Munich Startup: What exactly is the goal of this program?
Alexander Schmidbauer: Despite all the advantages Munich offers as a startup location, affordable office space remains scarce. Studies consistently highlight this issue. In the DSM 2020/2021, three-quarters of the surveyed startups rated “affordable office space” in Munich as “poor/very poor”, while only 35.9 percent did so in the national average.
Our RAW survey of Munich startups conducted at the end of 2021 reached a similar conclusion: The greatest difficulties in finding space were “reasonable price” at 90.6 percent, “lack of suitable spaces” at 78.8 percent, “suitable location” at 73.8 percent, “lack of available spaces” and “effort” each at 72.6 percent. Long-term rental contracts typical in the market and a lack of flexibility in terms of space size are also frequently cited issues.
With the curated network of private space providers – Spaces for Scaleups – we as municipal business development want to facilitate the smoothest possible transition to suitable and affordable follow-up spaces by effectively networking startups and scaleups with private space providers. Through shortened search processes and direct placement, startups save valuable time and costs, while often urgently needed moves to larger spaces are made easier.
“There is strong demand in the area of increasing space requirements from 200 to 300 square meters”
For this, we work with suitable and reliable partners from Munich’s real estate industry who support the Munich startup ecosystem with attractive space offerings, time-limited price reductions, and additional services for innovative startups or young companies, thus contributing to a sustainably successful startup and business location.
Munich Startup: Why does the program explicitly target fast-growing startups, so-called scaleups? Do companies in this growth phase find it particularly difficult to find suitable spaces in Munich?
Alexander Schmidbauer: Yes, the search for space is indeed not easy, especially during this often crucial growth phase of startups. In the area of increasing space requirements from 200 to 300 square meters, there is strong demand that the market has so far only been able to meet inadequately – this is consistently reported back to us by the startup scene, incubators such as MTZ and Werk1, as well as Munich’s real estate industry. The few existing offerings on the market are often not attractive for startups or scaleups – high prices, search effort, and high placement costs from brokers, for example, are deterrents. Moreover, for this target group in particular to a much greater extent than for “conventional” office renters, it’s about finding the right environment such as location, connectivity, atmosphere, cafés, flexible terms, and the community aspect like meeting spaces, other startups, or networking.
Program open to all growing startups and scaleups
Munich Startup: Do scaleups have to meet certain requirements to participate in the program?
Alexander Schmidbauer: No, the offer is open to all growing startups and scaleups. Ultimately, it is of course advantageous to already have some proof of market and reasonably stable financing, as the decision in favor of a tenant lies exclusively with the space providers as landlords.
We as Referat für Arbeit und Wirtschaft act only as a networking partner in this project and want to actively help bring together space providers and attractive scaleups – in mutual interest. After all, real estate developers and landlords are increasingly interested in attractive and diverse office locations, which should include an interesting mix of corporates and startups and scaleups – everyone benefits from this.
Munich Startup: How exactly does the placement process work? And where can scaleups find current offers?
Alexander Schmidbauer: Interested startups and scaleups can find a current overview of available offers at any time on the Munich Startup Pinboard. Through this, direct contact can be established with the space provider. Additionally, all incubators in Munich are informed about our offers and can pass them directly on to their interested tenants.
If nothing suitable is found among the offers, scaleups can then contact our company support team at Referat für Arbeit und Wirtschaft, which actively assists with space searches. Contact can be made via firmenbetreuung@muenchen.de .
Network continues to expand
Munich Startup: Are there any success stories to report?
Alexander Schmidbauer: The program is currently being established. Due to the long lead times and construction periods for real estate projects, there is still a relatively limited volume of actually available offers – such spaces don’t materialize overnight. The program is deliberately forward-looking and aims to quickly address a known shortage.
Much of the Spaces for Scaleups space will only be completed in the coming months and years and will then become available. Therefore, there are not yet a large number of successful placements. However, there is great interest from the startup side. Real estate providers are also responding very positively to our initiative, which of course pleases us. So we will continue to work on expanding the network and continue to advocate with real estate providers to make suitable and attractive spaces available for our program.
Munich Startup: Many companies have retained a hybrid work model after Corona. Is demand for office space still as strong, or is the Munich real estate market experiencing some relief in this area?
The boom in Munich’s commercial real estate market was initially halted in the first Corona year 2020 with a significant drop in rentals of a quarter, but this decline was not – as widely feared – permanent. Demand for office space has been rising significantly since the third quarter of 2021. Thus, it has remained merely a “Corona dip”: In the first quarter of 2022, space transactions rose by a remarkable 83 percent, even exceeding the more meaningful 10-year average by 4 percent. This stable trend at a high level also continues into the second quarter of 2022, with the vacancy rate moving at a low level of 4.3 percent.
Spacious work environments for sought-after skilled workers
Even though hybrid work models have probably become the “new normal” due to the pandemic, this apparently does not mean that space requirements are decreasing: office spaces continue to be needed, especially for team collaboration and creative processes. Additionally, companies are competing for well-trained skilled workers and want to offer them modern and spacious work environments. Furthermore, meeting areas and additional offerings, such as attractive gastronomy, are becoming increasingly important, which can lead to higher space requirements.
