The latest elections and the incapacity to form a government until a couple of weeks brought further uncertainty on the economic side. GDP forecasts were downgraded on both national and regional levels with -2% decline expected on both a national and Rome level. Over the same time, the labour market is forecast to deteriorate with unemployment rates peaking at 12.9% in 2014, up from 10.7% at the end of 2012.
After a strong rebound of take-up which reached 43,300 sq m in Q4 2012, the Rome office market kept a good trend with 38,600 sq m recorded in Q1 2013. This performance is mainly linked to the owner-occupier deal done by La Provincia di Roma on a 28,000 sq m Grade A office building in the Greater EUR submarket. The other transactions recorded over the quarter are mainly concentrated in the Centre and the Greater EUR areas.
Rental values continued to adjust in Q1 2013 with all submarkets recording a decline ranged between 10 and 20€/sq m/year. These falls are a direct consequence of cost cutting processes underway in numerous companies. The biggest declines were observed in the Centre where demand is strong but supply is quite abundant.
Immediate supply increased slightly in 2012 to reach a level of 656,000 sq m. The Centre posted the biggest increase in the course of Q1 2013 whilst the Greater EUR saw some supply contraction but continued to concentrate most of the office space availability.
No new office supply was delivered in Q1 and the development pipeline for 2013 (41,000 sq m) is limited to a handful of buildings. However, projects to be completed in 2014 are numerous and account for an additional volume of 300,000 sq m. Cautiousness of both developers and investors prevent them from launching these projects on a speculative basis.
Source : DTZ (Groupe UGL)