Europe leads office rent repricing, says Knight Frank

Global prime office rents fell by an average of 4.25% in 2008, according to Knight Frank's Global Real Estate Markets Review and Outlook 2009. Knight Frank noted the strongest declines were in Europe, where rents fell by 12% on average and two-thirds of the continent's major office markets experienced negative growth. Several European markets have continued to see rents fall in the first quarter of 2009, including London and Moscow, which recorded two of the largest declines in 2008.

'Despite a number of European markets observing rental falls in 2008, values should stabilise in the latter half of this year,' said Joe Simpson, head of international research, Knight Frank. Markets that weathered the effects of the downturn in 2008 included the primary German cities and regional UK markets including Glasgow, Edinburgh, Leeds, Sheffield and Bristol.

Simpson said that the substantial depreciation of the British pound sterling against both the US dollar and the euro now means rents have fallen substantially when measured against other US dollar or euro-denominated markets. 'Positively, the supply of new office space in the development pipeline is at a more modest level than has been the case in previous downturns, although there are exceptions,' he added.