Topic: The office market in Europe

The office real estate market in Europe - Statistics & Facts

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Published by Raynor de Best, Feb 27, 2018

The performance of the European office real estate market is strongly connected to the development of its domestic economies. As the economy of the European Union has shown signs of recovery, more and more companies showed their readiness to pay the right price for a new office building. Indeed, officy vacancy rates across Europe are at their lowest figures since the financial crisis of 2008. Warsaw reached a vacancy rate of 14 percent as of the first quarter 2017, whereas Berlin had a rate of 2.5 percent of vacant offices. London had the highest prime office space rental costs per square meter per year, with the average price in the West End at 1,530 euros and the London City at 902 euros. European companies are returning to the office market, yet the new demands and selection criteria that they bring prove difficult to fulfill. This article aims to take a look at office properties in Europe, specifically 1) the increasing demand for office space and 2) the new demands in the office market. Text continues below.

1) In the established financial centers of Europe, such as London, Frankfurt, Paris, Amsterdam and Luxembourg, office take-up has been growing. The take-up of office real estate in central Paris, for example, increased from approximately 1.9 billion square meters in 2015 to a total of more than 2.1 million square meters in 2016, whilst the take-up in Frankfurt increased to a total of approximately 551,000 square meters in 2016. Vacancy space decreases, however, due to the higher level of transactions combined with modest levels of new construction. Two percent of the available office accommodation in Amsterdam in 2016, for instance, was accounted for by new construction. The number of office completions does not keep up with the increasing demand. And this demand is expected to become less, as transactions on the M&A market are increasing. The total value of cross-border M&A transactions in Belgium, for instance, is forecast to increase to approximately 16 billion dollars in 2018.

2) Additionally, a lack of supply is combined with new demands of tenants in the office market. On the one hand, more start-ups enter the market. The total early-stage entrepreneurial acitvity (TEA) rate in Sweden, the percentage of the population involved in business start-ups, reached approximately 7.6 percent in 2016. These start-ups look into commercial real estate in a different way. On the other hand, companies increasingly show interest for so-called "smart offices", with energy efficiency, high service and flexibility as the most important selection criteria. In 2016, respondents to a survey in Italy on the expected benefits from a digitalized building expected both more security and energy saving. Some argue that because of these technological developments European commercial real estate is becoming more of a product or service and that is likely to influence demand.

This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, statistics can display more up-to-date data than referenced in the text.

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