Good situation on the European office market

The region of the Central and Eastern Europe is currently recording increase in demand for office areas stimulated by Budapest, Prague and Warsaw.

According to the report titled „European Office Property Clock Q2 2015” prepared by JLL consulting company, the Greece crisis did not have a crucial impact on lease of office areas in Europe. Countries in the region are experiencing different development pace, however, the general situation on the market is good.


Lease rates 


After decrease in the first quarter of this year, lease rates of offices in Europe are experiencing growth. In the second quarter of this year, the European rate index increased by 0.5 per cent quarter to quarter. Among 24 analyzed markets, seven of them recorded higher rates – including 5.7 per cent in Barcelona, 4.5 per cent in Berlin, 1.4 per cent in Frankfurt and 1.5 per cent in Munich. They decreased in Paris (-1.4 per cent in the city center) and Warsaw (-2.1 per cent). The lease rates in Warsaw slightly decreased in the second quarter of 2015 in spite of the record-breaking demand. The decrease in rates results from dynamically increasing demand for modern office areas in the city and this trend is going to maintain in the nearest future, especially in older and worse located office projects, but also in investments which strongly compete in pre-let transactions. However, the cost of leasing an office in Warsaw is higher in comparison to other capitals in the countries of the Central and Eastern Europe – says Mateusz Polkowski, Chairman in Department of Market Research and Consultancy, JLL.




In Europe, lease contracts for over 2.8 million sq. m of office area were concluded in the period from April to June. It indicates 2-per-cent increase year-on-year. Less agreements were signed in e.g. Paris, Lyon, Brussels, Milano or Madrid. The increase in demand is noticeable on the German markets, especially in Berlin and Hamburg. It was a very good quarter for office markets in the Central and Eastern Europe. This region recorded a significant increase in activity of tenants. In Prague, the demand increase by 84 per cent year-on-year and Budapest has recorded the highest quarterly performances from over 15 years. Warsaw also experienced a great activity of tenants and the second quarter turned out to be record-breaking in respect of demand in the capital because it reached 221 100 sq. m – enumerates Tomasz Czuba, Chairman in Department of Lease of Office Areas, JLL.


Uninhabited apartments 


The increased activity of tenants resulted in decrease in the level of uninhabited apartments on the European office market – up to 9.4 per cent. However, there is a small possibility of the further decrease due to a likely presence of ca. 3 million sq. m of new office areas on the market. In spite of the general decrease stimulated by Budapest and Prague, the uninhabited apartments rate in the Central and Eastern Europe is much higher (16.1 per cent) in comparison to Western Europe (8.6 per cent). In the case of Warsaw market, this rate increased to 14.1 per cent at the end of the second quarter.  


„European Office Property Clock Q2 2015” report was devised to compare a relative location on the European markets in different phases of the cycle of change concerning lease rates for the best office areas through the clock. There were four phases included in the structure – acceleration of increase concerning lease rates (rental growth accelerating), slowing of increase (rental growth slowing), acceleration of decrease (rents falling) and rates decreasing to the minimum (rents bottoming out).  


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