Peripheral office rents rise faster than CBDs as lack of prime space forces tenants across Europe from core locations – Savills

Alice Marwick, Associate Director, European Research, Savills, says: “Across Europe, we are seeing that the volume of new space being delivered is not enough to meet current demand, so tenants are looking at another two years of supply shortage. Limited supply and rising rents have resulted in occupiers becoming more flexible in their demands; tenants are more willing to move from their preferred location within the core for a better building and cheaper rent in secondary locations.”

Robbie Stewart, Associate Director, Tenant Representation, Savills, adds: “Strong polarisation remains across Europe, with markets such as Manchester, Vienna and Paris CBD experiencing exceptionally strong annual take-up increases of 110%, 69% and 49% respectively. These markets are also seeing the quarterly take-up exceed the five-year average. On the other end of the spectrum, Amsterdam, Brussels and Paris La Defense saw annual take-up levels fall 74%, 19% and 23% respectively.”

Few markets have a vacancy rate above 10.0% and just under one third of the markets are seeing the vacancy rate fall below 5.0%. Savills expects supply will continue to remain tight until 2020 at the earliest. The average vacancy rate will continue to fall to below 6.2%, led by a continued squeeze in the German markets and Sweden. More tenants will turn to serviced office providers for prime space and vacant space will be found in older office stock in secondary locations.

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