VICTOR Prime Office

Unweighted average of all submarkets

Despite the continuing weak economic environment, the Victor Prime Office Indicator continued to recover in 2025. After +0.4% in 2024, the current annual performance (comparison of indicator level Q4 2025 to Q4 2024) increased by +3.9%, with Hamburg in particular fuelling growth. Only Berlin shows a negative result for the year, while the other three cities remain in positive territory. While prime yields largely stagnated in 2024 and the Victor's performance was mainly determined by the rental markets, the capital market provided additional impetus in 2025: prime yields fell by a total of 20 basis points in Hamburg, ten basis points in Munich and five basis points in Düsseldorf over the course of the year. Over the course of the year, performance fluctuated around the one per cent mark compared with the previous quarter (Q1 2025 to Q4 2024: +0.4 per cent; Q2 2025 to Q1 2025: +1.2 per cent; Q3 2025 to Q2 2025: +0.8 per cent). In the fourth quarter of 2025, the indicator rose by +1.6% to a new level of 173.9 points. Total return also continued to recover due to the performance gains, reaching +8.3% for 2025 after +4.7% in the previous year.

These developments are part of a picture of slight market recovery, which is also reflected in transaction volumes. In the five real estate strongholds, investment volume in office properties reached around €4.1 billion in 2025 – a remarkable increase of 36 per cent compared to the weak years of 2023 and 2024. Large deals worth over €100 million, such as the sale of the Upper West in Berlin, remained a rarity. The currently most active investor group, equity-rich family offices, prefers investment volumes in the mid to upper double-digit million range. Hamburg, which had office properties of this size on offer, benefited particularly from this. In the office rental market, take-up remained stable at a low level compared with the previous year. The continuing focus of corporate interest on scarce prime properties in central locations led to sharp rises in prime rents in all five cities under review. A rise in lettings of around ten per cent is possible for 2026, supported by the expected moderate economic growth of one per cent. The decisive factor here is the structural paradigm shift in the German property market: the era of purely interest-driven growth is definitely over, and instead fundamental property data and operating cash flows are once again becoming key factors in value appreciation and investment decisions. Strong signals from the rental markets – such as Frankfurt's excellent year with almost 600,000 square metres of space turnover – are therefore essential for a further revival of the investment market and could be harbingers of increased investor interest.

After Berlin's prime locations recorded the second-highest indicator increase (+0.7%) among the property strongholds surveyed in 2024 compared to the previous year, the German capital is the only city to record a decline in value for the year in 2025, at -0.8%. This is attributable to weak quarterly results; the indicator rose only in the third quarter (Q1: -0.4%; Q2: -0.6%; Q3: +0.6%). In the final quarter, performance fell by -0.3% compared with the previous quarter to a new level of 180 points. No change in prime yields has been observed for two years, meaning that the development was exclusively influenced by rental effects: due to the continued focus on prime properties in prime locations, prime rents rose slightly, while rents outside prime locations declined. The weak performance resulted in a total return of +3.4%, which is also the lowest figure among the cities surveyed (after +4.9% in the previous year). It appears that Berlin is catching up more slowly than most other real estate strongholds.

In 2025, the Dusseldorf banking sector recorded solid annual performance of +4.8% (2024: -0.1%). While the change from the previous quarter was still negative in the first quarter, the metropolis on the Rhine turned sharply into positive numbers from the second quarter onwards. In the fourth quarter, the increase in value was +2.4%, which was well above the average for the five cities. While both prime yields and prime rents stagnated in the fourth quarter, rents outside the prime segment were the main drivers of this positive development. The new indicator stands at 158.5 points. At +9.4% (2024: +4.4%), the total return is also above the average for the five real estate cities.

The annual performance of Frankfurt's banking sector turned positive in 2025 with +2% after -1.2% in the previous year, as in most of the cities surveyed, but growth remains modest and is the second weakest annual performance after Berlin. In the fourth quarter, the indicator rose by +0.4% to its current level of 152.6 points. This means that the metropolis on the Main has had the lowest absolute indicator level for two years. This weak position is the result of the particularly severe upheavals of the crisis years 2022 and 2023, when Frankfurt suffered the most of all cities with a loss in value of 33 per cent within nine quarters. The recovery, which has been ongoing for six quarters, is progressing much more slowly than in other locations. This makes the momentum on the rental market all the more remarkable: Frankfurt had a record year in 2025 with almost 600,000 square metres of space turnover, returning to the level of the best years before the coronavirus pandemic. The prime rent rose from 50 to 52 euros per square metre, while new construction activity remains low. These strong fundamentals fuel hopes that the investment market will follow the positive rental signals with a time lag. As in the previous year (+3.3%), the total return is below average at +6.6%.

Hamburg city centre recorded the strongest increase in annual performance at 9.2% (2024: -0.4%). This is largely attributable to the excellent result in the fourth quarter: the indicator rose by +6.6% compared with the previous quarter to a new level of 198.6 points. This means that, for the first time in two years, the Hanseatic city has once again achieved the highest indicator level among cities, overtaking Munich. Both the rental markets and the capital market provided impetus for the strong performance of Hamburg's city centre location. Compared to the previous year, the prime yield fell by 20 basis points (15 basis points of which were in the final quarter alone). After a prolonged period of stagnation, the prime rent rose by five euros to 41 euros in the fourth quarter, and rents outside the prime segment also rose noticeably. The strong performance resulted in the highest total return of the five office locations at +13.5% (2024: +3.8%). In the difficult economic environment, Hamburg is benefiting from its broad mix of industries, which is stabilising the rental market, and from investment opportunities in the sub-100 million range, which are preferred by the currently active buyer clientele, such as family offices.

After recording the strongest annual performance growth in the previous year (+3.1%), Munich city centre had to settle for second place behind Hamburg in 2025 with 5.7%. The main reason for this is the below-average increase in value in the fourth quarter of 2025: the indicator rose by only 0.4% to a new level of 194.1 points (Q1 2025: +0.8%; Q2 2025: +3.5%; Q3 2025: +0.9%). Nevertheless, Munich continues to hold a top position: the indicator is currently around 20.5% below its peak in the first quarter of 2022. On average across the five cities, the loss in value since the peak is still just under 26%. Overall, the office property market in the Bavarian capital performed well: at around 3.3%, the vacancy rate in the city centre remains low, which, coupled with high user demand for prime space in prime locations, ensured that the prime rent broke the €60 mark in the second half of the year. Rents outside the prime segment also rose at an above-average rate. This strong performance resulted in a total return of +9.9% (2024: +7.3%).

• Overall performance remains positive
• Regional developments show significant differences
• Hamburg with the strongest quarterly and annual performance
• Rental market remains robust despite economic challenges
• Fundamental data gaining in importance

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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
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Valuation:
Ralf Kemper, EMEA Head of Office & Retail, Lender Services
Research:
Helge Scheunemann, Head of Research Germany

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