Falling unemployment rates and business expansion are leading demand across Europe. Companies, who had previously been putting off making relocation decisions until the economy stabilised, are now moving to modern offices in central locations. Lack of good quality space continues to be an issue across markets.
Prime CBD rental growth has slowed but remains positive with the average prime CBD rent growing 2.5% year-on-year. Non-CBD rents are being pushed up as tenants search for alternative locations outside of the CBD where the average year-on-year rent grew 3.5%. By the end of 2017, CBD rental growth will stabilise across the majority of markets.
Downward shifts in vacancy are starting to filter into increased development activity, particularly in peripheral areas where there is a greater availability of land. Over the next two years the development pipeline will rise by 8% pa in 2017 and 10% pa in 2018 across our survey area.
Source : Savills