Property adviser Cushman & Wakefield anticipates prime rents will fall by between 5% and 7% across all sectors in Europe this year and by a further 2-4% in 2010 as occupiers remain cautious amid the economic downturn. European prime rental growth turned negative in the final quarter of 2008 for the first time since 2003 and that trend is likely to remain weak, C&W said in its Economic Pulse report for February.

Property adviser Cushman & Wakefield anticipates prime rents will fall by between 5% and 7% across all sectors in Europe this year and by a further 2-4% in 2010 as occupiers remain cautious amid the economic downturn. European prime rental growth turned negative in the final quarter of 2008 for the first time since 2003 and that trend is likely to remain weak, C&W said in its Economic Pulse report for February.

Yields will continue to move out in 2009, notably in those markets that were slower to react in early 2008, according to C&W. 'Secondary stock, which is more dependant on the availability of finance, will suffer considerably more than prime, where yields look set to stabilise by the second to third quarter,' the adviser said.

The office sector faces a short-term threat in the form of banking sector consolidation. However, with businesses reacting quickly to the need to de-leverage, they rather than consumers may be the first to recover in some areas, C&W said. Corporate restructuring may also spark demand for cost-effective space such as well-located decentralised offices.

Retail markets will remain under pressure in those countries where consumers are most strapped for cash. In most European countries, however, the build-up of consumer debt has been limited, meaning that for prime stock at least, market values are more secure, C&W said. Similar trends may be seen in the logistics market while light industrial property will be hit more than logistics by the slowing economy, the adviser concluded.