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Europe’s office markets continue to perform at two speeds
JLL's Q2 2011 European Office Clock report says performance differentials continue to widen across the region
Article posted: 05 Aug 2011
Prime office rents across Europe continued to grow modestly in the second quarter of 2011 according to Jones Lang LaSalle’s latest European Office Clock report. The Index revealed a 2.1% increase over Q2 2011 based on rental growth in eight index markets. This was led by a strong performance in Moscow (+20%), Warsaw (+13.6%) and Lyon (+8.0%) with more modest rental growth witnessed in some of the German markets (Munich +3.4%, Berlin +2.4%, Hamburg +2.2 %) as well as office space in London’s West End (+2.7%) and Stockholm (+2.5%).
Debt pressures and significant austerity measures continued to place downward pressure on office rents in markets such as Madrid, Barcelona, Dublin, and especially Athens, which saw further rental decline. Utrecht also experienced a rental decrease, whilst other index markets saw stability or growth.
Bill Page, Head of EMEA Office Research at Jones Lang LaSalle, said: “Europe’s economic recovery has continued throughout the second quarter but the ongoing, and increasing, uncertainty about the Eurozone debt crisis and potential associated risks have softened the short term economic outlook. This, plus wide national economic variations, is mirrored in Europe’s office markets with a two speed market now in place.”
Around 29m sq ft of office space was leased in Q2 2011 across Europe, 2% higher than Q1 levels and 4% higher compared with the same period last year. JLL confirms that leasing activity in Q2 2011 was 8% higher than the 10-year average and expects total take-up for 2011 to be at similar levels to last year (circa 107-118m sq ft).
Q2 2011 leasing volumes were stronger in CEE, which saw an increase of 8% quarter-on-quarter, driven by improving demand in Moscow and, also significantly, in Warsaw and Prague markets which have shown encouraging activity so far this year. In Western Europe office take-up levels remained practically unchanged. However, the German markets exhibited further growth. Leasing volumes for office space in London and Paris, two of the most significant drivers in JLL’s Index, remained modest with volumes for office space in Central London so far this year significantly lower than Q2 2010.
Bill Page added: “Office market conditions across Europe continued to vary widely and reflect the underlying economy. The Nordics, Germany and increasingly France support the emergence of expansionary demand, whereas occupiers in Greece, Portugal, Spain and Ireland remained very cautious, with demand in these office markets driven by lease events, consolidation and cost containment.”
Bill Page concluded: “For the full year we expect about 42m sq ft of office space to complete which includes pre-lets. This is the lowest volume in more than a decade and this factor is expected to drive rental growth further in many markets and keep absorption healthy.”
A full copy of the report is available at http://www.joneslanglasalle.co.uk/UnitedKingdom/EN-GB/Pages/NewsItem.aspx?ItemID=22535
Posted by Sara
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