ā¢ New and subsequent lettings of around 1.3 million mĀ² in 2021
ā¢ Around half of the rental performance is attributable to Germany
ā¢ Occupancy rate stabilized at a high level of around 95 percent
Union Investment let significantly more commercial real estate space in 2021 than in previous years and was thus able to reduce vacancies despite the restrictions imposed in the wake of the corona pandemic. A total of 275,921 mĀ² was newly rented last year – an enormous 45 percent more than in the previous year and around 14 percent more than in 2019 and thus before the outbreak of the pandemic.
āThis is a top performance by our entire leasing and asset management team. Especially since lease extensions and follow-up leases, which still make up the majority of the letting balance, are at least as costly in the current difficult and intensely competitive environment. We were thus able to stabilize the occupancy rate based on income from our actively managed real estate funds at the high level of around 95 percent,” says Volker Noack, Member of the Management Board of Union Investment Real Estate GmbH and responsible for asset management.
In total, Union Investment let and re-let commercial real estate space totaling around 1.3 million mĀ² in 2021. That is around 13 percent of the space currently under management. From a fund perspective, this corresponds to annual net rent of 320 million euros. At 79 percent or around one million mĀ², the majority of the letting performance in the past year is again attributable to subsequent lettings.
Office space accounts for around a third of the rental performance
Office buildings in well-connected locations with modern, flexible and sustainable spaces are still in demand: 34 percent of all lettings in 2021 were in office properties, and a further 34 percent in retail. The rest of the rental activity is mainly divided between hotel and logistics properties.
Almost half of the rentals in Germany
At 46 percent, the majority of new and subsequent rentals are for real estate in Germany. Last year, for example, Union Investment successfully let four properties totaling around 8,700 mĀ² of office space in Hamburg’s EMPORIO-TOWER. Another major new letting in the office portfolio was in āThe Plant FĆ¼rthā. A total of around 6,200 mĀ² was repositioned in the 54,000 mĀ² campus. It consists of seven different buildings and is located directly on the renatured banks of the Pegnitz, on the city limits of Nuremberg. Union Investment was also able to prematurely extend the rental agreement with Edeka in the Berlin shopping center ALEXA by a further ten years. Although the original contract would not have expired until the end of May 2022, the food retailer has already secured the space. Edeka occupies 2,453 mĀ² of the around 60,000 mĀ² of usable space in the shopping center. And the Landesbetrieb Bau und Immobilien Hessen has rented a total of 16,450 mĀ² at Hahnstrasse 25 and 31-35 in Frankfurt-Niederrad. The contract has a term of 12 years. Both objects are intended to serve as an alternative area for parts of the Frankfurt courts.
Balance sheet in the European markets outside of Germany
Outside of Germany, 43 percent of new leases and follow-up leases are for commercial property in Europe. From a fund perspective, this corresponds to annual net rent of EUR 164.3 million. One of the largest lease extensions, measured by area, took place in Solna/Stockholm, Sweden. The energy group Vattenfall will remain the tenant of the office building at Uarda 5, in the immediate vicinity of Sweden’s largest shopping center, the Mall of Scandinavia, for a further ten years. He prematurely extended the existing lease for 42,989 mĀ² until the end of December 2034. In the Central Seine office building, contracts for a total of around 21,350 mĀ² were also extended. The 14-storey building is centrally located in the 12th arrondissement, an attractive and dynamically growing office submarket in Paris. In the Torre Diagonal Litoral in Barcelona, āāan office building with a view of the Mediterranean Sea, the leasing team was able to extend contracts for around 11,500 mĀ².
Overseas Rentals
Last year, Union Investment let and re-let around 144,398 mĀ² (11 percent of lettings) in the non-European markets, giving the fund annual net rents of around EUR 43 million. In New York, for example, the contract with the main tenant Brown Brothers Harriman for an area of āāaround 17,500 sqm in the landmark property 140 Broadway was extended until the end of October 2039. In Houston, Union Investment has extended the contract with Shell Oil, the main tenant of the Class A property at 1000 Main Street, for a rental area of āāaround 24,100 sqm until the end of June 2031. And Virgin Australia one of Australia’s largest airlines, will move into the Southpoint Tower on South Bank Brisbane as a permanent tenant. The lease for 7,300 mĀ² runs until the end of August 2030. In the āDos Patiosā office building in Mexico City, the contracts for around 13,170 mĀ² were also extended.
Author: Union Investment
