Many businesses turned to remote work during the lockdown. It is too early to say how this trend will influence offices in the long run, but figures from the first half of 2020 show reduced leasing activity. European office take-up in the first half of the year was at a five-year low. High demand combined with lack of availability, as is the situation with many cities, can further hinder the growth of the subsector. Despite the coronavirus (COVID-19) crisis, the biggest office real estate markets in Europe continue witnessing low vacancy rates. In Berlin, for instance, the office vacancy rate as of the fourth quarter of 2020 was 2.4 percent.
Another trend accelerated by the coronavirus (COVID-19) pandemic with implications on commercial real estate is the rise of e-commerce across European consumers. Not only does more online shopping challenge traditional brick and mortar retailers, but it raises the already high demand for near-urban warehousing. In some of the most competitive markets, prime logistics rental yields go as low as 3.35 percent in the biggest German cities and 3.5 percent in London. Furthermore, a few European countries (the United Kingdom, Germany, and Poland), saw industrial and logistics real estate investment increase in 2020.
Coming up with precise predictions on the development of the commercial real estate market at this stage is challenging. According to industry experts, the best property types for investments in 2021 will be data centers and logistic facilities, while Berlin, London, and Paris will be the hottest markets.