ECE implements multi-party rental agreements for the first time in Germany
Can you give us a preview of any new projects you are currently working on?
ECE and STRABAG Real Estate are currently developing an urban office and commercial district, MesseCity Cologne, on a 135,000 m² site. The new district will feature office space, hotels, dining options, and small-scale retail outlets. The first four buildings, which account for about half of the total floor space, are already fully leased. The two eastern sections with another 50,000 m² of leasable space will soon follow.
We are also busy planning a conference hotel with over 600 rooms on the Elbe bridges in Hamburg and are actively working on residential projects. Furthermore, we’re developing several logistics projects in the greater Berlin area and in Baden-Württemberg.
Can you give us a specific example?
In Königs Wusterhausen, southeast of Berlin, we’re currently building the Berlin-South I Logistics Center. The 50,000 m² facility is located on a 90,000 m² site in an industrial park without any noise restrictions directly adjacent to the A10 freeway. We deliberately decided to build the facility speculatively and are currently looking for tenants for units starting at 5,000 m² while completing construction work. The properties stand out thanks to their variable sizes and flexible lease periods and are suitable for both single and multi-tenant use. We plan to finish construction and have the first tenants move into the spaces by Q4 of 2020.
How the construction industry deals with rising construction costs
Are you currently facing any particular challenges in project development in your area?
Like many developers, we are also faced with the challenge of finding suitable properties at reasonable prices. Many areas are overpriced and ultimately do not represent a viable investment opportunity. In addition, building costs are rising because construction companies are operating at full capacity. This obviously also prolongs the time needed to complete construction projects.
What impact are rising construction costs having?
The reason behind the increase in construction costs is simply a lack of construction capacity. This means that the process of awarding contracts also takes longer and we have to look for suitable contractors early on. No one knows how building costs will develop. If you project the increases of recent years into the future, however, it will soon become increasingly difficult to build due to skyrocketing costs.