Office properties – market, trends, and outlook
What does EXPO REAL have to offer in the office property segment?
Exhibtiors dealing with office real estate form the largest group at the international trade fair for property and investment. The spectrum ranges from planners and architects, project developers, project managers and building technicians to financiers and investors, consultants and brokers, and facility and property managers responsible for smooth operations. All major players in the office property market are represented at EXPO REAL in Munich, as are the locations where office properties exist or are being developed. Prominent exhibitors in the office real estate sector at EXPO REAL 2026 include POLIS Immobilien AG, WÖHR + BAUER GmbH, and ALHO Systembau, among others.
The conference program also provides a comprehensive overview of the topic of office real estate, for example in the panel discussions “The Adaptable Office Property: The Key to Sustained Value Preservation,” “The Office Is Dead, Long Live the Office: Which Office Projects Are Still Financeable and Leasable?” and “Leasing Is Happening, Transactions Aren’t: What Does the Future of the Office Look Like?”.
The importance of office properties in the economy
Office properties are the most important asset class among commercial real estate. Their development is considered an indicator of the overall economic situation. They traditionally play a major role at EXPO REAL: all market players are represented, from project developers and investors to facility managers and users.The trade fair highlights current trends, technologies, and user needs that are shaping the transformation of office properties.
The transformation of office property
New working environments and room concepts
The classic image of the office with fixed desks has changed significantly. In the past, cubicle offices and open-plan offices dominated. Today, flexible concepts shape the working environment:
- Group offices for teamwork,
- Cubicle offices for concentrated work,
- Open-space and multi-space concepts that combine different work zones.
“Non-territorial working” – i.e., free choice of seating instead of fixed desks – enables more efficient use of space. Employers save on unused workspaces, while employees enjoy flexible working locations.
Social demands and new requirements
Younger generations expect offices to offer social, creative, and athletic activities. Companies are responding with relaxation areas, fitness rooms, and communal zones—a decisive factor in the competition for skilled workers.
The market for office properties
Diversity and structure
The market ranges from modern, state-of-the-art new buildings in city centers to renovated old buildings or combined uses with restaurants and retail outlets.
In the past, the user was often also the owner. Today, investors dominate, which has led to office properties becoming much more important as capital investments.
Decline in Office Investments
Slump in Office Real Estate Investments
However, that changed in 2023. According to JLL, only 5.3 billion euros flowed into this asset class—a decline of 81% compared to the previous year, which, at 22.3 billion euros, had already shown a significant decline compared to earlier years. Since then, the office investment market has barely recovered: in 2024, transaction volume remained virtually unchanged. In 2025, investments in office real estate rose to 6.2 billion euros. In the first half of 2026, investments totaled 3.5 billion euros, according to CBRE. This means that office real estate has once again moved to the top of the commercial real estate investment rankings, after lagging behind logistics and retail real estate in previous years. Nevertheless, the figure remains well below the long-term average of 7.9 billion euros.
This downturn following 2022 had numerous causes. One factor is the weakening German economy. Another reason is the rise in financing costs, which have become more expensive than during the period of low interest rates. Recently, the war in Iran and rising energy prices have once again put the brakes on the investment market.
Yields have risen since 2021, stabilized starting in 2023, and showed a slight upward trend in the first half of 2026. Prime yields in the top-tier markets remained unchanged at 4.2 percent in Munich and 4.5 percent in Frankfurt am Main. In Hamburg (4.35 percent), Berlin (4.5 percent), Düsseldorf (4.65 percent), Stuttgart (4.65 percent), and Cologne (4.6 percent), yields rose by between 10 and 20 basis points.
While international investors have tended to be cautious about office investments in recent years, interest rose from 16.1 percent in 2024 to 28.4 percent in 2025.
The share of deals worth more than 100 million euros has also risen. That share increased to just under 38 percent in the first half of 2026 (compared with 22.4 percent in the same period of the previous year).
Rental Market: Slight Recovery
The rental market is stabilizing
Over the course of 2024, the leasing market had at least stabilized compared with 2023—leasing volume in the major office hubs of Berlin, Düsseldorf, Essen, Frankfurt am Main, Hamburg, Cologne, Leipzig, and Munich stood at 2.66 million square meters, a good two percent above the previous year’s level. Since then, office space turnover has remained largely stable.
However, there are significant differences among the A-class locations. In the first half of 2026, Berlin led the way with 373,000 square meters of leasing volume (+51 percent compared to the previous year), followed by Munich: (335,000 square meters = +38 percent), Hamburg (177,000 square meters = -33 percent), and Frankfurt am Main (173,000 square meters = -57 percent).
