Office space in Jena: high demand, critical vacancy rate

Jena Economic Development Agency publishes 7th office market report for the City of Light

Jena remains an attractive location for companies and investors, and demand for office space remains high even in the crisis year 2021. This is confirmed by the seventh Jena Office Market Report recently published by the Jena Economic Development Corporation (JenaWirtschaft), which highlights key local market indicators.

One of the key findings from last year was that the coronavirus pandemic did not lead to a decline, but rather a change in demand: Demand for office and laboratory space as well as space for pre-production increased in 2021, while the vacancy rate fell by another 0.7 percentage points and averaged 1.3% for the year. This is the lowest figure since reporting began in 2016.

Changing requirements

Patrick Werner, Project Manager at JenaWirtschaft , knows which factors are decisive for this development:

"Our existing companies are expanding and need more space for their own growth. The demand for products and services remains high, and the local economy wants to offer its employees optimally equipped workplaces."

According to the office market report, the majority of the office and commercial space created is built and occupied by local companies themselves. Wilfried Röpke, head of the Jena Economic Development Agency, knows how important optimal office equipment is for skilled workers:

"The companies, especially in the digital economy and knowledge-intensive services, but also the city's research institutions, are growing on their own. They need very high-quality office space in order to create a modern and comfortable working environment for their employees."

This trend towards creating an optimal environment, especially for one's own team, has intensified once again after the pandemic has subsided:

"Flexibility is important: both the option of mobile working, but also a high-quality office environment to increase employer loyalty,"

says Röpke.

Lowest vacancy rate since reporting began

Overall, the total office space stock in Jena amounted to around 727,000 square meters last year. The low vacancy rate of just 1.3 percent has reached a critical point, according to the economic development agency:

"There is a real danger that companies based in Jena will leave the location because their need for office space cannot be realized locally either through rented space or self-build,"

says Wilfried Röpke.

According to the head of JenaWirtschaft, the current office market report clearly shows that Jena urgently needs new commercial building space in order to remain future-proof and competitive:

"New areas must be designated and prepared in terms of planning or existing remaining areas must be mobilized and revitalized."

The responsible department head for urban development and the environment, Mayor Christian Gerlitz, therefore emphasizes:

"We must make full use of existing existing areas and quickly develop reserved commercial areas already provided for in the land use plan in order to be able to offer companies attractive areas in the future."

According to Gerlitz, this includes the ten hectares in the Rothenstein inter-municipal commercial area as well as areas on the Saalbahn and Tatzendpromenade, the redensification of which is to be secured under planning law.

New challenges

In addition to the shortage of space, numerous other challenges are shaping the commercial real estate market and clouding the outlook for the coming year: high construction and energy costs, war, the difficult global economic situation, inflation and rising interest rates are leading to major uncertainties for the local real estate industry, but also for investors from outside and local companies, according to Patrick Werner.

These current uncertainties are reinforcing a trend that began during the coronavirus pandemic: companies are rethinking previous sales and procurement strategies and trying to diversify their suppliers:

"Global material shortages and disrupted supply chains mean that many companies are looking to create their own storage capacities in Jena in order to stock required materials and preliminary products themselves and thus achieve production reliability,"

says Patrick Werner. The demand for space for technical pre-production - so-called "light industrial" space - has risen sharply since 2020. At the same time, however, companies remain internationally oriented and part of global markets and value chains.

Growth in the life sciences sector

Another trend is the growth in the life sciences sector, i.e. biomedicine, pharmaceuticals, medical technology and biotechnology. The demand for laboratory space has skyrocketed here in 2021; according to Werner, the entire industry is an immense growth market:

"The range of medical products from Jena extends from analytics and diagnostics to classic drug production, laboratory automation and laser therapy."

In order to make supply and demand in this market segment transparent, JenaWirtschaft will be publishing its own laboratory space report for the first time in December.

Investments in Jena are therefore changing, but Jena remains a robust investment location even in times of economic uncertainty.

"The close links between business and science with the research-intensive universities and institutes and the high proportion of academics remain important location factors, especially for future-proof sectors such as healthcare technology or the digital economy."

summarizes Wilfried Röpke. To this end, administration and politics must keep an eye on the needs of companies and create business and investment-friendly framework conditions.