Q1 2018: Record take-up volumes for Q1 in several European markets
After recording the best transaction volume in a decade in 2017, the dynamism of the office letting market in Europe continued unabated in Q1 2018, with take-up totalling 2.47 million m² in the 15 main European markets. This healthy trend was notably fueled by the 3 largest markets, which all recorded high results. Volumes taken up amounted to 345,000 m² in Central London, which represented a rise of 46% compared to the same period in 2017 and the best result since 2010. Central Paris benefited from a series of very large occupier deals and from the significant increase in small and medium-sized units to achieve an increase of 11% vs Q1 2017. The 4 main German cities recorded their 2nd best all-time result in Q1, especially thanks to the very good performance of the Berlin office market (+13%). Volumes remained high but decreased in Munich (-9%), Frankfurt (-4%) and Hamburg (-3%), which is explained by the exceptionally high figures recorded in Q1 2017. Thanks to Ireland’s fast growing economy, volumes rose substantially in Dublin (+55%), which was also the case in Warsaw (+37%, best result ever in Q1) and Madrid (+27%). Although decreasing compared to Q1 2017, take-up remained well above its long-term average in Lisbon (-7%), Milan (-12%) and Amsterdam (-32%). Volumes were in line with the average in Brussels and Luxembourg.
The average vacancy rate of the 15 main European markets continued to shrink during the first months of 2018 and reached 7%, contracting by 130 basis points compared to Q1 2017. The lowest vacancy rates were still in Berlin (2%), Munich (3.2%) and Hamburg (4.5%), but the most impressive drop was seen in Warsaw, where the vacancy rate plummeted (-470 bps vs. Q1 2017), reaching 10.3%. As such, vacant space in the Polish capital amounted to 542,000 m² at the end of March 2018. Other significant decreases were seen in Amsterdam (-220 bps), Madrid (-190 bps) and Lisbon (-180 bps). Vacant premises were also scarcer in Central London and Central Paris as vacancy respectively stood at 5.6% (-80 bps) and 6% (-90 bps).
Prime rental values remained steady or increased in all main European markets, excepted in Central London (-10% vs. Q1 2017) where prime rents reached £1,238/m²/year. Most important changes over the last 12 months were in Berlin (+16%, €396/m²/year), Milan (+12%, €504/m²/year), Frankfurt (+9%, €504/m²/year), Hamburg (+9%, €318/m²/year) and Lisbon (+8%, €246/m²/year).