EUROPE - European prime office market rents fell by 8% during the first quarter of 2009, the greatest quarterly decline ever recorded by Jones Lang LaSalle's (JLL) European Office Property Clock index.
Prime rents decreases in the majority of the 24 markets covered by the index, with Moscow (-28.6%) and London (-21.1%) leading the downturn, and Madrid (-12.5%) and Warsaw (-10.7%) also showing double-digit declines.
The major German cities saw their first rental falls in the current cycle, posting corrections of between 2% and 5%.
Apart from Amsterdam, Budapest, Düsseldorf, Stuttgart, Lisbon and Prague, which are at the 12 o'clock position on JLL's Property Clock, representing a transition period from "rental growth slowing" to "rents falling", all markets are now seeing rents fall.
Office take-up has slowed throughout 2008 as office occupiers have instead increasingly downsized and made more efficient use of existing space, according to JLL's latest report.
Overall European office leasing volumes reached 1.9 million square metres, a fall of 37% over the quarter (-40% to Q1 2008) and 31% below the five-year average.
Central and Eastern European (CEE) markets, in particular, have been affected by the deteriorating economic conditions and outlook: leasing volumes decreased over the quarter by -41%.
"Many office projects have been cancelled or postponed in recent months," said Chris Staveley, head of JLL's cross-border team.
"However, the dramatic slowdown in office take-up is putting increased pressure on prime rental levels. These market indicators demonstrate that widescale recessionary conditions have arrived to strongly impact the region's occupational markets."