Positive development of the Vienna office market boosts the city’s role as a service hub
There were two apparent reasons for this in addition to good economic fundamentals. On the one hand, this development can be attributed to the increased number of large-scale rentals of office space with more than 10,000m² in each case. On the other hand, the market was also characterized by extensive pre-letting agreements for office buildings which will first be completed in 2017 or 2018. The largest transactions of the year were the leasing agreement for fourteen floors of the “DC Tower” by the business service provider PwC and the signing of a rental agreement for about 28,000m² of office space with BAWAG, which will move its new headquarters into one of three towers of the newly constructed building “The Icon Vienna” starting in 2018. We expect that the increased demand for office space in the Vienna office location will continue in the coming years, and that the year 2017 will only witness a slightly lower letting performance than in 2016.
New and very attractive office buildings will already be completed in 2017 and above all in 2018. They offer every desired type of comfort with respect to building services, infrastructure and accessibility to companies looking for a suitable location. The focus in the coming years will be on newly developed office space at the Danube City (Donau City)-Lassallestrasse and Vienna Central Railway Station sites. Approximately 56% of all office space to be finished in the years 2017-2019 will be in these two submarkets. These dynamic submarkets in Vienna have also benefitted or will benefit from the modern headquarters of Austria’s banking sector, as seen by the “Erste Campus” at the Vienna Central Railway Station and the “Austria Campus” on the former Northern Railway Station grounds. One of the few new properties with available space in the expanded CBD (city center and bordering areas) is the “ViE”, scheduled for completion in 2018. This office building is of particular interest for international companies thanks to its prestigious location on the Danube Canal in Vienna between the city center and the airport, and the high quality technical equipment. The structure of Vienna office sites will increasingly diversify in the future in light of the fact that future growth of office space will strongly focus on submarkets outside of the CBD.
In addition to the supply of newly constructed office space, the Vienna office market also stands out in international comparison due to its moderate rates. Top rentals in premium locations in Vienna were at about € 26.0/m²/month at the end of 2016, at approximately the same level as in Hamburg (approx. €26.0/m²/month) and Berlin (approx. € 27.5/m²/month) but considerably lower than other competitive locations such as Munich (approx. € 35.0/m²/month) and Milan (approx. € 41.7/m²/month). In conjunction with the world’s highest quality of life (Mercer Quality of Living Study 2010 to 2017) and its excellent location in the heart of Europe, Vienna offers the best prerequisites to enable it to further expand upon its position as a preferred office location in the future as well.
The year 2016 marked the highest investment volume ever for office properties in Vienna at about EUR 950 million with the exception of the record year 2015. International investors accounted for about half of the entire transaction volume in the Vienna office market. The sale of the “IZD Tower” in the Danube City supported by CBRE and the transaction involving the “Florido Tower” and “Solaris” office buildings within the framework of a pan-European portfolio deal are particularly worth highlighting. As a result of attractive investment options and the sales processes which are already underway, we anticipate strong investment activity in 2017 as well accompanied by a high proportion of international investors for Viennese office properties.
You find further information about the Austrian office market here.