Fredrik Widlund, CEO of CLS Holdings plc, summarised the insights from this year's Expo Real. He described an atmosphere marked neither by euphoria nor by resignation. Discussions at the fair made it clear that the industry has prepared for a potentially prolonged period of weakness, coupled with the understanding that a return to the conditions of the past decade is not imminent. At the same time, there was a discernible return to solution-oriented and pragmatic ways of working.
According to Widlund, the investment market for office properties in Germany is in a gradual transition to a new normal. Transactions continue to take place but require significantly more intensive preparation and execution. Robust property documentation and realistic business plans are crucial. Additionally, the willingness of buyers and sellers to engage in goal-oriented and pragmatic processes is decisive. Financing partners generally continue to act collaboratively and in a solution-oriented manner.
However, covenants, debt service capacity and the quality of the underlying assets are being scrutinised more closely. For investors, this implies a more consistent focus on asset quality, robust cash flows, and disciplined capital deployment. Expo Real confirmed that the market is not waiting for the old normal to return, but is beginning to work with the current conditions. This demands discipline and patience, but also opens up new opportunities for well-positioned investors and owners.
Dynamics in the office letting market
Rolf Mensing, Head of Germany at CLS Holdings plc, noted that the office letting market shows increased dynamism, but also reveals clear differences between locations and individual properties. Discussions at the fair confirmed the assessment that users are developing clearer ideas about their space requirements again, while also making very selective decisions.
- —Quality of properties
- —Good accessibility of properties
- —Adaptability to changing user needs
These criteria are becoming increasingly important. For owners, the consequence is that asset management will play a decisive role for the foreseeable future. It is no longer sufficient merely to offer space. Owners must understand the needs of their users, react promptly to changing requirements, and consistently develop their properties further. This includes upgrades and new space concepts, as well as a broader mix of uses or the repositioning of an asset. Those who consistently implement these tasks and unlock letting potential can secure and create value even in a demanding market environment.
