VICTOR Prime Office

Q4 2023

Valuation Performance Indicator

Indicator level: 166.6
Change from previous quarter: -2.7%

February 07, 2024
Prime Office
Unweighted average of all submarkets

At -19.6%, the current annual performance of the Victor Prime Office Indicator fell even more sharply in 2023 than in the previous year (-11.2%). While there was slight indicator growth in 2022, at least in the first quarter, all four quarters in 2023 showed a negative performance. However, the decline in value slowed in the fourth quarter of 2023. The indicator fell by -2.7% (Q2 2023: -4.8%; Q3 2023: -7.8%) to a new level of 166.6 points. It is therefore currently at the same level as at the start of 2017 and five years of growth have been relativised in just seven quarters. The main reason for the sharp declines is the impetus from the capital market with significant increases in prime yields, which rose by an average of 100 basis points over the course of the year in the five property strongholds under review. The transaction volume on the office property market slumped significantly. Only around €2.9 billion was invested in offices in the top 5, which corresponds to a decline of almost 80 per cent compared to 2022. For a long time, the rental markets defied the challenging environment, but the economic weakness finally had an impact on leasing activity. The weakening demand also dampened rental price momentum. In the final quarter, prime rents only rose in Berlin and Munich, which also recorded the strongest increases in prime rents for the year as a whole.

The total return has fallen further due to the decline in performance and stands at -16.3% for 2023 after -8.6% in the previous year. It remains to be seen whether the peak has been reached with the current rise in yields; further corrections are possible in the first half of the year. The end of the interest rate hike cycle by the European Central Bank is likely to have a stabilising effect, giving investors more predictability for their business plans.

Market Comparison
Q1 2015 to Q4 2023
Comprehensive performance analysis
  • Prime yields continue to rise in all property strongholds analysed

  • Performance decline slows down

  • Slump in transaction volume in the top 5 by around 80 per cent compared to the previous year

  • Letting markets weaken at the end of the year

  • Focus on space with very good fit-out quality in prime locations

  • ESG compliance continues to gain importance

  • Munich with strongest annual growth in rents

VICTOR – Valuation performance indicator

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.


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 esti-mated void and reletting periods are considered in the cash flow.


Dr. Andreas Dickert, Team Leader Operations Management

Ines Lippolt, Director Operations Management

Contact us

Our contacts:

Ralf Kemper, Head of Value and Risk Advisory Germany

Helge Scheunemann, Head of Research Germany

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