February 19, 2016

Leasing activity in Europe surged towards the end of 2015 with figures from the fourth quarter showing the fastest growth since 2006 and an 18 per cent rise on the year before.

Although quarterly rental growth slowed to 0.8 per cent – down from 1.5 per cent in Q3 – this was largely weighed down by the weak performance of Paris and Moscow, two of Europe’s largest markets. However, this decline is expected to be temporary with prime rents forecast to grow in 2016 and, looking at the bigger picture, corporate confidence continues to fuel demand among businesses for quality city centre space. Indeed, JLL’s office index indicates a resounding rental growth trend.

Barcelona (+2.6%) and Madrid (+2.8%) recorded their fifth and seventh consecutive quarters of rental growth respectively. Meanwhile in Germany, Berlin (+4.3%) and Hamburg (+2.0%) experienced a strong Q4, fuelled by record take-up. Berlin’s quarterly uplift pushed its annual growth rate to 9.1 per cent, the highest in 15 years. Other office markets recording prime rental growth in Q4 were Dublin (+9.1%), Stockholm (+8.3%), Edinburgh (+3.3%), Budapest (+5.0%), Luxembourg (+1.7%) and Munich (+1.5%).

“The upward momentum in leasing activity registered in Q4 2015 is expected to be maintained into 2016 as a more widespread recovery takes hold,” said Alex Colpaert, head of EMEA offices research, JLL.

“In cities such as London, Dublin, Berlin and Munich, constraints in the most sought-after locations are forcing occupiers to widen their search to high-quality space in well-connected areas,” he added.

“This is causing demand to spill over into secondary areas (often supporting rental growth in these submarkets), and this increased occupier mobility is likely to become more prevalent across Western Europe during 2016.”

Rental growth of 2-3 per cent a year is projected for prime European offices in the next two years with London set to outperform the European average in the year ahead. However, overall growth rates are forecast to ease from their recent levels.


Alex Colpaert
Head of Offices Research - JLL EMEA


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