Vacancy rates continued to move up; gross office take up remains weak but was 7% up on 2002. Investment activity remained very strong in 2003 with the German open-ended funds being the most active players. These are some of the main conclusions from the European Office Markets 2004 report by Catella Property Group.
Some of the main conclusions are:
- European economic recovery is expected to lead to increased job creation. Helsinki, Stockholm, Madrid & Barcelona are expected to see the strongest growth in services employment over the next two years.
- Gross office take-up in 2003 remained weak, but was 7% up on 2002. Brussels, London and Madrid saw the strongest increases. Vacancy rates continued to move up in 2003, but some markets, such as Brussels & Copenhagen recorded slightly lower levels in the final quarter of 2003 compared to the previous quarter. Nominal prime rents declined by an average 11% in 2003. We expect that most markets will see a gradual improvement in market fundamentals during 2004-05.
- Investment activity remained very strong in 2003 with the German open-ended funds being the most active players. Office investment transaction volumes were the highest in London & Paris, which attracted EUR10.4 billion and EUR9.3 billion of investment, respectively. The strongest increase in investment last year was in Stockholm (EUR3.75 billion) and the sharpest decline was in Frankfurt (EUR1.5 billion).
- We expect transaction volumes to remain on a high level in 2004, with capital outstripping the availability of suitable products.