Germany’s office market struggles as economic woes persist

Germany’s office market remains under pressure, with any recovery in the coming months vulnerable to further economic weakness, according to a quarterly index by property lender Deutsche Pfandbriefbank (PBB) released on Thursday.

The index rose slightly to -1.86 in the fourth quarter of 2024 from -1.92 in the previous quarter but remains well below zero, indicating continued contraction. Despite recent interest rate cuts stabilising the market, PBB warned that any recovery would be “moderate and very crisis-prone” due to ongoing economic uncertainty.

Germany’s commercial real estate sector has struggled for three years following the European Central Bank’s interest rate hikes to combat inflation. The downturn has affected major cities like Frankfurt, where the owner of a skyscraper housing Germany’s central bank filed for bankruptcy last year.

In a positive sign, however, Commerzbank recently signed a 15-year lease for a new high-rise office under construction, reflecting some confidence in the market’s future.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser