JLL study shows record demand for European office space

Demand for office space in Europe is at its highest since 2007, according to JLL.

The advisory firm said demand accelerated in the third quarter of this year, with total take-up at just over 3m sqm – 29% more than the figure for the same period last year and the highest recorded.

Full-year volumes, however, are forecast to reach 11.5m sqm – below the 13.1m sqm recorded in 2007.

Alex Colpaert, head of offices research for the EMEA at JLL, said occupier activity had reacted off the back of a steady recovery in the euro-zone economy and relatively healthy business growth prospects.

“Though demand for space across Europe is strong,” Colpaert said, “supply constraints will continue to push rental growth in many markets, such as Madrid and Barcelona, where speculative development has not kept pace with corporate growth.”

Berlin, Hamburg, Dusseldorf, Frankfurt and Munich reported a combined take-up of 775,000sqm, as the country’s strong employment market pushed up demand for office space.

The German office leasing market is seeing substantial continued growth, Colpaert said.

“In addition to rising demand for prime city space, occupiers are increasingly looking at a wider range of city submarkets,” he said.

“In some areas just outside the very prime CBDs in Berlin and Hamburg, vacancy of high-quality space is close to 0%, driven by an increasing cohort of media and tech companies looking for a base.”

Leasing activity in Lyon showed the largest regional increase and recorded the strongest quarter on record, up 142% year on year.

Activity in Barcelona jumped by 135% year on year, the second largest increase in take-up in Europe.

Paris also saw leasing levels improve in the third quarter by 39%.

While London leasing volumes were down on last year, activity remains very strong, up 11% on the long-term average, driven by solid corporate activity and a strong development pipeline, JLL said.

In Italy, Portugal and Spain, the continued recovery means occupier demand outstripped supply, resulting in rental growth over the quarter.