With the advent of new developments, the question always arises as to whether the old will be displaced by the new. When the e-book came on the market, many saw the end of the printed book sealed. Admittedly, digitalization has significantly changed living and working environments. The COVID-19 pandemic in particular has given this change another powerful push. However, does this also mean, for example, that the conventional office has had its day as a place to work because of home office and video conferencing? Not at all. In fact, it is the same as with electronic and printed books: the two forms coexist. Important for real estate investors: well-located premium office space is still highly desirable and represents attractive investment opportunities. The office continues to be an important place for collaboration, for fostering employees' identification with the respective company, and is hugely significant for a company’s corporate image.
New office concepts for sustainable investments
Meticulously sounding out the market to identify promising real estate investments is a necessity, however. Getting a feel for the changing requirements and appropriate building concepts is important. After all, the offices of the future will serve entirely new needs. They are essentially places that facilitate an efficient exchange of information and ideas between teams, create space for direct interaction, and also offer retreats for concentrated work. At the same time, sustainability criteria across all ESG dimensions are playing an increasingly important role for all market participants. After all, it's not just about safety and a pleasant working atmosphere for occupiers, for example through the installation of modern air filtration systems. It is also rather more about a property’s long-term appeal set against the requirements of climate change, and whether it can be part of an ESG-compliant portfolio and meet sustainable investment criteria. The question here is also what measures are necessary or even economically viable for a "manage-to-green" approach. At any rate, the most important thing for real estate investors is to find properties that can satisfy needs over the long term. The demand for office space that fulfils the new requirements for sustainability, technology and well-being remains unabated.
Stable market, despite crisis
The second pandemic year of 2021 also showed that the office real estate market remained intact in terms of its fundamentals and that there is demand. Accordingly, the market was characterized by low vacancy rates and stable office rents. The good performance on the office leasing markets - despite the pandemic and uncertainty with regard to the overall economic development - has sharpened the interest of national and international investors in the office property asset class, as substantiated by the transaction figures: In Germany, for example, the second-best investment volume after 2019 was achieved in 2021 with a good €30 billion; in the first three months of 2022, a record result of €9.8 billion was registered, as shown by an analysis conducted by BNP Paribas Real Estate. The focus clearly centers on the Top 7 locations of Frankfurt am Main, Hamburg, Düsseldorf, Berlin, Cologne, Munich and Stuttgart. The outlook for the office property asset class is also positive, despite the geopolitical and economic uncertainties. However, office properties are not a foregone conclusion; in addition to the location and the quality of the property, active asset management is sometimes decisive.
Office real estate still part of Real I.S.’s strategy
Real I.S. AG has been leveraging the market potential of the highly desirable asset class of office real estate for some time now and is investing in attractive properties for its customers. Only recently, Real I.S. acquired the "Innovationspark Kisselberg" in Mainz - with 12,246 square meters of office space and long-term leases - for its "Real I.S. SCF I" special real estate AIF and, in March 2022, an office building in the banking district of Frankfurt am Main for its "BGV VIII Europa" special real estate AIF. Not only Germany’s metropolitan areas, but also other European countries and Australia offer promising investment opportunities. For example, Real I.S.'s 2021 acquisition list includes office buildings in Berlin and Düsseldorf, as well as attractive office properties in Luxembourg, Brussels, Marseille and Helsinki. Real I.S. has also been represented in Australia since 2012, where it most recently purchased an office property in Melbourne: The 6,400-square-meter building is in a very attractive location and is fully leased. Australia’s economic potential is often underestimated. Yet Down Under offers very good investment opportunities. Australia holds the record for the longest uninterrupted economic growth of almost 30 years and has recovered significantly from the pandemic-related economic slowdown in 2020.
Office real estate will continue to be part of Real I.S.’s investment strategy, and market opportunities are still to be had. The focus remains on core properties that promise to perform particularly well due to sustained, reliable income.