Demand for office space set to accelerate in Europe, says CBRE

Corporate real estate occupiers are expected to return to the market with new office space requirements across Europe as 2014 progresses, according to the latest research from agent CBRE.

Richard Holberton, senior director, EMEA Research, at CBRE, said that the occupier market is set to benefit from improving economic conditions, resulting in new demand for office space across Europe in the coming months.

'It is no secret that in recent years corporate occupiers have been constrained by stringent cost management strategies born out of the economic downturn,' he commented. 'As a result, we have seen a contraction in total office take-up levels across Europe, with the overriding commercial real estate trends being consolidation, cost savings, or operational streamlining. Now, things are changing in line with an improving economic environment, which we expect to have material impact on the office market this year.'

Prime office rents are expected to increase in a number of markets as corporate demand to lease or acquire space accelerates.

In addition, the tight supply of high quality office space and growing occupier confidence supported by positive economic signals is expected to move more markets into prime rental growth. This has already started in some of the stronger markets, with London a stand out performer including the West End recording a 5% prime rent increase to £105 per sq ft per annum in the first quarter of the year.

Amsterdam and Munich saw an increase of 1.5% each respectively over the same period, with both cities experiencing demand for buildings with well-equipped office space and high levels of amenities for employees. As a result, Munich has just 35,000 m2 of space available in the city centre pushing prime rents to stand 5% higher than 12 months ago at €33 per m2 per month. This trend is not confined to the West of Europe with the Nordic cities of Oslo and Stockholm seeing a similar pattern with both recording prime rental growth of 5.2% and 2.3% respectively over the same period.