Plummeting vacancy rates in the context of high take-up
There was no let up in the dynamism of the office letting market in Europe, with take-up totalling 2.38 million m² in Q2 2018 in the main 15 European markets. Transactions amounted to 4.79 million m² since January - a rise in take-up of 4% compared to H1 2017. The three largest markets continued to fuel the lively pace of take-up in Europe. Central London recorded a 26% rise in take-up vs H1 2017 and the best result since 2010. Deals for large units continued to drive the volumes in Central Paris, where they increased by 12% compared to the same period in 2017. Five deals of more than 20,000 m² have notably already been signed in the French capital. Despite a very slight dip (- 2%), the attractiveness of the main four German cities remained unchanged, especially Munich, where volumes were 15% up compared to last year and achieved their best result over the 6-month period since 2001. The small decrease in volumes in Berlin (-3%) can be explained by the shortage of supply, whereas Frankfurt (-10%) and Hamburg (-16%) remain above their 10-year average. Positive results were also obtained in Milan (+3%) and Madrid (+1%), which both established new records since 2011 and exceeded their long-term average. Exceptionally high results in H1 were also observed in Lisbon (+6%), Warsaw (+19%) and in Dublin despite a drop in volumes (-3%) as compared to last year. Volumes fell more significantly in Luxembourg (-19%) and Brussels (-23%).
The average vacancy rate of the main 15 European markets reached a low with only 6.9% of empty offices, contracting by 120 basis points compared to H1 2017. With only 2.1% of vacancy, representing only 405,000 m² available for rent, relative to the 382,000 m² taken-up in H1, Berlin is the city most concerned by the shortage of supply. Munich (3% of vacancy) and Hamburg (4.8%) are experiencing a similar trend. The vacancy rate plummeted in Warsaw (-420 bps), Amsterdam (-290 bps), Lisbon (-240 bps), Prague and Milan (-220 bps). The share of empty premises fell in all the other markets, such as Central Paris (-100 bps), Central London (-80 bps), Brussels, Dublin, Luxembourg (-40 bps) and Vienna (-20 bps).
Prime rental values remained steady or increased in all main European markets, excepted in Central London (-10% vs. H1 2017) where prime rents reached £1,238/m²/year. The most important changes over the last 12 months were in Berlin (+13%, €408/m²/year), Frankfurt (+12%, €516/m²/year), Madrid (+11%, €408/m²/year), Milan (+10%, €570/m²/year) and Lisbon (+8%, €246/m²/year).