Europe | Offices
At a Glance Q3 2017
On-going letting activity is pushing down vacancy in Europe - November 2017With 6.83 million m² taken up over the last 9 months, transacted volumes in Europe stepped up by 9% compared to the same period last year.
With 6.83 million m² taken up over the last 9 months, transacted volumes in Europe stepped up by 9% compared to the same period last year. In a context of continuous take-up growth over the last few years, 2017 has the most active 9-month period since 2008. The four main German markets performed particularly well. When combined they record take-up of 2.2 million m², a 14% rise and individually: Frankfurt (+27%); Hamburg (+13%); Munich (+11%) and Berlin (+9%). Both Frankfurt and Hamburg recorded their best result of the last 15 years, while Berlin and Munich exceeded their 10-year average by 63% and 17% respectively. After dropping at the beginning of the year in the wake of the Brexit vote, the Central London market spent Q2 and Q3 in recovery. All in all, office take-up grew by 12% versus last year, notably thanks to deals for units greater than 10,000 m², which are around 50% up on average levels. Driven by deals for large units greater than 20,000 m², Central Paris also achieved a small increase (+6%). Most of European markets followed this increasing trend, especially Milan (+30%), Amsterdam (+29%) and Dublin (+21%).
The average vacancy rate of the 14 main European markets shrunk again during the last quarter, and reached 7.5%, contracting by 60 basis points compared to Q3 2016. Already historically low, vacancy in German markets decreased again to 2.4% in Berlin, 3.6% in Munich and 5.3% in Hamburg. The dynamism of the market resulted in a lower vacancy rate in Central Paris (6.7%) with Paris CBD reaching a record-low vacancy of 2.9% and new supply remaining extremely scarce. The most significant drop was seen in Bucharest with 8.8% of vacant space, a 410 basis point downturn in vacancy, followed by Amsterdam (11.2%, -200 bps), Dublin (8.5%, -130 bps), Madrid (10.8%, -120 bps) and Lisbon (9.1%, -120 bps). The only two markets recording a higher vacancy than last year were Milan (12.7%, +50 bps) and Central London (6.3%, +90 bps). However, these two markets seem to be currently reversing this trend as both of them saw vacancy decreases during the last quarter.
Prime rents mostly increased across Europe over the last 12 months. Even though rental values remained steady in Central Paris and decreased in Central London, prime rents rose by 3% on average, with Berlin (+11%, €372/m²/year) and Brussels (+13%, €310/m²/year) seeing the most important changes.