Demand for prime office space across Europe increased by 17% in 2015 setting a new aggregate record since 1999, according to CBRE.
Significant increases in leasing activity were recorded in former recovery markets such as Paris, Milan, Madrid and CEE, elevating office take-up sharply in Q4 2015. At almost 4.5 million m², the volume of office space transacted for this period was the highest quarterly level achieved since 2008. This, coupled with subdued development activity across Europe, means vacancy levels have dropped to a five-year low.
Office rental growth is uneven across European markets, however, Madrid, Dublin and Stockholm are currently seeing good upward momentum. Madrid saw demand for office space push rents to almost €27/m²/month and take-up to 186,000m² (+85% q-o-q). Stockholm’s lack of prime office stock is set to encourage further rental growth in 2016, having reached a new record in 2015 at SEK5,200/m²/year (€556/m²/year).
Richard Holberton, EMEA head of occupier research at CBRE, commented: “A new record was set in 2015 as EMEA office take-up levels surpassed the pre-crisis peak. Driving this, was a 30% q-o-q uplift at the back end of 2015 led by the former recovery markets. For example, Budapest, spearheaded by its burgeoning TMT sector saw 120,000m² of office take-up compared to just 46,000m² across the previous quarter.
“Looking ahead, the three year forecast indicates that Paris will register the highest completions levels across EMEA at 2.5 million m². Supply growth within the Central London market is also anticipated to remain strong.”
Olesya Dzuba, director, strategic analysis and planning department CBRE in Russia, said: “Office take-up in Moscow was 18% higher in 2015, with the main driving force being the state companies – Avtodor leased 12,000m² in Pushkinsky Dom, Rosenergoatom – 11,000m² in Port Plaza, and Transneft purchased Evolution BC (79,000m² GLA) – and institutions – Moscow Government subsidiaries in OKO BC, the Moscow Region Government structures in Orbita BC, and Deposit Insurance Agency in Mosfilmovsky BC (16,000m² GLA). Overall, 2015 was a year of large deals, there were 12 deals over 10,000m² (totaling 306,600m² or 35% of the take-up) compared to six (80,200m² or 11%) and five (75,800m² or 7%) in 2014 and 2013 respectively. As the market is providing good opportunities for occupiers, companies prefer to improve their leasing terms and find more attractive office space in terms of location, building quality and efficiency of workplace.”
