Munich Startup: What exactly is the goal of this program?
Alexander SchmidbauerDespite all the advantages that Munich offers as a startup location, affordable space is and will remain in short supply. This is also repeatedly highlighted in studies. DSM 2020/2021 Three quarters of the startups surveyed rated the item “affordable office space” in Munich as “poor/very poor”, whereas the national average was only 35.9 percent.
Our RAW survey of Munich startups conducted at the end of 2021 also reached a similar conclusion: The criteria cited as the greatest difficulties in finding space were "reasonable price" (90.6 percent), "lack of suitable space" (78.8 percent), "suitable location" (73.8 percent), "lack of available space" (72.6 percent each), and "effort" (72.6 percent each). The long-term leases common in the market and the lack of flexibility, for example, in terms of space size, were also frequently criticized.
With our curated network of private space providers – Spaces for Scaleups – we, as the city's economic development agency, aim to effectively connect startups and scaleups with private space providers, enabling the most seamless transition possible into suitable and affordable follow-up space. Shortened search processes and direct placement save startups valuable time and money, while also facilitating an often urgently needed move to larger spaces.
“There is strong demand in the area of increasing space requirements from 200 to 300 square meters”
To this end, we work with suitable and reliable partners in the Munich real estate industry who support the Munich startup ecosystem with attractive space offers, temporary price discounts and other services for innovative startups and young companies, thus contributing to a sustainably successful startup and business location.
Munich Startup: Why is the program specifically aimed at fast-growing startups, so-called scaleups? Do companies in this growth phase find it particularly difficult to find suitable space in Munich?
Alexander Schmidbauer: Yes, finding space is indeed not easy, especially during this often crucial growth phase for startups. There is strong demand for space from 200 to 300 square meters upwards, but the market has so far been unable to adequately satisfy this demand – this is what the startup scene, incubators such as MTZ and Plant1 and the Munich real estate industry consistently agree. The few available options on the market are often unattractive for startups and scaleups – high prices, the search effort, and high brokerage costs for real estate agents, for example, are a deterrent. Moreover, for this target group, the right environment, such as location, connectivity, atmosphere, cafés, flexible terms, and community aspects such as meeting spaces, other startups, and networking, are much more important than for "traditional" office tenants.
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, however, it is of course advantageous to already have a certain degree of proof of market and reasonably stable financing, as the decision in favor of a tenant rests solely with the space providers as landlords.
We at Referat für Arbeit und Wirtschaft are merely acting as a networking partner in this project and would like to actively contribute to bringing space providers and attractive scaleups together – in the mutual interest. Real estate developers and landlords are increasingly interested in attractive and diverse office locations, including an interesting mix of corporates, startups, and scaleups – all parties benefit 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 the available offers at any time on the Munich Startup PinboardThis allows direct contact with the space provider. Furthermore, all startup centers in Munich are informed about our offers and can pass them on directly to their interested tenants.
If there is nothing suitable among the offers, the scaleups can contact our Company support in Referat für Arbeit und Wirtschaft who will actively assist you in your search for space. Contact can be made via firmenbetreuung@muenchen.de be recorded.
Network is constantly expanding
Munich Startup: Are there any examples of success to report?
Alexander Schmidbauer: The program is currently under development. Due to the long lead and construction times of real estate projects, there is still a relatively limited volume of actually available space – such spaces don't spring up overnight. The program is deliberately future-oriented and aims to address a known shortage as quickly as possible.
A large portion of the Spaces for Scaleups space will only be completed and accessible in the coming months and years. Therefore, we haven't yet had a large number of successful placements. However, there is considerable interest from startups. Real estate providers have also responded very positively to our initiative, which we are naturally pleased about. We will therefore continue to work on expanding the network and continue to encourage real estate providers to provide suitable and attractive space for our program.
Munich Startup: Many companies are maintaining a hybrid work model even after the coronavirus pandemic. Is demand for office space still strong, or is the Munich real estate market experiencing some easing in this area?
Although the boom on Munich's commercial real estate market initially ended in the first year of the coronavirus pandemic, 2020, with a significant drop in rentals by a quarter, this decline was not permanent, as many feared. Demand for office space has been rising significantly again since the third quarter of 2021. Thus, so far, it has only been a "coronavirus dip": In the first quarter of 2022, take-up rose by a remarkable 83 percent, even exceeding the more meaningful 10-year average by 4 percent. This stable trend continued at a high level in the second quarter of 2022, with the vacancy rate remaining at a low level of 4.3 percent.
Spacious working environments for sought-after specialists
Even though hybrid working models have definitively become the "new normal" due to the pandemic, this apparently doesn't mean that the need for space is decreasing: Workstations will still be needed in the office, especially for team collaboration and creative processes. Furthermore, companies are competing for well-trained specialists and want to offer them modern, spacious work environments. Meeting spaces and additional amenities, such as attractive dining options, are also becoming increasingly important, which can trigger greater demand for space.
