Despite interest rate rises, inflation and recession, Union Investment let or relet approximately 1.2 million sqm of commercial real estate space in 2022, representing around 11 per cent of the space currently under management. The Hamburg-based real estate investment manager thus secured annual net rent of approximately EUR 286 million for its funds.
“The fact that our current letting performance remains at the pre-coronavirus level of 2019 despite the ongoing difficult environment is due to an outstanding performance by everyone in our letting and asset management team. It is especially impressive since lease extensions and follow-on leases – which again made up the majority of lettings at 81 per cent or approximately 963,300 sq m – are very complex to negotiate in the current difficult and highly competitive market,” said Volker Noack, the member of the management board at Union Investment Real Estate GmbH with responsibility for asset management. The high occupancy rate of the actively managed real estate funds was maintained and came in at 94.3 per cent, based on rental income.
Office space accounts for nearly half of lettings
Offices in well-connected locations with modern, flexible and sustainable space were the most sought-after properties last year. Of total lettings in 2022, around 47 per cent related to office properties and a further 27 per cent to retail. The remaining lettings were mainly split across logistics properties and hotels.
Almost 60 per cent of lettings in Germany
At almost 60 per cent, properties in Germany accounted for a large proportion of the new lettings and renewals. Union Investment achieved its biggest letting successes in terms of space in the logistics segment. Fiege Logistik extended its lease on 35,747 sq m in Burgwedel, for example, while logistics provider Trans Service Team agreed an extension for 32,177 sq m in Worms. In the office segment, Union Investment extended nine leases in Hamburg’s Chilehaus alone, which is among Germany’s best-known buildings and one of the most prestigious office addresses in Hamburg. New tenant Dierkes Hamburg AG, an audit company, moved in after signing a ten-year lease for 1,483 sq m. Union Investment also let seven floors in the TOWER at TRIIIO Hamburg in one go. Law firm and tax consultants YPOG signed a 15-year lease for around 4,150 sq m on floors 10 to 15, while real estate services provider Cushman & Wakefield is set to occupy the ninth floor, totalling 685 sq m. Union Investment acquired the TRIIIO ensemble, the former head office of shipping company Hamburg Süd, from the Oetker Group in 2021.
Lettings in European markets outside Germany
Outside Germany, other European countries accounted for approximately 30 per cent of new lettings and renewals of commercial space. A total of around 120,672 sq m was let or relet in Poland alone. In the Netherlands, where a total of 41,874 sq m was let and relet, law firm Houthoff Buruma extended its lease on around 12,250 sq m in Amsterdam’s ITO office building. Completed in 2005, the office tower is named after its creator, leading Japanese architect Toyo Ito. The striking design makes the tower a landmark building in the Amsterdam-Zuid commercial district. In France, where lettings totalled 23,416 sq m, 14 individual spaces totalling 4,283 sq m were newly let in Paris-Trocadéro CityQuartier. The ensemble comprises office and retail space, luxury apartments and service offerings and is situated in the fashionable 16th arrondissement.
Lettings overseas
Last year, Union Investment let or relet approximately 107,560 sq m of space (9 per cent of total lettings) in markets outside Europe. In Dallas, for example, Union Investment extended the lease with Texas Capital Bank for a further 15 years. The Class A office building at 2000 McKinney Avenue has been the bank’s headquarters since 2008. Alongside the lease extension, the tenant took on more space and the building was renamed Texas Capital Center. The financial institution will occupy a total of around 35,000 sq m going forward. The lease for 5,500 sq m with Lincoln Properties Company at 2000 McKinney Avenue was also extended again. In the Australian city of Brisbane, a direct lease for 7,300 sq m at the Flight Centre Southbank property was concluded with the current sub-tenant, Virgin Australia. The lease will run until 2030.
