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At a Glance - Main Office Markets in Europe - Q4 2017

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Best take-up volume in decade

  • 2017 was a very successful year for the office letting market with take-up totalling 10.08 million m² in the main European markets. Volumes increase of 14% compared to last year represents by far the best result 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 vs. last year. Due to several deals greater than 10,000 m², Frankfurt (+47%) and Munich (+28%) recorded significant increases in take-up, while Hamburg (+13%) and Berlin (+8%) also set new records. Take-up grew (+11%) vs. 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 of European markets followed this healthy trend, particularly Dublin (+45%), Madrid (+29%), Warsaw (+28%), Milan (+19%) or Amsterdam (+16%). Only Luxembourg (-6%), Brussels (-8%) and Vienna (-42%) saw a decline in take-up.
  • The average vacancy rate of the 14 main European markets shrunk again during the last quarter and reached 7.1%, contracting by 80 basis points compared to Q4 2016. The volume of vacant space dropped in the 4 largest German markets where only 3.16 million m² were available at the end of last year, 16% lower than in Q4 2016. The vacancy rate reached 2% in Berlin, 3.3% in Munich, 5.1% in Hamburg while Frankfurt remained above the European average (8.9%). Vacancy also contracted in Central Paris, reaching 6.5% (-30 bps vs. 1 year ago) but the most important drop was seen in Bucharest (-410 bps), followed by Amsterdam (-230 bps) Warsaw (-300 bps), Lisbon (-160 bps) and Madrid (-160 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, with a 5% increase on average. Rental values rose for the first time since 2015 in Central Paris with €850/m²/year in Paris CBD Etoile (+6%). The most important changes were in Berlin (+16%, € 396/m²/year), Brussels (+13%, €310/m²/year), and Milan (+12%, €550/ m²/year). Prime rents declined in Central London and reached €1,404/m²/year in the Mayfair & St James’s market, a 10% drop compared to last year, and the result of cooler demand in the West End submarket.
At a Glance Main office market Q4 2017
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