The differences in vacancy rates are just as pronounced. Overall, the vacancy rate for office space rose to 9.1 million square meters by the end of the first half of 2026—about nine percent higher than the previous year. However, the increase appears to be slowing. At the end of 2024, 7.6 million square meters were available on short notice. Vacancy rates were above average in Düsseldorf (12.4 percent), Frankfurt (11.8 percent), and Berlin (9.6 percent), while Munich (8 percent) and Hamburg (6.5 percent) had below-average rates.
Since demand continues to focus on modern, high-quality space in prime locations, but the volume of new construction remains low, there is a significant supply shortfall in this segment, which is driving upward pressure on top rents. The most expensive cities are Munich and Frankfurt am Main, at 59.50 euros per square meter and 57 euros per square meter, respectively, followed by Berlin (47 euros per square meter) and Düsseldorf (46 euros per square meter). Hamburg is just below the 40-euro mark (39 euros per square meter).
The Future of Office Real Estate
In a sense, the office real estate market serves as an indicator of macroeconomic trends. And the outlook for Germany still doesn’t look all that rosy. According to the latest economic forecasts from Germany’s leading economic institutes, growth in 2026 is expected to range between just 0.4 percent and 0.8 percent. This is also reflected in companies’ expectations regarding their future business development and, not least, in their willingness to expand not only their operations but also their office space—on the contrary: space requirements are more likely to be under scrutiny. Even though companies are increasingly trying to bring employees back to the office from working remotely, this will no longer be entirely successful. And since many companies are reducing rather than expanding their workforce in light of the economic situation, the demand for office space continues to decline. Another factor is the question of to what extent AI will also lead to fewer office workstations needing to be staffed.
One trend that has been growing for years is what are known as flexible office solutions. In particular, those who needed more space on short notice or for a foreseeable temporary period preferred such a solution over more long-term leases. However, flex offices are also often the choice for small and medium-sized businesses that are not necessarily willing or able to afford their own service areas and facilities. This trend will continue, as digital progress, in particular, is increasingly opening up opportunities for flexible solutions.
With the end of the low-interest-rate period, higher financing costs, and a significant rise in construction costs, the market for project developers has become much tighter. Added to this are economic uncertainties, which are causing project developers to act with much greater caution. Although a total of 1.33 million square meters of new office space was completed in 2022—the highest figure since 2019—these projects still dated back to the period of low interest rates and before the economic crisis. Since then, project development has declined significantly.
It is important to note that the future of office real estate depends on many factors (including digitalization and different work models) and that there may be regional differences. A comprehensive understanding of market dynamics and a careful analysis of specific locations and demand factors are essential for investment decisions.
What makes an office property attractive?
For a long time, the mantra for office real estate was: location, location, location. That remains true today. Established office locations in Germany’s top five or top eight cities continue to command the highest prices and rents. However, location is no longer the only deciding factor: It is becoming increasingly clear that buildings should have a green building certification to be attractive to investors and tenants. In 2022, for example, certified buildings accounted for around 46% of the total investment volume in office real estate—up from 34% in 2020. This is likely related to the ESG taxonomy, but also to the fact that, as of January 1, 2023, the CO2 tax in Germany also applies to commercial uses. Another factor is that the EU has adopted a directive requiring buildings with low energy efficiency to be retrofitted to a higher efficiency level.
But for users as well, energy-efficient, certified buildings are often a “must,” as larger companies in particular are also subject to ESG requirements. According to an analysis by CBRE, office properties with a green building certification in Europe command rents that are, on average, 7% higher, and the average vacancy rate is about 2% lower. The competitive advantage over non-certified buildings lies not only in lower operating costs but also in the enhanced reputation that tenants gain as a result.
The requirements for office real estate are highly individualized and can vary. They relate in particular to location, floor space, infrastructure, flexibility, sustainability, and security.
Trends and challenges
Market and user trends
- Home offices reduce space requirements in the long term.
- Location quality and accessibility are becoming increasingly important.
- Employees expect service offerings, mobility solutions, and social spaces.
- Sustainability is becoming a must-have – even for renovations of existing buildings.
Flexible contracts and working models
Companies prefer shorter terms and agile rental models. Flex office operators offer offices that include services, community spaces, and infrastructure. Although prices are 10–15% higher, the model is growing dynamically.
Adapting existing buildings and repurposing
Sustainable renovation instead of new construction
Many older office buildings need to be adapted to new energy and ESG standards. Demolition is often not an option due to the “gray energy” tied up in buildings. Therefore, repurposing (e.g., into residential space) is becoming the focus.
Asset managers are faced with the task of identifying potential for value enhancement and implementing the right adaptation strategies.
Conclusion – Office real estate between adaptation and realignment
The office property market will undergo structural change in 2025. Economic uncertainty, new ways of working, and ESG requirements are changing the rules of the game. Flexibility, sustainability, and location quality will become the key success factors for investors, developers, and users.