Rents rising in core office markets, says Savills

Over half of the European office markets will record positive year-on-year prime rental growth at the end of 2012 due to decreasing availability of prime space in the CBD, according to Savills' latest European office market research report.

These markets include London West End, with a forecast y-o-y rental growth of 7.3%, Brussels (5.5%), Lyon (8.7%), Dusseldorf (5.8%) and Hamburg (4.3%).

Overall the agent forecasts that prime CBD rents across European office markets will increase by 1.4% on average by year end. This relatively limited increase reflects a two-tier situation as certain European markets continue to experience a slowdown in occupational activity and rental growth due to ongoing Eurozone challenges.

Take-up across European office markets decreased on average by 4.2% year-on-year in the first half of 2012, largely linked to overall economic uncertainty. However, some markets recorded robust demand levels including Amsterdam and Brussels, where take-up increased by 65% and 10% respectively in H1 2012. The firm expects this healthy demand to continue in the rest of the year.

'Looking ahead we expect demand in the second half of 2012 to be stronger than in H1 and anticipate that in some of the core markets, such as Amsterdam, Frankfurt and Brussels, the total 2012 take-up will exceed 2011 levels,' said Julia Maurer, analyst in Savills European research team. On a pan-European level the average take-up volume in 2012 is expected to come in below 2011 as ongoing Eurozone uncertainties impact on occupier demand, she added.