Offices take the lead in Q2: C&W

Investment activity in Europe’s commercial property markets slowed in the second quarter, with transactions down by 11.5% quarter on quarter to EUR 26.2 bn, according to new research issued by Cushman & Wakefield on Tuesday. However, trends were far from uniform market by market, with offices fighting back against retail, and core markets gaining at the expense of the peripheries, the study showed.

´Less stock has been sold than we had expected, with volumes in the year to June actually dipping slightly to EUR 122.4 bn,´said Michael Rhydderch, head of the European Capital Markets Group at C&W. ´What we have noticed is that average deal times have lengthened, partly due to very thorough due-diligence and extended credit approval processes.´

Another feature of the quarter was the renaissance in the office sector, which saw its share of activity rise from 36% in Q1 to 46% in Q2, compared to falls of 35% for retail and 46% for industrial.

David Hutchings, head of European Research at C&W, said the economic picture has become more favourable for offices. ´Investment spending by companies is rising and recruitment is up in some cities. What is more, while corporate Europe is not in such a bad shape, consumer expenditure will face pressure for some time to come and will be slower to benefit from the economic recovery than many had hoped.´

While there has been further evidence of a shift back towards core markets - with the UK, Germany and France maintaining their market share at 64% - many emerging markets saw their share of activity fall back during Q2. Central and Eastern European activity fell from EUR 3.9 bn to EUR 2.1 bn.

More marked was a fall for the markets most mired by concerns over sovereign debt where activity dropped 42% between Q1 and Q2. In the rest of the Eurozone, trading actually rose by 6.7%.