Further downgrade and latent political turmoil leave uncertainty on the economic side. GDP forecasts were downgraded on both national and regional levels with -2% decline expected. 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.
Following two strong quarters in take-up, Rome is at the trough of the wave, with only 20,700 sq m of take-up in Q2. There was no major deal this quarter but a few large transactions (5 already identified accounting for a total of 35,000 sq m) should boost take-up for the second half of the year.
Rental value stabilized in Q2 after all submarkets recording a decline ranged between €10 and €20/sq m/year in Q1. 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. We also observe a change in trend in lease contracts length from the usual 6 years +6 years to 9 years + 6 years.
Immediate supply increased slightly in Q2 to reach a level of 670,000 sq m. The Centre posted the biggest increase in the course of H1 2013 whilst the Greater EUR continued to concentrate most of the office space availability. The vacancy rate slightly increased to 6.8%.
No new office supply was delivered in Q2 and the development pipeline for 2013 (41,000 sq m) is limited to a handful of buildings under construction. 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)