EUROPE - Prime rental levels stabilised in the majority of European markets in the third quarter of 2009, according to Jones Lang LaSalle.
JLL's latest European Prime Office Rental Index, which is based on the weighted performance of 24 markets, decreased by 0.8% during Q3, a marked improvement on the preceding three-month period when it fell by 4.6%.
Prime rents across Europe are still on average 16% below the level recorded a year ago, representing a rental decline not seen on record before.
Markets that were adversely affected included Dublin (-11.1%), Madrid (-6.3%), Prague (-4.5%) and Barcelona (-4.4%).
But headline rents remained at Q2 levels in 16 markets, including London and Paris.
"In the cities with stabilising rental levels, landlords are offering increasing incentives to attract tenants," said Chris Staveley, head of JLL's cross-border team.
"A number of markets are now approaching the highest rental falls in their cycle, proceeding towards a rental stabilisation, but further limited rental decreases are expected," suggested Staveley.
JLL said that despite an improving economic outlook in most European countries - on the back of stimulus packages and governmental interventions - business sentiment was improving only cautiously.
Corporates are continuing to undergo rigid restructuring processes and their focus has been on lease renewals in the last quarter, the company said.
After a short-run recovery in Q2, when total European take-up improved by 19% after an extremely weak first quarter, gross take-up did not follow an upward trend and stayed stable, slightly below 2.2 million square metres from July to September.
Compared to the first three quarters of 2008, however, European office demand is 34% lower so far this year and stands nearly 30% below the five-year average.
JLL said the stabilisation in overall European demand has been backed by some markets that registered increasing take-up over the quarter, including larger markets like Milan (+75%), London (+64%) and Moscow (+17%).
But some major markets, namely Paris and Stockholm, still continued to see further declines, the firm predicted.
No comments yet