A surge of investor interest in Milan's office sector is driving the recovery in Italian commercial real estate although suitable product remains in short supply, according to the latest market update from adviser Knight Frank.
A surge of investor interest in Milan's office sector is driving the recovery in Italian commercial real estate although suitable product remains in short supply, according to the latest market update from adviser Knight Frank.
While investment volumes in Milan for the first half of this year were down on the same period in 2013, the strength of investor interest and the current deal pipeline mean volumes are likely to increase significantly by the end of the year.
On the occupier side, the renewed tenant interest in Milan’s CBD is an indication that office rents have reached their floor at €475 per m2 per year, while total take-up in the city is expected to exceed 250,000 m2 this year, Knight Frank said.
'Looking ahead, we expect the broadly positive trend to continue over the coming months, even if the wider economic picture remains uncertain,' the firm said. 'Milan and its surrounding area is the commercial heart of Italy and is set to outperform the rest of the country by a considerable margin over the coming years. This is good news for the city’s office market which, on the back of falling availability and a strengthening in occupier demand, is expected to generate a recovery in rents over the next year or so. As a result, this is likely to continue to attract an increasing number of European and global investors.'
