Office rents in Europe grew a record 1.5% quarter on quarter, according to JLL, as data emerged that office demand is proving resilient in many key markets around the world.
Rents on prime office assets across the 110 territories covered by the JLL Global Office Index increased by 3.6% year on year in Q2, the strongest rise in four years, with Europe out-performing other regions quarter on quarter.
'Office demand is proving resilient in many of the world’s dominant commercial real estate markets despite increased political and economic uncertainty which is leading to corporate occupiers striking a more cautious tone,' said Jeremy Kelly, Director in Global Research Programmes, JLL.
'Underlying market fundamentals are sound and corporate demand is holding up well, notably in continental Europe. Stockholm in particular was Europe’s star performer of the quarter, with a spike in demand boosting rents by 9.4%', he added.
Berlin (+6.3%) outperformed other German cities in Q2, while Paris (+3.4%) saw limited new supply and more robust take-up influence prime rents for the fourth consecutive quarter. In Southern Europe, the positive trend continued in Milan (+2.0%), Barcelona (+3.7%) and Madrid (+0.9%).
JLL noted that headline rents have so far remained unchanged in London quarter-on-quarter despite the UK referendum, but said that rent-free periods may soften as occupiers look to negotiate more flexible lease terms.
Overall, Q2 2016 office leasing volumes in Europe were down 3% year on year, but the 2.9 million m2 of office space transacted in Q2 was still ahead of the 10-year average. Excluding the UK, European take-up grew by 4% year on year in Q2, reinforcing the positive trend.
