Occupier demand for office space across Europe remained strong through 2007, with the full-year total of over 10 million m[sup]2[/sup] on a par with the previous year, according to CB Richard Ellis' upcoming EMEA Offices Market View. Despite predictions of growing caution among occupiers, particularly in the financial sector, the overall level of activity remained healthy in the fourth quarter at 2.5 million m2, continuing a sustained period of strong leasing activity in Europe, CBRE said.
Occupier demand for office space across Europe remained strong through 2007, with the full-year total of over 10 million m2 on a par with the previous year, according to CB Richard Ellis' upcoming EMEA Offices Market View. Despite predictions of growing caution among occupiers, particularly in the financial sector, the overall level of activity remained healthy in the fourth quarter at 2.5 million m2, continuing a sustained period of strong leasing activity in Europe, CBRE said.
Local variations in leasing patterns became more pronounced in the fourth quarter of last year, the property advisor said, but demand fundamentals were more robust, with territories such as Germany enjoying high levels of leasing activity similar to previous quarters. Markets in Central and Eastern Europe also continued to generate strong take-up as a result of fast-growing economies, while some major financial centres, such as London and Madrid, saw reduced activity in the last quarter of 2007 as a result of weakening demand from financial services associated with the 'credit squeeze'.
CBRE said the strong demand has continued to support rent growth, with the CB Richard Ellis EU-27 Rent Index up by 1.1% in the fourth quarter and 9% year-on-year. Both figures are, however, lower than the corresponding third-quarter numbers. As with demand, there is significant variation in rental growth across the region. The major markets of London, Paris and Madrid that contributed heavily to the recent growth in the index are now seeing rents grow more slowly or decline. The exceptions to this trend again focus on several of the CEE markets and Germany with prime Frankfurt rents, for instance, up by 13% year-on-year.
Richard Holberton, Director of CB Richard Ellis’' EMEA Research and Consultancy, said: 'With economic growth forecasts being downgraded for 2008 in some of the major European countries, office demand fundamentals could soften. Although rental momentum will still be evident in a number of European locations, the overall pace of growth is likely to slow over the next few quarters.'
