Innovation and identification with the company have declined, productivity has suffered, and employees are communicating less with each other. All of these realisations are prompting more and more companies to summon their employees back to the office, observes Riza Demirci, Frankfurt Branch Manager at BNP Paribas Real Estate. „But the 100% office presence that existed before coronavirus will not return,“ he emphasised at a press conference in Frankfurt.

With a view to the rising vacancy rate in 2024, the very few large lettings, and the stagnating take-up of space, Demirci notes that "the transformation from the old to the new world is not yet complete.“

However, modern, ESG-compliant properties in central locations with good public transport connections are clearly in demand. „ESG has now become almost as important as the old „location, location, location“,“ says the branch manager. As President Trump returns in the US, he cannot yet detect any ESG „rollback“ from companies.

Looking at the Frankfurt office market as a whole, companies are still hesitant. This is reflected in the rising vacancy rate. At 10.9%, it was only just behind Düsseldorf in a comparison of the six German metropolises last year. For Demirci, this means it is „still in a healthy range“. In 2025, the vacancy rate will increase slightly but will peak at some point during the year.

BNP Paribas Real Estate views 2025 as a turnaround year. Against the backdrop of falling interest rates and construction costs, yields will increase as prime rents in Frankfurt break through the 50 euro mark. Demirci refers to the current activity in rental applications: A total of 460,000 sqm applications bigger than 2,000 sqm (including 14 applications for 10,000 sqm each totalling 350,000 sqm). „This indicates a clear recovery this year.“

The situation for property developments remains difficult. „The financing situation has not yet eased,“ notes Demirci. Until four years ago, developers were still able to obtain bank loans with 50 to 60% pre-letting and a single tenant. „Today, even a property that is 100% pre-let is difficult to finance. Banks are very, very restrictive when it comes to tickets over 100 million euros.“ According to Demirci's observations, banks now require 15% to 20% equity from project developers. „That used to be in the single-digit percentage range.“ In addition, there are high interest rates, risk premiums, and collateral. Other sources of financing such as mezzanine have „completely collapsed“. All of this discourages project developers from becoming active. However the situation is much more positive for properties already under construction. They are very likely to be let on completion, as there are hardly any other projects coming soon.

Family offices are particularly active in the Frankfurt investment market at the moment, due to their fast decision-making processes. Of the commercial properties sold for 1.6 billion euros in 2024 (previous year: 1.15 billion euros), 62% were offices. There were virtually no portfolio transactions. Accordingly, the individual tickets of the predominantly national investors were mostly between 50 and 100 million euros. In contrast to the past, there are hardly any forward deals. „Investors are waiting until the properties are completed,“ observed Marc Schmerberg, Deputy Head of National Office Investment at BNP Paribas Real Estate.

Schmerberg is optimistic for 2025. He considers a transaction volume of 2 billion euros to be „quite possible“. Development sites in central Frankfurt city centre locations would „go well“. Investors are keen to reinvest their abundant capital in property, given the gains in their share portfolios. But they are prepared to wait.