According to the newest report of Jones Lang LaSalle ‘European Property Clock’ rental rates in the second quarter of 2013 show a tendency to increase. It can be seen with the use of relative clock scheme, by the comparison of the situation of separate markets in consecutive phases of cycle of change in rental rates for the most prestigious office spaces. Rent index in Europe has risen by 0,2 percent in comparison with the first quarter of 2013, but it remains lower in relation to the previous year. Experts suggest that rents will go up slightly before the end of the year.
Report points out that the state of separate markets in Europe varies primarily in relation to the economic situation of the region. For example, rents for the best locations in Dublin have risen by over 9,4 percent. It was caused by previous record – breaking decreases. In the meantime, rental rates in cities like Lyon, Budapest, Barcelona and Warsaw have decreased by 5,3, 2,5, 1,4 and 2 percent respectively. In the Polish capitol the decrease is caused by a noticeable activity of property developers which, despite the strong demand, results in an increased level of vacancies. However, in London City and on West End rent remain unchanged. Nevertheless, experts predict an upcoming increase.
Supply
Office space supply in Europe is falling. In the second quarter of the year only 720 000 sqm of new office space have been created. That is as much as 50 percent less than a five year average for the second quarter. Over the first six months of 2013 in Europe, a total of 1 500 000 msq of office space have been created which may cause a revision of forecasts according to which, in the entire year, as much as 4 million msq was supposed to be created.
The limitation of the number of new projects was not the case on the Polish market. Currently over one million square meters of modern office space is under construction in the country. Warsaw obviously remains the most active market, as, in the last few weeks, it has exceeded the level of 4 million square meters of office space. In the entire year additional 336 000 msq may have been created, which is the biggest amount of new space since 2000 – states Mateusz Polkowski, head of Research and Counseling in Jones Lang LaSalle.
Demand
In the first quarter of 2013 supply in Europe has risen by 5 percent, being at the same time lower than in analogous period in the previous year.
The increased activity of leaseholders has been seen in the entire Western Europe except Paris, which noted a decline by 4 percent.
Dr Lee Elliot, Head of EMEA Research at Jones Lang LaSalle comments on the overall tendency: Some leaseholders are willing to pick a spot of a higher standard if it means a significant improvement in terms of their effectiveness or a better location. Market activity however, depends on the readiness to take up certain obligations and invest under the conditions of unstable economic situation. On some markets, the first signs of improvement in atmosphere between leaseholders begin to show, but, for us to see a significant increase in demand, this tendency has to strengthen.
In East – Central Europe, the activity of the leaseholders is growing as well. Demand in this region has risen by 7 percent. The capitol of Poland deserves special attention. Warsaw experiences an increased interest of leaseholders trying to both set up and develop their companies. The first quarter of 2013 was a very good period in terms of the amount of deals signed, as supply gross in Warsaw reached the level of 334 000 msq and was 12 percent higher than in analogous period in previous year. In the second period alone, supply gross reached 178 000 msq of office space which gives us about 130 500 msq net. Those numbers confirm a strong position of capitol’s market not only in the East – Central Europe, but on the entire continent – says Tomasz Czuba, Head of Office Property Renting Department at Jones Lang LaSalle.