Barings acquires office and retail building in Berlin for institutional investor

Barings Real Estate Advisers has acquired an office and retail property in Berlin-Friedenau on behalf of a separate account mandate and will have responsibility for both the refurbishment and asset management of the property.

The vendors are the Cologne-based SILVER CLOUD Invest GmbH and the Klingsöhr Group from Berlin. Zenk Rechtsanwälte. Ebner Stolz and Engel & Völkers acted for the vendors, while Berwin Leighton Paisner LLP and KPMG AG Wirtschaftsprüfungsgesellschaft advised the purchaser.
The property, situated at Hauptstrasse 78/79, currently provides around 4,000 sq m. The lettable area of the existing historic listed building could be extended to ca. 5,100 sq m. Constructed in 1929 as the so-called "Roxy Palast" the building originally housed a cinema alongside other facilities. The large cinema auditorium is now let to an organic supermarket. Most of the remaining space has already been vacated, with the remaining tenants leaving before the year end, allowing Barings to start refurbishment and repositioning of the property.
The "Roxy Palast" is close to the Friedenau town hall, with good local shopping facilities and public transport links, with U-Bahn and S-Bahn stations nearby. The city motorway and the Berlin-Südkreuz ICE (high-speed train) mainline station are also within easy reach.
As part of the refurbishment work, the loft-style office accommodation, with ceiling heights of around four metres, will retain some of its original brickwork so as to maintain the property’s character. A double-storey office unit with 125 sq m space, as well as roof terraces is also planned.
The Berlin office market is very dynamic. Low vacancy rates and substantial excess demand mean that it has the highest forecast rental growth among the major European markets. Under the planned manage-to-core strategy, this investment has the ability to generate strong investment returns.
Christoph Wittkop, Managing Director and Head of Germany at Barings Real Estate Advisers, adds: "The Berlin office market is still under pressure with demand for quality space continuing to outstrip supply. Once refurbished, the Roxy Palast should prove attractive to a diverse range of tenants due to its combination of historic architecture, individual office layouts and popular urban location”.
Gunther Deutsch, Managing Director and Head of Investment Transactions Europe at Barings Real Estate Advisers, says: “This is the second value add investment in Berlin that Barings is acquiring for its pan-European investment strategy. Berlin is a key European market given the opportunity in terms of rent levels and capital values. We are continuously on the lookout for investment opportunities across the office, retail and logistics sectors in this vibrant city”.