Real estate market report Ruhr 2023

Office occupancy in the Ruhr Metropolis will total around 550,000 sq m MFG in 2022, which is well above the 10-year average of 504,000 sq m MFG.

Despite increased vacancy rates, prime rents have so far shown stable to slightly rising trends and are between €16.50 and €19.00 per sqm MFG in the core cities. For new-build space in prime locations, the 20.00 euro mark has already been exceeded.

In total, around 911 million euros are being invested in office properties, which is above the 10-year average of 860 million euros.

However, the yield premiums of up to 30 basis points are more moderate in the Ruhr Metropolis than in the significantly more expensive A-cities with up to 45 to 60 basis points.

Corporate real estate is mixed-use commercial property with a typical tenant structure of medium-sized companies. The mix includes office, warehouse, manufacturing, research, service and/or wholesale space as well as open space. The corporate real estate segment includes distribution properties (< 10,000 sqm), production warehouses (< 10,000 sqm), industrial parks and transformation properties.

Completion volumes are down in 2022, compared to previous years. These figures confirm the impression that was already emerging at the halfway point of 2022. Competition from other types of use and rising construction and financing costs, combined with further economic uncertainties, continue to limit the project development business.

Rents are developing in the area of tension between limited supply and vital demand and are consequently showing slight growth.

The yield compression of recent years has also come to an early end in this segment due to higher financing costs and economic uncertainties.

Over the course of 2022, yields have risen between 10 and 40 basis points, depending on location and corporate property type, which is moderate compared with A-locations.

The logistics market in the Ruhr Metropolis is following the overall German trend, according to which logistics properties continue to be in high demand and take-up is being held back primarily by a shortage of available space. This excess demand is driving up rents and leading to rising rents in all submarkets of the Ruhr Metropolis.

Transaction turnover in the second half of the year amounted to only 81 million euros, while the total volume for the year as a whole was 536 million euros.

At +30 basis points in the core segment and +10 to +30 basis points on average (core area/Ruhr Metropolis), the increase in yields in the Ruhr Metropolis compared with the year-end values for 2021 is in line with the general market trend.

Retail rents have once again fallen slightly, as the rents demanded, particularly for textile retailers, are virtually unaffordable in many places. The necessary sales can no longer be generated.

On the consumer side, higher spending on energy and everyday consumer goods is depressing the propensity to buy. In many places, not only in the Ruhr region, these factors are reflected in an increase in the number of vacant store units.

Net initial yields have risen somewhat more sharply than in the A-cities, by 30 to 40 basis points in the central locations. The highest demand volume remains in the "daily needs" product group with 63.2% pro rata market potential, while all other market areas have predominantly declined in demand in 2022.

The investment market in the Ruhr Metropolis is positioned in the lower midfield in comparison with the seven A cities in 2022. It ranks behind Düsseldorf in terms of transaction volume, but this time is clearly ahead of Cologne and Stuttgart.

In the segment-specific analysis of commercial investment volume, there have been some shifts compared with 2021. With a transaction volume of around EUR 911 million, office properties are in the lead, ahead of logistics properties with just under EUR 536 million. After a dynamic start to the year in the first quarter with €772 million, transaction activity slumped significantly to €365 million in the second quarter as a result of the changed conditions on the capital markets and the associated uncertainties about future price developments.