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Since the 1990s, at the latest, property markets in German cities have been analyzed and documented regularly and comprehensively. But this applies only to the top locations. There is hardly anything known about property markets in smaller cities, in particular office markets. A student research project at the Technical University in Hamburg-Harburg has looked into this matter. The initial presumption was that low rents and high yields could hardly allow successful real estate development. But, if project developers do not provide potential tenants with a sufficient volume of office space, demanding companies are forced to invest their own equity in owner-occupied real estate or to take available office space that does not support optimum performance conditions. Both alternatives mean disadvantages for local companies.
The research project took place in the mid-size city of Braunschweig, where approximately 200,000 sqm of office space has been constructed since the beginning of the 1990s. Asked about their success formula, the developers named the following factors most frequently: optimal plot shapes, above-ground parking and the use of the existing fabric.
On the spatial level, it is exactly these success factors that lead to a problem: the inner-city areas struggle with decline, because, on their small, oddly shaped and expensive plots of land, efficient building layouts and above-ground parking cannot be implemented. New investments therefore mainly take place on derelict industrial sites in the remoter quarters. The paper recommends more transparency on the property market and lowering construction costs within inner-city areas through more permissive dealings with historical town patterns or the abolition of transfer fees for parking places.