Frankfurt leads office recovery in Germany

The German commercial real estate market is showing signs of stabilization, but a new analysis by the German Real Estate Association (IVD) reveals a stark divergence based on property quality, location, and sustainability. 

Germany

The IVD's Commercial Real Estate Price Index 2025/2026, based on data from approximately 420 cities, highlights that modern, centrally located, and ESG-compliant office spaces continue to command higher prices. In Germany's top eight cities, rents for high-quality office space increased by around 6%, outpacing the nationwide average of just over 3%. In contrast, offices of average utility value experienced only a 0.6% rise, and basic offices a 0.7% increase.
This trend puts significant pressure on owners of older properties. "Without investments in energy efficiency and amenities, structural vacancies are a real threat," emphasizes Jeanette Kuhnert, IVD Vice President. The IVD suggests that some unadapted older properties could potentially be converted into residential spaces, with appropriate funding.
The shift towards hybrid work models has led companies to transform traditional workspaces into attractive communication zones, prioritizing spatial design and quality of stay. 
Frankfurt am Main emerges as a standout performer, being the only major city to record price increases across all office segments in 2025: basic (+10%), mid-range (+8%), and high-end (+7%). Munich retains its status as the most expensive city, with prime office rents reaching up to €50/m2, seeing a 4.5% increase in mid-range and an impressive 19% rise in high-end spaces.
Stuttgart experienced mixed fortunes, with high-end space rising (+7.6%) but basic and mid-range declining (-2.5%). Düsseldorf saw an almost 19% slump in high-end office space, and Hamburg experienced declines across all segments (2% to 7%). 
Cologne showed stability in its mid-range segment and a 2.3% increase in high-end spaces. Leipzig remains the most affordable top location, with stable prices in basic and mid-range segments and a 6.4% increase in high-end office rents. Berlin showed an average rent of €28/m2 (-2.4%) and a top rent of up to €46/m2.
Nationwide, average rents stand at €8.25/m2 for basic, €11.15/m2 for average, and €15.45/m2 for good-quality office space.
While the total number of brick-and-mortar stores has decreased by nearly 20% since 2015, visitor numbers in city centres rose by 1.5% in 2024 according to the Hystreet Index. While highly visible retail spaces in high-traffic areas are being upgraded, overall retail property rents fell on average. The emphasis remains on quality and location, mirroring the office sector.
Axel Quester, an IVD board member, notes that the value of a commercial property is now determined less by its blueprints and more by its surrounding neighbourhood and its integration into a sustainable environment.