Case Study – Umspannwerk Kreuzberg

Umspannwerk Kreuzberg is an 11,500 sqm multi-let, mixed-use building located in Berlin’s ‘hipster’ area of Kreuzberg. The building was once an electricity transformer station built in 1926; today, it is a thriving campus for the creative and media industries, let to various media and tech tenants including Red Bull Studios.

Avignon Capital acquired the asset in Q1 2015 and designed a business plan to improve rental tone, reconfigure underutilised space and enhance tenant engagement.

Over the past 3 years, Avignon has improved the profile of the building providing a strong foundation for rental growth, tenant retention and new lettings.

Avignon has applied its innovative asset management approach to maximise the investment performance of the asset. Initiatives such as marketing & rebranding, building improvements and personal communication with tenants have resulted in no vacancies, strong demand and headlines rents being driven to €25+ sqm, and the capital value of the asset increasing by over 100% since acquisition.

Red Bull Studios, Umspannwerk Kreuzberg

Avignon successfully negotiated a surrender on the basement and event space which was underutilised space and secured a new letting to Google Campus; on a 15-year term, thus removing letting risk and adding a brand that fits seamlessly with the creative ethos of the building.

Umspannwerk Kreuzberg will be Google’s first Campus in Berlin; the Campus spaces are designed to help entrepreneurs to form and build their businesses alongside other tech professionals, primarily within the start-up sector.

CBRE reported that the Berlin office market remains on a record level and the TMT sector was again the most important user group. By repositioning the building, it has now become one of the most renowned and in-demand office buildings for the TMT sector in Berlin.

Over the past 3 years, Avignon Capital has achieved significant income and capital growth at Umspannwerk Kreuzberg which has generated high returns for investors.

In 2016 Umspannwerk Kreuzberg was awarded best office deal of the year at the Property Investor Europe Awards.

 

Investment Results