International real estate advisor Savills expects a continued steady rise in prime CBD office rents across European office markets and predicts a rise of 3.1% year-on-year on average in Q411 with London City, Lyon, Frankfurt, Brussels and Milan leading the way.
International real estate advisor Savills expects a continued steady rise in prime CBD office rents across European office markets and predicts a rise of 3.1% year-on-year on average in Q411 with London City, Lyon, Frankfurt, Brussels and Milan leading the way.
According to the firm demand remains predominantly in CBD locations, with the ICT sector particularly active, notably Google which has taken office space in London, Paris, Amsterdam and Dublin in 2011. Savills has noted a significant slowdown in development activity across European markets over the past two years and expects this to lead to an increase in the level of pre lettings, particularly in CBD locations.
Lydia Brissy, Savills European Research Director, says: “Rare and expensive new CBD office spaces might deter some office occupiers who may consider relocating into secondary areas, but CBD locations will remain the jewel in the crown for major tenants. As pipeline is very short prime rents are expected to keep on rising, for example in Stockholm where a shortage of prime modern office premises resulted in a strong rental growth in Q1 and Q2 of this year.”
In terms of letting volumes while Savills research shows an increased level of turn-over on some markets compared with 2010, including Berlin, Lyon, Hamburg and Warsaw, overall the firm anticipates volumes will decline on average by approximately 6.5% across European markets at year end.
Eri Mitsostergiou, Director in European Research, says: “We expect to see occupier caution in the rest of 2011 and letting activity will largely stem from occupiers attempting to make cost savings, in some cases by relocating to smaller offices.”