by Brianna Crandall — April 1, 2016—Demand for prime office space across Europe increased by 17% in 2015, setting a new aggregate record since inception in 1999, according to global real estate advisor CBRE.
Significant increases in leasing activity recorded in former recovery markets such as Paris, Milan, Madrid and Central and Eastern Europe (CEE) pushed office take-up sharply higher in the last quarter of 2015. At almost 4.5 million sq m, the volume of office space transacted for the period is the highest quarterly level attained since 2008. This, coupled with subdued development activity across Europe, means vacancy levels have dropped to a five-year low, points out CBRE.
According to the research, office rental growth is uneven across the European markets. However, Madrid, Dublin and Stockholm are among the markets currently seeing good upward momentum. Madrid saw demand for office space push rents to almost €27 per square meter per month and take-up to 186, 000 sq m (+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 5,200 SEK per sq m per annum.
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% quarter-on-quarter uplift at the back end of 2015 led by the former recovery markets. For example, Budapest, spearheaded by its burgeoning TMT sector, saw 120,000 sq m of office take-up compared to just 46,000 sq m across the previous quarter.
Looking ahead, the three-year forecast indicates that Paris will register the highest completions levels across EMEA at 2.5 mn sq m. Supply growth within the Central London market is also anticipated to remain strong.
