Signs point to increased rental growth across European office markets

Jones Lang LaSalle’s Q1 2011 European Office Clock reveals that price rents grew modestly

Article posted: 12 May 2011

Jones Lang LaSalle’s latest research reveals that prime rents across Europe grew modestly over quarter one 2011 though differences remain across markets. JLL’s European Office Rental Index increased by 1.5% over the first three months of the year however this increase was nearly entirely driven by continued rental growth of office space in London’s West End (+4.6%) and Moscow (+17.6%) with Lyon (+4.2%) and Dusseldorf (+2.2%) being the only two other index markets to experience rental growth. 

The debt problems in Spain, Portugal and Ireland continued to be a drag on rents in these economies; Spain’s office markets again experienced rental declines over the quarter (Madrid -0.9% and Barcelona -1.3%) and together with office space in Dublin and Lisbon, where rents remained stable, Jones Lang LaSalle expect rents to soften further before reaching the bottom of the cycle in 2012. In addition the performance differential between prime space and secondary space persists in many markets.

Around 28m sq ft of office space was leased in Q1 2011 across Europe, which was 17% lower than take-up volumes in Q4 2010, (which is not unexpected as the first quarter is usually the weakest of the year.) Overall Q1 leasing volumes were broadly similar to Q1 2010 (+4%) and only slightly below the five year quarterly average. Leasing volumes were much stronger in Central and Eastern Europe (CEE) driven by the Moscow market and a strong first quarter in Warsaw and Prague. 

In Western Europe, occupier activity was strong in Stockholm, Milan and Dusseldorf with a good first quarter in these markets providing a boost to the overall Western European volumes. London experienced lower volumes of take-up, however the level of enquires in the market grew. 

To view a copy of the report click here

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Posted by Jo