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Tower 185, Frankfurt’s largest office building, has been sold for €775m, in a “hotly contested” transaction that highlights how Brexit has buoyed the German financial centre’s property market.

Deka Immobilien, the real estate investment arm of Germany’s municipally owned savings banks, outbid a number of international bidders to ink one of continental Europe’s largest real estate deals of the year.

“The sales process was hotly contested,” said Michael Morgan, head of investment management at CA Immo, which developed the building in 2011 and still owned one-third of it before the sale.

So far 15 global banks have announced they will move some operations from London to Frankfurt in preparation for the UK’s planned 2019 departure from the EU.

“Brexit clearly played an important role in our decision to acquire Tower 185,” Victor Stoltenburg, head of acquisitions and sales Germany at Deka Immobilien, told the Financial Times.

“Demand for office space in Frankfurt has risen markedly over the last 12 to 18 months, and we expect this trend to continue,” he said.

CA Immo said Germany’s fourth-tallest skyscraper sold for about 125 per cent of the building’s book value at the end of 2016. The building was constructed in 2011 for €480m

Four years ago, CA Immo sold 67 per cent of the property to WPI Fonds SCS-Fis, a pension fund that has also sold its stake to Deka.

The prospect of Brexit has triggered a surge in building activity in Frankfurt: four office towers in prime locations are under construction and will add up to 300,000 square meters of space by 2020.

Goldman Sachs and Morgan Stanley, the US investment banks, have already secured leases in two of them: the Marienturm and the Omniturm. 

The price per square foot paid for Tower 185 — about €8,000 — is still moderate compared with other German cities. “We have seen transactions in Berlin and Munich where €12,000 per square meter were paid,” said Marcus Lütgering, head of office investment at JLL Germany.

And the total price was dwarfed by the record £1.3bn sale of London’s “Walkie Talkie” skyscraper to Lee Kum Kee, the Hong Kong oyster sauce maker, in July.

“We can expect that the events surrounding Brexit will have positive effects on investments in Frankfurt,” said Mr Lütgering. “Tower 185 won’t be the last transaction to benefit from this.” 

The single biggest tenant in Tower 185 is PwC, the professional services firm, which rents 60 per cent of the building’s 100,000 square meters. The property’s vacancy rate stands at 10 per cent, and demand is growing strongly. “We are confident that we will rent out the remaining space soon”, Mr Stoltenburg added. 

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