The proportion of office space taken up by technology, media and telecoms (TMT) companies across the European office market now stands at 17%, an increase by 2% year-on-year (yoy), according to Savills. At the same time, prime CBD rents have increased by 5.1% yoy in Europe as historically low vacancy rates meet rising take-up figures. Information and communications technology (ICT) firms accounted for 160,000m² (46%) of H1 2019’s take-up in Dublin. Even if the 2018’s Facebook deal is excluded, the amount of space being taken by ICT firms has been trending strongly upwards in the Irish capital (see Figure 1). This is also true for ICT firms’ share of total take-up, which has been increasing.
ICT take-up in Dublin
Similarly, in Berlin, ICT firms have taken 45,300m² in Q1 2019 alone, following from 219,600m² for the full year in 2016, 364,500m² in 2017 and 209,300m² in 2018 according to Savills data. While take-up volumes have dropped slightly between 2017 and 2018, this is due to a lack of supply and therefore absorption rates still remain high. Owing to Berlin’s low vacancy rate (1.5%) and the 70% pre-let status for 2019, more than 50% of the pipeline (1.8m m²) for the next two years is also already pre-let. As a result, more companies are planning further ahead as illustrated by one of the biggest deals in Q1 2019, Sony’s 2020 relocation from Munich to Berlin, taking out 8,200m² at the ‘ZENTRALE‘ property at Potsdamer Straße.
ICT take-up in Berlin – Savills data
In Paris, Q1 2019 saw one of the ‘Big Four’ tech companies sign a lease for over 5,600m² in Paris Centre West and several deals struck with co-working operators. Furthermore, another Big Four tech firm is about to sign a lease in the CBD of Paris soon. Similar recent deals in Amsterdam involve Perform Group/DAZN, advised by Savills, taking 3,000m in the city centre in May this year, Snapchat signing a new long-term office lease agreement in April and cloud computing software company Nutanix taking out 3,500m² of office space in Hoofddorp, just to the west of Amsterdam, in March.
ICT take-up in Amsterdam – Savills data
Mike Barnes, Associate in Savills European Research Team, says: “The share of ICT companies is increasing in most of the cities we have analysed. It is clear that such trends are affecting the respective office markets and that landlords must keep pace with the changing business demands of the sector, such as the highest quality of internet connectivity and the provision of flexible office space, in order to stay profitable and ensure continued occupancy of their office spaces.”
Matthew Fitzgerald, Director, European Cross Border Tenant Advisory at Savills, says: “The global technology industry continues to grow and so we should not be surprised that its requirement for office space in European office locations is rising. Dublin, for example, has particularly benefitted from inward investment by tech firms that have been attracted to the country by a blend of factors. The reason for levels of take up declining is not due to a reduction in demand but in most cases because of a lack of supply. This is demonstrated in the fact that net absorption rates for office space are relatively unchanged. Meaning that while take-up numbers may have fallen, as a proportion of supply, they are fairly stable.”
