Office real estate markets around the world took another step towards returning to normal in the past six months. According to the Colliers' Global Office Real Estate Review for the first six months of 2010, most markets show increasing signs that the worst of the global crisis is over.
Leasing activity is up significantly compared to the previous six months. In particular, Asia Pacific, Latin America and Canada all post healthy growth rates and show signs of future expansion. The outlook for the balance of 2010 and into 2011 is for continued signs of growth, and a general sentiment that "the worst appears to be over".
The rise in vacancy was felt across the EMEA region (Europe, Middle East and Africa), but was particularly acute in Dubai, Riyadh, Sofia, Bucharest, Athens, Abu Dhabi, Budapest, Johannesburg and Tirana, all of which saw their respective vacancy rates rise by at least 4%-points in the first half of 2010. The highest vacancy levels are found in Riga and Dubai both with 30% vacant office space.
While the trend for the region is still up, vacancy rates in central London, Madrid, Dublin, Moscow, and Tel Aviv all fell during first half of the year.
Notable cities registering increases in asking rents included London, Paris, Tel Aviv, and Zurich. London again retained its position as the most expensive office market in the region, with current average Class A asking rents in the West End sub-market at 95/m²/month.
After a period of relatively low activity, Sofia is also seeing signs of recovery in the office market. The net absorption for the first half of 2010 has marked a 27% increase compared to the previous six months, the most active companies being mainly from the telecom, outsourcing and IT sectors. The vacancy level has reached 21% of the total stock and was higher in Class A than Class B buildings - a testament to the price sensitivity of the market.
"Key parameters on the Sofia office real estate market remain the rental levels, location and functionality of the buildings," comments Anton Slavchev, Manager, Office Department at Colliers International. According to him, more transactions on attractive rental levels and conditions should be expected in the coming months, the major driver of demand being the effect of further consolidation and global mergers and acquisitions and the fact that companies can currently get very favorable leasing conditions.
Source: Colliers International