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At a Glance - Main Office Markets in Europe - Q4 2018

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Q4 2018: Strong occupier take-up performance continued in 2018

Occupational activity stayed particularly lively in the main 15 European markets in 2018, even though volumes of take-up in Q4 2018 were 13% down compared to the exceptional Q4 2017.. As such, 10.02 million m² was transacted last year, only 1% behind 2017, by far the most active year of the decade.

The Central London market increased for the 3rd year in a row and reached 1.4 million m², notably thanks to a return of activity from small and medium businesses, driven by high demand from the Media Tech sector. The four main German markets combined dropped 8% but still represented 3.04 million m², well above the long term average. Munich (975,000 m², -2%) was Germany’s largest market and was notably fueled by large units above 5,000 m². Volumes in Central Paris diminished by 9%, notably due to the lack of very large deals (-30% in transactions over 20,000 m²). Very high results were achieved in Vienna (+54%), Luxembourg, Lisbon (+21%), Milan and Warsaw (+10%).

Vacancy in Europe contracted again by 110 basis points compared to the end of 2017. With only 6.4% of empty premises in Europe on average, vacancy may have reached its floor in 2018. The German markets still display the lowest vacancy rates, especially Berlin (1.7%, representing only 327,000 m²) and Munich (2.3%). Luxembourg (3.7% of vacancy) is close to the level of German markets. Vacancy dropped the most in Amsterdam (-310 bps) and Warsaw (-340 bps). The share of empty premises fell in all the other markets, such as Central Paris (-100 bps), Central London (-120 bps), Milan (-110 bps) and Dublin (-170 bps).

Prime rental values remained steady or increased in all main European markets, except in Central London (-2% vs. the end of 2018) where prime rents reached £1,211/m²/year. Madrid (+13%, €432/m²/year) saw the most significant growth in rental values. Other big increases were in Hamburg, Berlin (+9%), Milan and Frankfurt (+7%).

 

At a Glance - Main Office Markets in Europe - Q4 2018
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