European prime office rents

Wioleta Wojtczak, Associate Director in Research Department, Savills

European prime office rents saw an average year-on-year (yoy) rental increase of 6 pct in 2017, their fifth consecutive year of growth and they show no sign of abating for at least another three years, according to international real estate advisor Savills. In the last few years rents were relatively stable in Warsaw, however a small increase of rents is expected in the next few month. 

Increase of rents in Warsaw will be a result of lower new supply of office space forecasted to be delivered in the months to come, especially in central location, high demand for office space and growing cost of construction.

Savills has recorded that since 2010 the average prime rental growth across Europe’s CBDs has been rising constantly; in Core markets by 2.4 pct pa and 5.4 pct pa in the Nordic region. In addition to rising rents, vacancy rates in Europe’s CBDs hit historic lows in Q3 last year, at an average of 6.6 pct, meaning that there is very little choice of high quality space for occupiers. 

- Availability of office space has decreased also in Warsaw. Considering relatively low new supply projected in 2018 and 2019 and high tenants’ activity visible both in gross take-up and record high level of net absorption, further decrease of vacancy rate is to be expected with a small increase of rents, - says Wioleta Wojtczak, Associate Director in Research Department, Savills.

There are now a number of European cities where prime office rents are considerably higher than the pre GFC peak in 2007. These include:  Stockholm (+49 pct), Berlin (35 pct), Oslo (26 pct) Munich (16 pct) and London WE (14 pct). 

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