pbbIX continues slight upward trend

• Index still bottoming out with a tentative upward trend
• Moderate increase in demand for office space over the course of the year
• In the 4th quarter of 2024, prime rents were over 6 % higher than a year earlier

Munich, 20 February 2025 - The slight upward trend observed since Q2 2024 remained intact at the end of 2024. The pbbIX continued to rise tentatively in Q4 2024, reaching a value of -1.86. The year 2024 as a whole was characterised by a shrinking economy. Nevertheless, demand for office space increased moderately over the course of the year but remained at a comparatively low level. Although take-up on the investment markets doubled compared to the previous quarter, the total investment volume this year remained just as low as in the previous year. In the prime segment, initial yields remained stable over the course of the year and capital values only increased slightly due to the continuous growth in rents.
The inflow on the BIG 7 office investment markets increased in the 4th quarter. 2024 at a low level. Nevertheless, the recessionary development on the office investment markets continues unabated. Office investments totalled € 4.1 billion over the whole of 2024 and were thus at the same level as in the previous year.

The stagnating economy continues to have an impact on the office space markets in the BIG 7, which are suffering from weak demand. At around 690,000 m², take-up in the 4th quarter was down on the previous quarter (730,000 m²). Despite the lack of an economic tailwind, 2.7 million m² was let over the year as a whole, 150,000 m² (+6%) more than in the previous year. In the course of an expected slow economic recovery, only a moderate increase in office space take-up is likely over the course of 2025.

With a completion volume of 1.6 million m², new construction activity was
around a quarter higher than in the previous year. In conjunction with the below-average letting turnover, the vacancy rate increased noticeably and amounted to a weighted average of 6.8% across all BIG 7 markets at the end of the year. This is also the highest vacancy rate since the third quarter of 2015.

In line with the demand for high-quality space, prime rents continued to trend upwards. In the 4th quarter of 2024, they were over 6% higher than a year earlier. Average rents also at a slower pace. Due to the strong demand for premium space in top locations, prime rents remain under upward pressure.

You can download the full report for Q4 2024 here or as always at pbbIX.com.