CB Richard Ellis Group Inc.'s latest EMEA Office Market View shows reduced vacancy, coupled with solid levels of leasing activity, producing upward pressure on rents across many European office markets.
The CB Richard Ellis EU-27 Vacancy Rate Index registered a decrease for the ninth consecutive quarter and is now 10% lower than a year ago. Fourteen of the 28 European markets included in the index recorded lower vacancy this quarter. Substantial reductions in vacancy rates occurred in major western European markets such as London, Brussels and Dublin. Reductions were also recorded in the Central & Eastern Europe (CEE) markets including Prague, Bratislava and Budapest, supported by strong occupier expansion and rapidly growing economies.
Rental growth accelerated, with the CB Richard Ellis EU-27 Rent Index up by nearly 3% in the quarter and 10% year-on-year. Many of the major capital-city markets saw stronger growth in the second quarter than the first, and there is also evidence of growth spreading to a broader range of markets, including Prague, Lisbon and Barcelona.
Richard Holberton, Director of EMEA Research & Consultancy, said "The combination of solid take-up levels and falling availability is producing healthy rates of rental growth in many markets. The downward trend in availability is well-established across many European markets and it is clear that the percentage of centrally-located prime space in many markets is now extremely low. These trends are reflected not only in many major capital cities but also in the emergence of growth across a broader range of markets within Europe."
Anna Starczewska, Senior Analyst of EMEA Research & Consultancy said "With improving shortterm economic prospects for a number of markets, robust letting activity is likely to continue to reduce availability levels over the remainder of this year."
Source: CB Richard Ellis