Prime rents across Europe remained stable in the office and retail sectors during the third quarter of 2008, with rents in the industrial sector falling slightly, according to the latest CB Richard Ellis Rent Indices. However, whilst the annual rental growth rates for all three sectors are still in positive territory there are growing indications of downward pressure on rents in a number of countries as the continued financial uncertainty reduces confidence in the occupier markets. This may in turn contribute to a general reduction in corporate occupation costs.

Prime rents across Europe remained stable in the office and retail sectors during the third quarter of 2008, with rents in the industrial sector falling slightly, according to the latest CB Richard Ellis Rent Indices. However, whilst the annual rental growth rates for all three sectors are still in positive territory there are growing indications of downward pressure on rents in a number of countries as the continued financial uncertainty reduces confidence in the occupier markets. This may in turn contribute to a general reduction in corporate occupation costs.

Richard Holberton, director, CBRE EMEA Research and Consulting, said: 'While the annual growth rates for all three sectors remain positive, the weaker outlook for the European economy is reflected in support for rents at their current levels, and the growing incidence of actual rental declines. The combined effects of much-reduced levels of liquidity and investment turnover, and a weaker short-term income growth outlook, are now contributing to upward pressure on yields in all sectors. This latest evidence of rising yields will be of interest to equity-rich investors that are targeting the commercial real estate market.'

The CB Richard Ellis office rent index for the EU-15 area fell by 0.2% in the quarter, reducing the year-on-year rate of growth to 5%. Eight of the 49 locations in the survey saw increases in the level of prime office rents, seven declined and 34 remained unchanged. The largest increases occurred in Dubai and Marseille, with rents up by 12% to EUR1,113 and EUR240 per m2 per annum, respectively. The largest declines were recorded in St. Petersburg and Oslo, down by 8% and 4% to EUR866 and EUR518 per m2 per annum, respectively. The key City and West End markets in Central London also saw rents come under downward pressure.

Reflecting the trend seen in the office markets, prime rents in the retail sector remained stable in Q3 2008. The CB Richard Ellis retail rent index for the EU-15 area fell by 0.1% in the quarter, lowering the year-on-year growth rate to 4.6%. The largest changes occurred in Dubai and Bucharest, with rents up by 11% and 7% to EUR1,041 and EUR1,680 per m2 per annum, respectively. The largest decrease was recorded in Madrid, down by 4% to EUR3,000 per m2 per annum.

European industrial rents fell slightly in the quarter. The CB Richard Ellis industrial rent index for the EU-15 area fell by 1%, reducing the year-on-year rate of growth to 0.4% Only two of the 41 locations surveyed saw increases in the level of prime rent, four declined and 35 remained unchanged. The only rises occurred in St. Petersburg and Zagreb, with rents up by 39% and 2% to EUR177 and EUR71 per m2 per annum, respectively. The largest decreases were recorded in Milan and Rome, down by 6% and 4% to EUR58 and EUR62 per m2 per annum, respectively.