Global office real estate markets will undergo a slow recovery, with several key markets poised to see growth continue through 2012 and 2013, according to Cushman & Wakefield's Global Office Forecast.
While Europe's overall economy will remain sluggish, Frankfurt (pictured), Munich, Paris, Istanbul, Stockholm and London are expected to outpace other European markets.
While 2011 began strongly in office markets around the world, apprehension and uncertainty led to a major bump in the road to recovery during the third quarter, resulting in a conservative outlook for the next year.
While the forecast for growth has become more moderate, strong leasing fundamentals and limited supply will sustain global office markets, the majority of which have little or no new construction planned for either 2012 or 2013.
Leasing activity through 2012 is best characterized as mixed. In the Americas, markets dependent on government leasing will stall, though growth industries such as technology, healthcare and energy will fuel markets like San Francisco, Calgary, Houston and Downtown Toronto.
While Europe's overall economy will remain sluggish, Frankfurt, Munich, Paris, Istanbul, Stockholm and London are expected to outpace other European markets. In Asia, growth in second-tier markets in China is expected to accelerate, as well as in countries where regional trade accounts for the majority of exports, such as Indonesia and Australia.
Increased leasing activity early in 2011 made little impact on global office rents. Accordingly, significant upward pressure on rents is not forecast until 2013 for the majority of US markets. Several European markets did experience good rental growth earlier in 2011 meanwhile, but a number will expect downward pressure on rents to return if economic conditions do not improve in the near term. In Asia, rental values correlation to GDP growth and inflation will support slight growth.
Occupiers across the world are focused on controlling costs associated with their corporate real estate; yet, at the same time, have begun to take a more strategic approach to their real estate to derive value for their firms.
Organizations with multiple locations are centralizing functions to create greater synergy, while sustainability, technology and changing work habits have led many occupiers to pursue a strategy of "less space is more." Portfolio expansion will remain moderate