EUROPE - The decline in European commercial property rents is coming to an end, and tenants are responding by committing to new space, according to JP Morgan Asset Management (JPMAM).

The company's European real estate group has signed a series of new leases at properties throughout Germany, Belgium and France on behalf of institutional investors over the past three months.

It has achieved new lettings for more than 40,000 square metres of space in the second quarter, more than double the level it leased in the first quarter.

The majority of new leasing activity took place in Germany, where the largest deals included the City of Dresden taking space in the World Trade Center and TKMaxx leasing space at the Forum City Mall in Mülheim, while Kone signed a contract for room at the WEB building in Brussels.

JPMAM's European real estate group has expanded over the past year and now manages office, retail and industrial assets in excess of 1.2m square metres across most of the main European markets.

The group said its leasing activity had been accelerated by occupiers responding to the perception that rents had stopped declining by wanting to commit to new space requirements at a low point in the real estate cycle.

Scott MacDonald, portfolio manager at the European real estate group's largest property fund, said: "The leases signed in the second quarter show a significant increase over the first quarter and demonstrate that the increased interest from occupiers we noticed toward the end of 2009 and into early 2010 is now being acted upon.

"Based upon lease negotiations currently underway, we expect to announce further positive leasing results throughout the remainder of the year.

"This gradually improving leasing market should encourage investors to selectively consider allocating to value-add property investments."

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