(Bloomberg) -- Germany’s market for office properties continued to worsen at the beginning of the year, with deal volumes hitting the lowest point in almost 15 years. 

A composite performance index compiled by German lender PBB dropped for a sixth consecutive quarter during the three months through March as investments in the asset class only reached €700 million ($758 million). That’s the lowest level since the second quarter of 2009, PBB said.

Valuations for office properties in Europe’s largest economy have been hit hard by the interest rate hikes implemented by the European Central Bank, which have increased funding costs and made it harder for buyers and sellers to agree on pricing. In addition, a sluggish German economy and the shift to remote working have pushed up vacancies, exacerbating the hit to values. 

“Office markets are expected to continue their underperformance and demand for office space will remain depressed,” PBB said in a report. “Office space vacancies continue to increase and are significantly higher than a year ago.”

Read more: German Office Values to Drop as Much as 10% This Year, VDP Says

However, the first-quarter decline in PBB’s index was less than in previous periods, “suggesting that office markets have started to bottom out,” the lender said in the report. If the economy recovers, “office markets could stabilize over the course of the year and ultimately embark on an upward trajectory,” it said.

PBB uses data on the economic outlook, office rents and deals in Germany’s largest cities to compile its pbbIX index. The index hit -2.01 in the first quarter, with a reading below zero on the scale from -3 to +3 indicating the market is worse than the long-term average.

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