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European Office Market - 2017 Overview

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European office market activity is at a ten year high

Best take-up volume in a decade

2017 was a very successful year for the office letting market which achieved the best result by far in 10 years. The market thrived in most cities over the year, especially in the 3 largest countries, where large occupational deals boosted the market. Thanks to Germany’s good economic performance, the country’s 4 main markets were particularly active with a 23% growth over last year. Take-up grew (+11%) over 2016 in Central London where large occupier deals were 55% ahead of average levels. The volume of take-up was much higher than last year in Central Paris (+9%), where large units were the busiest segment in 2017. Most European markets followed this healthy trend, particularly Dublin (+45%), Warsaw and Madrid (+28%), Milan (+19%) or Amsterdam (+16%).

Vacancy contraction in Europe pushing up prime rental values

The average vacancy rate shrunk again in Europe in 2017 and attained all-time record lows in several markets. The volume of vacant space dropped in the 4 largest German markets (-16% over Q4 2016). Vacancy also contracted in Central Paris, reaching 6.5% (-30 bps over 1 year ago) but the most important drop was seen in Bucharest (-410 bps), followed by Amsterdam (-230 bps), Warsaw (-200 bps), Lisbon (-160 bps) and Madrid (-150 bps). In contrast, vacancy increased in Central London with 6.2% of vacant premises (+50 bps vs. last year). Prime rents mostly increased across Europe over the last 12 months. Rental values rose in Central Paris with € 850/m²/year, in Berlin (+16%, € 396/m²/year), Brussels (+13%, €310/m²/year), and Milan (+12%, €550/m²/year), whereas they slightly decreased in Central London.

 

EOM 2018
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