Prime office rents continue to soften in Europe: JLL

A majority of the major office markets worldwide are expected to register single-digit rental growth, according to Jones Lang LaSalle’s third quarter 2012 Global Office Index, released on Monday.

The index, which measures the rental performance of prime office space across 90 major markets in the Americas, Asia Pacific and Europe, reveals a stable outlook for global prime office rental growth in 2013. The markets with the strongest rental growth prospects include: Beijing, San Francisco, London, Tokyo, Moscow, Hong Kong and Sydney.

While the overall outlook shows rising rents next year, JLL's analysis of global rental growth in the third quarter 2012 show a deceleration in office rental growth to 0.2%, down from 0.6% growth in the second quarter of 2012.

A third of the markets covered by the Index registered rental declines in the third quarter, compared with just a quarter of all markets in second quarter, reflecting a range of factors including weak corporate occupier demand particularly from the financial sector, oversupply or poor economic fundamentals.

In Europe, Paris, Milan, Madrid, Utrecht and The Hague all registered declines of between 1.9% and 2.4%. Nevertheless, rents increased in Stockholm (+2.3%) and Munich (+1.7%) based on robust economic performance and a decreasing availability of high-quality space.