Europe’s economic recovery gathered momentum in Q4 2013, but remains fragile and reliant on rising activity in Germany. GDP expanded by 0.5% yoy, the first positive growth in eight months.
Leasing activity trends were mixed last year. The recovery of Dublin and Madrid and the strength of London were counterbalanced by weaker take-up in Paris, Amsterdam and the German markets. Although total take-up in our survey area was 4% lower yoy, there are significant enquiries for high quality space that remain unsatisfied. We predict total take-up for 2014 to be stable or higher in all our markets.
The tight supply of prime space is reflected in the falling vacancy rates. The average vacancy rate was 10.2% in Q4 2013, while the average CBD rate was 7.5%. Development completions are picking up and will rise by 6% on average in our markets this year, but the average vacancy rate is predicted to remain in the region of 10%.
Last year the annual prime CBD rental growth was stronger in Dublin, in the Scandinavian and in the German cities. In most cases this was the result of the tight demand and supply conditions in the central locations. This year we expect prime CBD rents to increase by 1.5% on average.
Source : Savills