Classification of locations
The 127 RIWIS locations have been divided into four categories by bulwiengesa AG, according to their significance for the international, national, regional or local real estate market
Most important German centres with national and in some cases international significance. Large, functioning markets in all segments.
Example: Office space (gross floor space) over 5 m m², turnover in long-term mean over 100,000 m².
Cities of national and regional significance.
Example: Office space between 1.5 and 4 m m², turnover generally above 35,000 m².
Important German towns and cities with regional and to an extent national significance, with important radiance to the surrounding region.
Small, regionally-focused locations with a central function for the area directly surrounding them, low market volume and turnover.
Gross value added
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.
Employees subject to social security contributions
Employees subject to social security contributions are counted by the Bundesagentur für Arbeit, the federal employment agency.
Over the years there have been frequent changes in the methods used to assign employees to the different economic branches. The WZ08 system currently in use (revision August 2014) offers figures from 2008 at this time. A reverse projection into the past is not currently available from the Bundesagentur, but is under consideration.
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.
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 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 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.
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.
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.
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.
Rents for the Retail sub-market typically refer to small areas with 100 m² sales space, consistent plot level, floor-level, step-free access, 6 m of display window, high-end building condition, for the city centre (1a locations, secondary or 1b locations) and for locations in the districts. Retail agglomerations are not taken into account. The rents stated are nominal values.
Rents are recorded without ancillary costs and without taking account of other benefits. Rents are differentiated as peak and average rents for both the 1a location and the secondary location. Peak rent refers to the top 3-5 % of rentals for the market, from which a mean value is formed. This does not correspond to the absolute top rent (defined as outlier). Average rents represent a mean rental value across the defined total market.
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) in the mathematical sense.
The returns stated here are net initial returns, they reflect the relationship of net rental income received to the purchase price, taking account of ancillary costs (maintenance, ancillary acquisition costs, taxes and clearly non-apportionable costs). The rent is the rent achieved (in the case of existing buildings) or estimated (in the case of new buildings) in one year (from the time of purchase).
The net initial return for retail is stated for 1a locations (city centre) and decentral locations (retail centres).