It’s summer 2023 and we are visiting the offices of Union Investment to find out more about asset management of the TRIIIO building in Hamburg. Developing this existing property involves plenty of exciting challenges: rebranding a landmark building, repositioning it from single to multi-tenant use, re-letting the entire property and doing it all under the strict constraints of protected building status.
Flashback to the winter of 2020/2021, in the midst of the pandemic, and Union Investment is considering the acquisition of the headquarters of Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft, or Hamburg Süd for short. The shipping company is planning to move out of its long-established home at Willy-Brandt-Straße 59–65 at the end of 2021, after some 57 years. Union Investment recognises the opportunity and acquires the building complex, which was fully upgraded in terms of technology and energy efficiency in 2016, and also extended, with the aim of repositioning it in the Hamburg office property market.
Developing a new story and a compelling marketing strategy
The asset managers, who are involved in the acquisition process alongside other departments, develop a marketing strategy. “It was clear to us from the start that the building complex needed a new, compelling story,” says Lars Kirmse, Head of Asset Management North Germany. “Thanks to our market expertise, we’re able to judge what will work at a particular site and what won’t. We understand competitors and locations very well and know what’s happening. Ultimately, the questions are: can you do it, and how long do you need?”
Given the pandemic and the approximately 17,200 square metres of office space due to be vacated in the near future, the investment decision is challenging. Working closely with various departments, particularly real estate project management, a business case is developed and an agreement reached that the project will be jointly managed.
“Internal cooperation and support are major drivers behind the subsequent success of TRIIIO,” says Kirmse. Signing in mid-February 2021 and closing at the beginning of June 2021 seal the much publicised deal. The landmark building dating from 1964/2016 is added to the holdings of special real estate fund UII German Prime Select. Hamburg Süd remains in situ as the tenant for a few months until the property changes to project status.
Building infrastructure converted for multi-tenant use
At the start of 2022, the landmark high-rise block and associated buildings stand empty in one of Hamburg’s most sought-after submarkets where the highest prime and average rents are achieved. These would normally be perfect conditions for re-letting, but working from home and remote working are making the outlook for traditional offices increasingly uncertain. The result is marked restraint on the demand side. Following initial discussions with market players, it is also considered unlikely that a new single lease could be concluded. Attractive option two – switching from single user to multi-tenant – therefore becomes the preferred option even before Hamburg Süd moves out. Christian Born, the asset manager in Lars Kirmse’s team with responsibility for tenant relations, is tasked with letting the property. He and project manager Timo Albers must succeed in creating a new identity for the empty office complex, reconfigure it structurally to meet multi-tenant requirements and fill it with new users. At the same time, investment in the building infrastructure, tenant fit-out and marketing must meet the dictates of fund management. “A few question marks emerged as we looked to the future,” comments Timo Albers.
The asset managers see promising opportunities in the property’s unique city centre location with its high visibility, good transport links and flexible floorplans. “But there were certain restrictions. For example, it was not immediately apparent that the three buildings actually belong together,” says Kirmse. On the long plot of land stand a 15-storey tower, a two-storey connecting building and a six-storey building, plus an adjacent seven-storey building that was constructed in 2016. “We had to give the ensemble a coherent identity,” says Kirmse, looking back. Timo Albers emphasises the specific features of the microcosm: “On the left side, we have the attractive waterfront location on the Nikolaifleet canal and to the right of Willy-Brandt-Straße we have a district dominated by offices, restaurants and conference facilities.”
In addition, it is essential to work closely with Hamburg’s heritage conservation authorities because, except for the most recent addition, all of the buildings by architect Cäsar Pinnau are historically important and have been heritage protected since 2011. “That involves a lot of effort, but we can always manage this kind of challenge effectively in Hamburg,” says Kirmse, speaking from his experience with the heritage-protected Emporio and Chilehaus buildings. “Unfortunately, we weren’t able to put all our ideas into practice at TRIIIO,” says Timo Albers. For example, opening the façade towards the waterfront and building a large roof terrace on the connecting building were not permitted.
Kirmse, Albers and Born go through an intensive, eventful decision-making and implementation process in which a number of alternatives and new possible combinations are tested and rejected. It is important to identify and structure rental spaces for different uses and tenants while continually considering new approaches and taking all the possible scenarios into account. Various needs must be reconciled with structural factors and conservation requirements, and the marketing strategy has to be implemented.
Rebranding and an intensive marketing campaign
With support from the internal marketing unit, a pitch is developed early on and the team soon come up with the name TRIIIO. It ticks all the boxes. Under the new name, the different buildings can be presented as a single complex. TRIIIO consists of the three buildings Tower, Meet Place and Nikolai Office. With a property description, visualisations, a website and various social media activities, B2B marketing picks up speed in 2021. However, the new name doesn’t appear on the tower block’s façade until a year and a half later, when HAMBURG SÜD becomes TRIIIO HAMBURG. “We had detailed and lengthy discussions with the heritage conservation authorities, who didn’t want to touch the HAMBURG SÜD sign,” says Albers. “But we and our tenants are now very happy with retaining the Hamburg part alongside the new brand name TRIIIO. Strong visibility is definitely a given.”
First leases signed in Q2 2022
While Timo Albers drives forward the remodelling work together with his colleagues in project development and deals with new fire safety measures, new media technology and conversion of the interior to autonomous spaces with smart meters, Christian Born focuses on letting. “We went on a huge roadshow,” says Kirmse. “Christian presented TRIIIO to every real estate agent and spread our story far and wide throughout the market. There was an incredible amount of sales effort involved.” “Union Investment’s high profile obviously helped us here,” says Christian Born. “It’s even more important that we are a reliable partner for tenants and maintain close contact with them.” As Tenant Relations Manager, Born manages 200 tenants of varying sizes. He remains in regular contact with his customers after the letting process: “You have to keep your ear to the ground and be prepared for changes and tenant requests.”
In Q2 2022, asset management scores its first two letting successes. Law firm and tax consultancy Ypog is the first tenant to opt for TRIIIO, which is now BREEAM certified. A 15-year lease is signed for around 4,150 square metres on floors 10 to 15 of the tower. Ypog moves into the building in summer 2023. The landmark building is the perfect fit with its corporate culture, and the firm feels in no way constrained by the heritage-protected interior of the premium top floor. Real estate services firm Cushman & Wakefield chooses the ninth floor. Christian Born emphasises: “A strong signal is sent out when a tenant with such deep market insights chooses to rent in TRIIIO.”
After more than 70 viewings and intensive pre-planning, seven fast-growing, creditworthy tenants are acquired by mid-2023. The restaurant area in Meet Place is also let. It is being occupied by Kitchen Guerilla, the winner of various awards. “The target rents are being achieved and full occupancy of the entire usable floor space of 19,321 square metres is within reach. All tenants will have moved in by 1 April 2024 and we hope to be able to let the last remaining available spaces soon,” says asset manager Lars Kirmse. In terms of adding value to the special fund, TRIIIO looks like really hitting the spot.
Text by Elke Hildebrandt, photos by Andreas Vallbracht and Patrick Ohligschläger