Asset classes - glossary

Gross value added (GVA) as a measure of the economic performance of an economic sector is calculated by subtracting the outlay consumed in production (consumables, supplies and other goods, semi-finished products and trading goods, transport costs, rent etc.) from the overall production of goods (turnover, value of changes in inventories of own goods and the self-produced assets) in a reporting year.

The GVA at cost price as difference from gross production value and outlay results in determination of the level of net output of an economic field within a region.

Office workers

The number of office workers is calculated by dividing the employees subject to social security contributions according to occupational grouping. The basis for this is occupational grouping rates of employees subject to social security contributions according to the Dobberstein method, supplemented by civil service employees in office tasks, self-employed and assisting family members with specific rates. For example, the share of engineers that work in offices and are also subject to social security contributions fluctuates between 60 % and 100 %, depending on technical specialisation.
In contrast to the von Einem method, these occupational grouping-specific rates are accounted for to a greater extent.

The number of office workers and the office rate are calculated on the basis of this occupational grouping data.

The respective subtotal of office-relevant employment is derived from the multiplication of the corresponding office quota with the corresponding group of gainfully employed persons. Taking account of full and part-time information results in a parameter that states regional office employment in full-time equivalents (FTE). To aid comprehension, the FTE is indicated without decimal points. As a result of this rounding off, differences to the total value are possible.

Data from 2012

As a result of the switch to WZ08 and renewed revision of the data by the BA in August 2014, unfortunately no conclusive statement of the office employment basis has yet been made by the Bundesagentur für Arbeit. The data in RIWIS is therefore estimates of bulwiengesa, undertaken with the aid of the figures for employees subject to social security contributions according to the WZ08.

Existing space

The gross existing space comprises the total stock of office space relating to gross floor space in a location, calculated by bulwiengesa AG. In the case of net floor space only the net space is illustrated, with the calculation also accounting for annual demolition rates.

The basis for calculation is the development of office employees and the annual growth in new space. A more precise estimation method is used for calculation of office employees, based on the Dobberstein method for calculating office workers.

New space

New space in the key office market towns and cities (currently approximately 25) is based on own surveys of bulwiengesa AG and is a net value (usable space).

For the 7 A cities these surveys are dated as follows:

Munich from 1998

Frankfurt am Main from 1999

Stuttgart from 2000

Berlin from 2001

Düsseldorf from 2001

Hamburg from 2001

Cologne from 2001

New space for the B cities is generally based on own surveys from 2001, with the official construction activity statistics utilised for the remaining locations, joined by the property information of bulwiengesa AG, with the official figures and own new construction statistics published.

Vacancy

Vacancy is office space standing vacant at the end of a respective year. Account is only taken of marketable properties, with structural vacancy not considered.The vacancy rate indicates the ratio of vacancy to existing space.

Floor space turnover

Floor space turnover is defined as an annual sum, it primarily describes the turnover of office space (in m² CRS) via letting (no contract extension, no lease back), but also includes space newly utilised by owner occupiers. The time point of floor space turnover is the conclusion of the contract for lets and the beginning of construction or purchase in the case of owner occupiers.

Rents

Office rents are reported in euro/m² usable space (CRS according to gif) and apply for office spaces in marketable condition (technical/spatial) with good equipment levels and small to medium rental size. Rents are recorded without ancillary costs and without taking account of other benefits. The rents stated are nominal values.

Peak rent and average rent are displayed for the three locations (sub-markets) city, edge of city centre and periphery, as well as office centre for some towns and cities.

Peak rent refers to the top 3-5 % of rentals for the respective location, from which a mean value is formed. This does not correspond to the absolute top rent (defined as outlier). The average rent states the rental value of the defined location weighted according to office space of the individual lets.

The rental values stated are mean values, intended to illustrate a typical or commonly-found value, they are not a strict mathematical mean, mode (most common value) or median (central value).

The rents stated refer to new rental agreements, for both new buildings and marketable existing buildings.

Definition of locations

City centre: classic, inner-city area, central downtown office location, frequently bordered by transport ring, typically the site of a location in which the highest average and peak rents are achieved.

Edge of city centre: usually office locations bordering the city centre, frequently along the ring road, typically the site of a location in which the second-highest average and peak rents are achieved.

Periphery: taking account of city centre and edge of city centre, all remaining areas of a town or city in which individual office properties (no mixed use) are found. A distinction is made here to office centres. The periphery is usually the area of a location in which the lowest peak and average rents are achieved.

Office centre: agglomerations of office properties outside of the city centre and edge of city centre area, with high volumes of space and high rents (similarly high or higher even than in the city centre area). A distinction is made here between office centres and commercial areas with a proportion of offices, but which have less of an impact on their surroundings and a low rent level.

CRS

The guidelines for calculating commercial rental space (CRS) developed by the gif are frequently used to determine rental space.

The rental space is typically calculated from the dimensions between the stationary walls at floor height, with skirting boards and edging not taken into account.

Local additions and fixtures such as radiators are not included when calculating rental space. Non-load-bearing walls are ignored in the calculation.

Rental space does not include, for example, stairways, lifts or installation shafts that serve the vertical connection of the building.

Returns

bulwiengesa AG states net initial returns (NIR) for the office market:

NIR = Net rent - net income / Total purchase price

Net rental income is the annual net return, i.e. rental income minus non-apportionable ancillary costs (AC). The rent is the rent achieved (in the case of existing buildings) or estimated (in the case of new buildings) in the first year from the time of purchase.

Rule of thumb for office (non-apportionable ancillary costs approx. 9 %): net rental income = (achievable or estimated annual rent) x 0.91.

The total purchase price is the net purchase price plus typical ancillary costs (AC). Typical AC are real estate transfer tax (3.5 %, respectively 4.5 %), land registry entry (approx. 1 %), notary and assessor fees approx. 0.5 %) and broker fees (approx. 1 - 5 %).

Fees for notary, assessor and broker in particular vary from case to case. The values stated are typical, theoretical values. According to our definition, ancillary acquisition costs therefore amount to around 7 % of the net purchase price. Rule of thumb: Total purchase price = net purchase price x 1.07.