Prime office rents in Europe remain stable in Q1: CBRE

Rents for prime offices remained stable in most major European markets in Q1 2012, with the CBRE EU-27 Prime Office Rent Index edging up by 0.1% during the period.

The stability of CBRE's index masked modest increases in a handful of European markets, notably in Hamburg (+4.3%) and the Nordic markets, as well as declines in southern Europe and Ireland - reflecting the ongoing effects of the economic difficulties in the eurozone. Overall, office rents across Europe increased 0.4% from a year ago.

'As the economic challenges in Europe continue, we are seeing a more pronounced divergence in the performance of key office markets,' commented Richard Holberton, director of EMEA Research at CBRE. 'Where economic and political uncertainty is most acute, most obviously Greece, but also Spain and Portugal, the office markets remain either in decline, or are showing very limited signs of recovery.'

He added: 'With the economic challenges set to continue throughout the rest of the year, we expect the polarisation of European office markets to persist.'

For the past 18 months, uncertainty in the eurozone has had an adverse effect on corporate decision-making, with several occupiers avoiding large new space acquisitions until the outlook becomes clearer. In Q1, take-up across Europe was down 9% compared to the same period the previous year, with significant declines in Milan, Dublin and Madrid.

Take-up in London in the first three months of the year was up 1% on the year-earlier period, while significant increases were evident in Moscow (+25%) and Frankfurt (+60%).