European office market vacancy rates drops to lowest level in seven years (EU)

According to international real estate advisor Savills the average vacancy rate for the European office market was 9.37% in Q1 2015, which is the lowest level recorded since 2009. The firm predicts vacancy may soon fall to 2007/2008 levels of less than 9.0%.
Savills finds the lowest versus highest vacancy rates continue previous trends with the lowest vacancy rates being recorded in London West End, Berlin and Stockholm at 3.8%, 4.3% and 5.75% respectively. The highest vacancy levels were recorded in Athens, Amsterdam and Warsaw at 18.5%, 16.1% and 13.4% respectively.
The firm reports that scarcity of prime office space in some of the key European CBD locations caused rental growth to slow down slightly from 4% in Q4 2014 to 3.4% in Q1 2015. However, rental growth in prime non-CBD locations where available space is often numerous has surged from 3.4% at the end of last year to 5.8% yoy in Q1 2015.
Non-CBD locations that have benefited from rising demand exhibiting double digit prime rental growth include Vienna, Paris (La Defense) and Berlin at 24.4%, 17.8% and 12.2% respectively.
Eri Mitsostergiou, head of European research at Savills, comments: “With development completions still limited in almost all office locations many European cities appear to be undersupplied. This year is expected to see a 9% drop in development completions. However construction activity is slowly picking up driven by improved financing conditions for speculative schemes and we expect completions to increase by 15% in 2016.”
Source: Savills