VICTOR Prime Office

Market commentary Q1 2026

In the first quarter of 2026, the Victor Prime Office Performance Indicator rose by just +0.3% to 174.5 points, failing to build on the slight upward trend seen in previous quarters (Q4 2025: 1.6%; Q3 2025: 0.8%). Whilst the fourth quarter of 2025 and the first few weeks of 2026 still sent cautiously optimistic signals from the office property market in Germany, and the office investment market was also gaining momentum, the outbreak of hostilities in the Middle East led to a noticeable slowdown in market activity. Almost all performance parameters remained unchanged in the prime locations of Berlin, Düsseldorf, Frankfurt, Hamburg and Munich during the reporting period: prime yields remained at the previous quarter’s level and prime rents rose only in Berlin. Only rents outside the prime segment moved in all locations – albeit in different directions – and significantly influenced the change in the indicator.

In the first quarter of 2026, Berlin’s prime locations recorded the strongest index growth, rising by +1.6% to 182.9 points. With prime yields remaining unchanged, the capital is benefiting from the sharpest rises in rents among the five cities under review. Several leases, including in the Mediaspree submarket which had previously been viewed with scepticism, as well as further large-scale space enquiries, underscore the improved letting momentum. Hamburg’s prime location maintains its leading position among German office markets with an increase of +0.5% to 199.6 points. This development was driven in particular by rent increases outside the prime segment. Munich recorded a moderate index increase of +0.2% to 194.5 points, whilst Frankfurt’s banking district remained at the previous quarter’s level of 152.6 points. With a decline of -0.4% to 157.9 points, Düsseldorf’s banking district brings up the rear, due to lower rents in the broader market segment and higher vacancy rates.

The annual performance across all locations remains positive at +3.9% (comparing Q1 2026 to Q1 2025). Hamburg leads the way at +9.0%, benefiting from its consistently strong market position. Düsseldorf and Munich share second place, both at +5.0%. Berlin is in fourth place at +1.3%, whilst Frankfurt, at +1.1%, shows the lowest annual growth.

Against the backdrop of geopolitical turbulence, the German office investment market demonstrated a degree of resilience despite the slowdown. A number of transactions were still completed in the second half of February and in March, confirming current yield levels – a development that can certainly be viewed positively when compared historically with previous external shocks of this magnitude. Overall, transaction volume in the five key real estate markets under review exceeded the previous quarter’s figure by a good five per cent in the first quarter, reaching around one billion euros, and is even slightly above the quarterly average for the last three years.

Sentiment has also cooled in the office leasing market. With just under 540,000 square metres of space let across the five cities, the figure remains slightly above that of the previous quarter, albeit at a low level and below the average for the past three years. Due to the fundamental shortage in the market for high-quality office space in prime locations and the continuing low volume of new completions, prime rents could rise further in the second half of the year – despite the low volume of lettings and the geopolitical and associated economic challenges.

In general, uncertainty among market participants has increased significantly. Many institutional investors, particularly equity investors, are currently showing a noticeable degree of caution. Numerous players have put their investment decisions on hold and appear to be adopting a wait-and-see approach in order to better assess future economic developments and their impact on the office property markets.

Indicator level Q1 2026
174.5 Punkte
Performance Q4 2025 / Q1 2026
0.3%

Indicator level Q1 2026
182.9 Punkte
Performance Q4 2025 / Q1 2026
1.6%

Indicator level Q1 2026
157.9 Punkte
Performance Q4 2025 / Q1 2026

-0.4%

Indicator level Q1 2026
152.6 Punkte
Performance Q4 2025 / Q1 2026
0.0%

Indicator level Q1 2026
199.6 Punkte

Performance Q4 2025 / Q1 2026
0.5%

Indicator level Q1 2026
194.5 Punkte
Performance Q1 2025 / Q1 2026

0.2%

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Concept

Property markets exhibit cyclical fluctuations from which even the prime German prime office locations are not immune. The volatility of price performance emphasizes all the more how important a transparent market indicator is. In this context, JLL analyses the price development in the prime office locations of the cities of Berlin, Dusseldorf, Frankfurt, Hamburg and Munich. Holders of real estate port-folios and potential investors should be given the oppor-tunity to obtain greater transparency for clearly defined submarkets and identify developments and trends more quickly so they can act accordingly. The indicator analyses the following submarkets, which have a total area of approximately 12 million sqm:

• Berlin – Charlottenburg / Mitte / Potsdamer Platz und Leipziger Platz

• Dusseldorf – Banking district

• Frankfurt – Banking district

• Hamburg – City centre

• Munich – City centre

In these submarkets, the price development of the lettable office space stock is analysed. The analysis identifies the changes in value of the office space stock and reflects the performance (capital growth) over time. In the overall analysis (VICTOR Top-5), the price development of the abovementioned prime office markets was averaged (unweighted). As a result of the differing amount of existing office space and the differing value levels in the individual submarkets, these values were considered with a 20% weighting in the Top-5 Indicator.

Since 31 December 2003, the indicator has been calculated on a quarterly basis and will continue to be updated on a quarterly basis in the future. The short observation intervals provide an adequate picture of short-term market fluctuations and a realistic portrayal of current market trends. In this regard, the Valuation Performance Indicator VICTOR is a valuable benchmarking tool and a trend barometer for the analysed submarkets.

Methodology

The market valuation of the submarkets, based on the effective date, is carried out according to international valuation standards and is based on the JLL database. The assumptions in the model relate to real market data as well as the assessment of JLL professionals. In the model, we refer to an assumed fixed space inventory in the submarkets, actual vacancy rates as of the effective date and different quality proportions. This ensures a real-istic picture of the letting situation and temporal compara-bility of the indicator values. The calculation is based on a discounted cash flow model, which takes into account all valuation parameters relevant to market standard.

Inflation expectations, as well as the market rental growth anticipated by JLL, are explicitly considered in the analysis. The growth of the contractual rents was adjusted on the basis of market standard, assumed indexation regulation and the real inflation rate. The market rents of the prime office locations are analysed by JLL on a quarterly basis and incorporated into the model. The contractual rents are determined over a historic time series, so that a statement about the respective over / underrent status can be made. In addition, explicit ongoing building costs, letting costs and rental incentives as well as estimated void and reletting periods are considered in the cash flow.

Authors
Dr. Andreas Dickert, Operations & Delivery Lead, Emerging Markets
Ines Lippolt, Operations Manager Germany
Contact us
Our contacts:
Valuation:
Ralf Kemper, EMEA Head of Office & Retail, Lender Services
Research:
Helge Scheunemann, Head of Research Germany

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