Occupier demand in the European office market remains strong, but rental growth shows signs of slowing in 2008, according to Jones Lang LaSalle's (JLL) Q1 2008 European Office Property Clock. However, the property consultants noted that whilst the rental outlook for Western Europe for 2008 is subdued, rental growth expectations for the Central and Eastern European markets are still very positive.
Occupier demand in the European office market remains strong, but rental growth shows signs of slowing in 2008, according to Jones Lang LaSalle's (JLL) Q1 2008 European Office Property Clock. However, the property consultants noted that whilst the rental outlook for Western Europe for 2008 is subdued, rental growth expectations for the Central and Eastern European markets are still very positive.
The data showed that office rental index grew by 1% over the quarter and 8.9% over the year with six markets showing prime rent increases, led by Milan (+14%) and Warsaw (+10%). Brussels was the exception, with rents decreasing by 1.7%.
Alastair Hughes, CEO EMEA at Jones Lang LaSalle, commented: 'Demand for office space remained at healthy levels, although prime rental growth continued to slow in the first quarter due to the diminishing economic outlook.'
The JLL report found office take-up of almost 3.2 million m2 in Q1 2008. Although this represents a decrease of 7% in comparison to the same quarter last year, it is 25% above the five year average. At a city level the highest increase over the year was recorded in Prague (+83%).
Although European office completions are moderate at around 1.1 million m2 in Q1 2008, they are well below the volumes witnessed over the last three quarters. However, JLL added that more than 7.2 million m2 are anticipated to be completed by end 2008, driven mainly by the booming Moscow market with nearly 2.4 million m2 expected completions.
