German Office Investment Market Defies Economic Headwinds, Stabilizes in 2025
Berlin, Germany – In a surprising show of resilience, Germany’s office investment market has stabilized in 2025, posting a transaction volume of €5.13 billion, on par with the previous year, according to a new report from Cushman & Wakefield. This comes despite ongoing economic challenges and represents a significant 17% increase compared to the cycle low point in 2023. This is breaking news for investors and industry watchers alike, signaling a potential turning point in the commercial real estate landscape.
A Second-Half Surge and Improving Market Conditions
While the first half of 2025 saw continued caution among investors, activity picked up considerably in the latter six months. A key factor in this turnaround is the emergence of clearer price discovery and more stable financing conditions. “Price discovery has improved over the course of the year,” explains Daniel Sanders, Head of Office Capital Markets Germany at Cushman & Wakefield. “Many investors have sufficient capital, but continue to act very selectively. Quality and location are becoming increasingly differentiated, and stable financing is bolstering confidence.” This isn’t just about money; it’s about a return to rational assessment and data-driven decision-making – a welcome shift after periods of uncertainty.
International Investors Fuel Market Recovery
The stabilization wasn’t solely driven by domestic players. International investors dramatically increased their commitment, boosting investments by 65% to €2.12 billion, now representing a 40% market share. This influx of foreign capital has been crucial in offsetting a 20% decrease in investment from national investors, who still account for the majority (almost 60%, or €3.01 billion) of the total transaction volume. This highlights Germany’s continued appeal as a safe and stable investment destination, even amidst global economic fluctuations. For those following Google News SEO best practices, this international interest is a key signal of market health.
Top 7 Locations Dominate, Yield Spreads Widen
The concentration of investment remains firmly in Germany’s established office hubs. The top 7 locations – Berlin, Munich, Frankfurt, Hamburg, Cologne, Düsseldorf, and Stuttgart – accounted for over 75% of the total transaction volume (€3.97 billion). However, a notable trend is the widening yield spread between prime properties in central business districts (CBDs) and those in peripheral locations. Prime yields averaged 4.90% at the end of 2025, remaining stable, while peripheral yields rose to 6.37%, reflecting a growing preference for core assets. This divergence underscores the importance of location, location, location – a timeless principle in real estate.
Key Deals of 2025
Several high-profile transactions shaped the market in 2025. The sale of the “Upper West” high-rise in Berlin to the Schöller Group from the Signa Group for around €450 million was a standout deal. Other significant transactions included the sale of “Schönhauser Tor” and “Edisonhöfe” in Berlin to Attestor Capital (€240 million) and the acquisition of “R 139” in Munich by Generali from Art-Invest (€150 million). These deals demonstrate continued appetite for quality assets in prime locations.
Regional Performance: Berlin and Cologne Lead the Charge
Berlin experienced a remarkable surge, with an office investment volume increase of nearly 60% to around €1.16 billion. Cologne also saw substantial growth, up almost 70% to around €0.65 billion. Munich and Düsseldorf also posted increases, while Hamburg remained relatively stable and Frankfurt experienced a significant decline (around 70%). Stuttgart also lagged behind its 2024 results. This regional variation highlights the nuanced dynamics at play within the German office market.
Looking Ahead: A Gradual Normalization
The German office investment market isn’t out of the woods yet, but the signs of stabilization are encouraging. As Daniel Sander notes, “Overall, the results show that the German office investment market continued to stabilize in 2025… This stability will also be important for the start of 2026, as investors are increasingly becoming active again and structuring transactions.” Alexander Waldman, Team Leader Research & Insight Germany at Cushman & Wakefield, adds that investors are now making sharper distinctions between quality, location, and risk, signaling a gradual but sustainable normalization. The market is learning from recent challenges and adapting to a new reality, prioritizing data-driven decisions and focusing on long-term value. For investors seeking opportunities in the European commercial real estate market, Germany remains a compelling option, particularly for those focused on prime assets in established locations. Stay tuned to archyde.com for continued coverage of this evolving story and expert analysis on navigating the complexities of the global real estate landscape.
