The UK’s office market in perspective: European comparisons

The performance and forecasts that apply to global commercial property markets are a useful indicator for the UK’s office market. Below you will find a selection of the most notable trends affecting office properties all over Europe.

According to market analysts at Cushman & Wakefield, 80 per cent of the European markets studied are set to experience rental growth during the next 12 months. Of the 21 cities that were included in the study, London tops the list of best-performing office markets in Western Europe. According to the report, the office market in the British capital will benefit from a positive economic outlook, which is very likely to boost occupier demand. In addition, and in line with the trends that we have seen during 2014, the growth of the creative, media, and tech sectors will continue its upward trend, bringing about increased demand for Grade A space in prime rental locations in the West End and beyond. The recovery of the finance, banking, and insurance sectors is also expected to consolidate over the next 12 months, and this is likely to bring renovated interest in office properties throughout the City.

First, it is important to note that GDP growth across Western Europe has been predicted at 1.7 per cent. The best performing economies are the UK, Poland, Hungary, and Romania, and it is precisely in these markets where we can expect to see the highest office inventory absorption rates, ranging from 13 per cent in Warsaw to 18 per cent in Bucharest. In terms of new office developments, Istanbul, Bucharest, Prague, Warsaw, and Moscow are on the lead, whereas London, Lisbon, Madrid, and Barcelona are set to be the worst-performing in terms of their respective development pipelines. In Europe, office space is at its dearest in London, where prime rents are expected to average £127.5 sq/ft/year, increasing to £130 sq/ft in 2016. Dublin, Paris, Zurich, and Brussels are other European markets where office rental values are set to grow.

Source:

http://www.cushmanwakefield.com/~/media/global-reports/Global%20Office%20Forecast_2015-2016-1205.pdf