Prime office rents in Europe fell by 0.3% in Q1 2012, according to the Jones Lang LaSalle European Office Index. This is the first overall recorded reduction in rents since Q4 2009.
Prime office rents in Europe fell by 0.3% in Q1 2012, according to the Jones Lang LaSalle European Office Index. This is the first overall recorded reduction in rents since Q4 2009.
The net reduction masked both rises and falls across several prime office rental markets. Falls were recorded in Brussels (-5.0%), Madrid (-1.9%), Barcelona (-1.4%) and Paris (-1.2%) whilst rental increases were recorded in Luxembourg (+5.3%), Stockholm (+2.4%) and Hamburg (+2.1%).
In the wake of the adjusted economic outlook for the region as a whole, growth forecasts for 2012 have been revised downwards. Markets with more robust economic conditions such as the UK and Germany are likely to perform well, while struggling economies such as Greece, Portugal, Spain and Italy will see on-going strains in occupational markets and rents.
Office occupiers are expected to remain cautious in the short term and current expectations are for leasing volumes over 2012 to be slightly lower then 2011 - but in line with long term averages. Take-up in Q1 2012 totalled 2.3 million m2, 15% below Q1 2011 with leasing volumes in Germany decreasing from the high levels of last year and an 18% reduction in Paris.
The European vacancy rate remains unchanged at 9.9% over the quarter with stable aggregated vacancy in Western Europe, but increasing vacancy in CEE markets driven by occupiers releasing second hand space back into the market. Budapest showed the highest increase, rising 110bps to 20.3%.
