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Berlin's office market is proving to be a real study in contradictions. Vacancy rates have climbed to 7.7% in the first half of 2025 - the highest level in over a decade - while prime rents continue climbing to €45 per square metre. This paradox reflects a market split between quality buildings that command premiums and struggling older stock as 21.7 million square metres of office space faces structural change.
GSG Berlin's latest Commercial Pulse report reveals a market caught between conflicting forces. GSG, which manages around one million square metres and almost €20 billion in assets across the capital, produces this annual analysis to track commercial property trends. Their seventh study shows office completions reached 494,000 square metres in 2024, well above the ten-year average of 370,000 square metres. Another 410,000 square metres are planned for 2025.
"The Berlin office market remains in a tense adjustment process in mid-2025," explained Sebastian Blecke, Chief Operating Officer of GSG Berlin. "The fundamental drivers are structural: little economic impetus, hybrid working models, increased ESG compliance requirements and selective demand." Blecke warned the crisis will worsen due to continuing construction, with vacancy rates expected to hit 9%.
The challenge becomes clear when examining GSG's own performance. Despite the company's expertise and substantial assets, GSG reports vacancy rates of almost 10% - above the market average. This has forced strategic rethinking, with Blecke exploring alternative uses including "commercial housing" such as student flats or age-appropriate accommodation.
The market split is stark. Prime rents have risen despite growing vacancies, with high-quality space in central locations remaining scarce and expensive whilst owners of older buildings face pressure. Average rents are falling slightly even as the gap widens, creating two separate markets.
Employment growth provides underlying support. Around 880,000 people worked in Berlin offices at the end of 2024—up nearly 70,000 since 2019 despite economic uncertainties. This figure should reach over 915,000 by 2027, maintaining Berlin's leadership among German A-cities.
The regulatory environment is increasingly determining which properties get funding and which get left behind. Expert discussions at GSG Berlin's event showed growing differences between buildings meeting green standards and those that don't.
"Today, debt capital in Europe demands the highest possible taxonomy compliance for real estate," said Ulf Buhlemann, Head of Capital Markets at Colliers. "Lenders face EU regulations even more than equity investors. Only through regulation can we reach the breadth of the market." Buhlemann predicts buildings failing minimum requirements will struggle to get financing.
Oliver Schlink, Commercial Managing Director of GSG Berlin, advocates market-driven approaches over bureaucracy. "There are various ways to become greener as a real estate industry. More reporting and bureaucracy are not the best way," he argued. "Much better is rising CO₂ pricing in Europe, which encourages companies to invest in lower energy consumption."
Nina Joneleit-Mabeka, Managing Partner of Green Lion Consulting, talked about practical approaches. "Today, the focus is on how we can make portfolios economically sustainable. For starters, implement measures with the least effort and greatest impact."
Current vacancy patterns reflect these changing standards. GSG's analysis shows vacancies split almost equally between new buildings that haven't found tenants and older buildings. But future vacancies will hit mainly properties with location and quality problems. Companies no longer want more space - they want better space.
Office turnover in Berlin reached 585,000 square metres in 2024 - slightly above the previous year but well below the ten-year average. The market is dominated by small deals and public sector activity. Digital companies and start-ups showed first signs of recovery in the first half of 2025.
While traditional offices struggle, light industrial properties are doing well thanks to modern manufacturing needs and city locations. Completions should hit a record 100,000 square metres in 2025, with similar numbers likely for 2026 before new projects decline from 2027.
These buildings work better than pure warehouses because they're more central and flexible. Many use old industrial sites, supporting urban renewal while meeting modern business needs. Business and commercial parks make up 58% of new developments, production buildings 34% and warehouses 8%.
Take-up exceeded 80,000 square metres in 2024 despite tough conditions, with larger deals above 5,000 square metres helping alongside steady smaller deals. Demand for flexible business space near city centres suggests these buildings will keep playing a stable role.
The changes show how manufacturing is shifting from traditional factories to tech-enabled production that needs different buildings. Flexible properties with good access are increasingly popular compared to conventional warehouses.
GSG's own portfolio shows market pressures, with existing rents up compared to 2019 but flat compared to last year. Central districts including Mitte and Friedrichshain-Kreuzberg showed strong growth. Despite this, GSG's average rents remain below market averages, reflecting their diverse space offering.
REFIRE: Berlin's office market is generating clear winners and losers. The 7.7% vacancy rate shows oversupply, but €45/m² prime rents prove good buildings still work. Green-compliant buildings will get funding while others won't. The 915,000 office workers projected by 2027 shows demand remains, but tenants want modern buildings in prime locations. Light industrial offers exposure to Berlin commercial property without the office headaches. Buy quality buildings that meet environmental standards and consider light industrial as manufacturing changes.
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