Take-up in the European office market increased by around 30% in the first nine months of 2022, compared to the same period of 2021, according to new research from BNP Paribas Real Estate.
Leasing activity in Europe's 17 main markets came in at 6.924 million m2 for the first three quarters, largely thanks to a particularly buoyant H1.
The research also said that the recovery was driven by quest for high-quality, flexible spaces, better suited to new hybrid working styles.
Take-up across 25 European cities was up +29% to end September 2022 compared to the year-earlier period. The growth was such that take-up matched or even exceeded its long-term average in many markets.
The recovery in rental activity was particularly noticeable in Dublin (+175% vs 9M 2021), Central London (+77%), Warsaw (+54%), Luxembourg (+44%) and in the six main German markets (+22%).
Laurent Boucher, president of BNP Paribas Real Estate Advisory, said: '2022 should end on this positive momentum and annual volumes should be in line with their long-term average in most European markets.'
The office as catalyst
The office as 'a catalyst for integration, collaboration and setting a collective example' has aided market growth, while it is increasingly seen as 'a competitive advantage in recruiting and retaining talent', according to the research.
Prime rents have continued to climb in line with the desire for central, high-quality locations.
The biggest increases over the past 12 months have been in Warsaw (+13%), Milan (+10%) and Dublin (+9%).
However, there seems to be a widening gap between new assets in the most sought-after districts, where rents are rising steadily, and those in secondary areas, which are likely to fall out of favour with occupiers.
Investment remains high
€304 bn was invested over the rolling year to Q3 2022. There was a decline in activity compared to Q2 2022 (-3%), but growth remained positive when considering investment for the first nine months of the year, which almost matched the record level of 2019.
'Historically, the fourth quarter is the busiest of the year for investment, which could mean an overall rise for 2022. The trend applied to all asset categories, but offices (+3%) were in line with their five-year average, largely underpinned by high activity in the business districts,' added Boucher.
After rising sharply over 2020 and early 2021, office vacancy rates have stabilised or even fallen in some markets since Q2 2022. The overall vacancy rate in Europe stood at 7.4% at the end of Q3 2022, up slightly by 10 basis points compared to Q3 2021.
As with rents, vacancy rates vary greatly between the most sought-after business districts and out-of-town areas.
