Global Gateway Frankfurt, the city with more investment in office space than Spain and Italy

As one of the 30 ‘Global Gateway Cities’ worldwide, Frankfurt is a place which, in no small part due to its infrastructure, acts as a point of entry into Europe’s largest economy both for visitors from abroad and international investors. It is no exaggeration to say that Frankfurt am Main, the birthplace of Germany’s most revered literary figure, Goethe, is also the country’s most international city – and, with an impressive 8.33 billion Euros flowing into office space last year, one which boasts more investment in this category than the entire Spanish or Italian economies. In other words, when foreign investors decide to put their money into Germany, Frankfurt is the first place they look.

Ideal conditions for sizeable capital reserves from abroad
As the largest city in the state of Hesse yet only the fifth-largest in Germany, Frankfurt punches well above its weight in terms of its infrastructure: its international airport has the largest air-freight terminal in Europe, while its financial centre is the most important on the European mainland, measured in terms of data throughput, its internet exchange point is the largest in the world, and more broadly, the city has a comprehensive range of educational opportunities and an international, cosmopolitan population. Other factors are of great importance to international investors, too: Frankfurt has the highest liquidity of all German office markets, with its roughly 12 million metres squared being traded more frequently than those of any other city in Germany’s ‘Top Seven’, indeed, since 2009, the mini-metropolis on the Main has registered continuous increases in transaction volumes. Moreover, national and international capital are in proportion (61:39), reflecting a healthy, sustainable market environment which investors reward with high levels of trust.

First mover from Asia, Scandinavia, and the Near East
Capital from Asia has been particularly instrumental in turning Frankfurt into Germany’s first Global Gateway City – ahead of later additions to this index such as Munich and Berlin. This development began in the 1990s with initial interest from international investors backed by huge stocks of capital. One historical starting point is the 843ft Trade Fair Tower (Messeturm), begun in 1990 at a cost of 500 million Deutsche Mark and financed by a joint venture between Tishman Speyer, Nomura Holdings, and Meiji Life. This represented the first major Japanese investment in Frankfurt, followed up by the Japan Tower of 1996 (209 million Euros, Jowa Holdings). Over the last ten years, Frankfurt has seen sustained investment from a variety of Asian countries, as the following six selected projects illustrate:

• Opernturm: GIC, JP Morgan Asset Management (Singapore & USA), €568m, 2010
• Silberturm: Samsung (Korea), €460m, 2014
• Commerzbank Tower: consortium around Samsung Life Insurance (Korea), €620m, 2016
• Trianon: Hana Financial Group, IGIS (Korea), €670m, 2018
• Eurotower: Fubon Financial (Taiwan), €530m, 2018
• Main Airport Center: CapitaLand (Singapore), €245m, 2018.

Closer to home, Scandinavian investors have long been a part of Frankfurt’s booming economy: in the 1980s, for instance, the land on which the Trianon skyscraper now stands was sold to a group of Swedish investors who then led the development (which cost 1.1 billion Deutsche Mark, or around 560 million Euros in today’s money); and after SEB took over Bfg, the Stockholm-based bank used the tower as its German headquarters. 2012 saw a wave-shaped complex (Die Welle) built by a consortium of NBIM and AXA Real Estate (Norway) for around 395 million Euros, while investment in the Taunus Tower ran to 650 million (Elo Mutual and Varma, Finland). Somewhat further afield, the Near East, above all Israel, has developed a taste for Frankfurt in the past decade, with the Weserstrasse 54 development financed by Delek Group for 128.5 million Euros in 2006; one year later, the Dresdner Bank building followed (€287m, Kamor Ltd.), before, two years ago, Migdal Insurance, Leumi Bank, and IDI Insurance joined forces for Eschborn Plaza (€236m).

Today – and tomorrow
Various other development projects also helped Frankfurt to set a new record in terms of investment into office space as, last year, the city racked up 8.33 billion Euros, exceeding the volume of office investment in entire countries such as Spain (€3.58bn) and Italy (€2.83bn) by quite some margin and reaching fourth place in rankings of European countries and German cities by investment volume. In other words, Frankfurt was only behind Germany (€30.75bn), the United Kingdom (€26.23bn) and France (€20.93bn) as wholes when it came to investment into office developments in 2018.

Looking forward, there is little reason to assume that this positive trend will not continue, with the prospect of Brexit driving it on as banks look to relocate from London: the German financial regulatory body BaFin is currently dealing with 16 applications for banking licences as Frankfurt retains its Global Gateway position in Germany. Moreover, with the European Central Bank located in the city, as well as a range of industry associations, federal agencies, and the stock exchange, Frankfurt is simply of unparalleled importance as a financial centre; its international airport with direct flights to every continent and the fact that, in percentage terms, it is seeing the fastest rise in population of all German cities, will help to maintain this dynamism as skilled labour continues to pour into the city.