decade, the Frankfurt office market has been dominated by small deals. However, by 2025, significant transactions will take center stage." With potential for further large-scale deals in the pipeline, JLL anticipates a total of 475,000 square meters to be sold in 2025, roughly equivalent to the past decade's average.
The coronavirus pandemic has left its mark on Frankfurt's office market, with work-from-home policies becoming the norm. As a result, the vacancy rate surpassed 10% in the first quarter. Despite some companies like Deutsche Bank calling for more in-person work, a study by the Ifo Institute suggests that nearly a quarter of workers will continue to work at least partially remotely.
As JLL reports, the gap between Frankfurt's premium and secondary office locations is growing. In-demand modern spaces positioned in prime locations like the banking district are fetching top dollar, with rents hovering around €50 per square meter. On the other hand, vacant spaces in less desirable locations like Frankfurt-Niederrad or City-West struggle to command the average rent of €32.60 per square meter.
The escalating demand for prime locations is putting pressure on central areas of the city, with rents under €50 per square meter becoming unsustainable in the long run, says Kurt. The influx of workers from Frankfurt's surrounding regions is only exacerbating this trend. So, buckle up, Frankfurt - it's shaping up to be one hectic real estate market!
- Frankfurt
- Real Estate
- Record
- Relocation Plan
- Commercial
- Office Market
- Work-from-Home
- Germany
- ESG
- Logistics
- By 2025, Frankfurt's office market may witness a shift, as significant transactions are expected to dominate, according to Suat Kurt from JLL.
- In line with their relocation plans, Commerzbank and ING are set to contribute to the average rental pricing in Frankfurt, as they lease prominent commercial spaces in 2025 and beyond.
- As Frankfurt's office sector moves towards consolidation, employment policies such as work-from-home arrangements could influence the demand for office space in various city locations, contributing to the growing disparity between premium and secondary office rents.
