Differentiation between European office locations deepens, and the rents are under an upward pressure - we read in the "Short-Cycle Rent Changes" published by Jones Lang LaSalle. Analysts add that the tenants demand for office in the second quarter is comparable to the level recorded in the previous quarter. They also alert that the new supply of office space reached a record low level. Sources of regional differences are primarily caused by the condition of given economies.
In the second quarter of 2011, the highest trading rents in Europe showed a moderate growth of around 2.1 percent. This result was affected by increases in the rates that have been registered in the cities covered in the analysis. The largest increases took place in Moscow (20.0 percent), Warsaw (13.6 percent) and Lyon (8.0 percent). Slightly smaller increases in rents were observed in Munich (+3.4 percent), Berlin (+2.4 percent), Hamburg (+2.2 percent), London's West End (+2.7 percent) and Stockholm (+2.5 percent). A completely different situation was observed in Athens - increasing debt combined with the policy of cost cutting has resulted in downward trend. Declines, although with a relatively lower scale, were also recorded in Madrid, Barcelona, Dublin and Utrecht.
During the study period there was nearly 2.7 million square meters of modern office space leased in Europe. This means a 2 percent increase compared to the first quarter of 2011 The highest activity of the tenants on the market was recorded in Central and Eastern Europe, including in particular Warsaw, Moscow and Prague office market. The demand for modern space in important locations such as London and Paris remained very moderate, with the size of the lease in Central London at a level significantly below the level recorded in the second quarter of 2010. Analysts predict that the total demand in 2011 will reach a close level of 2010, and will be about 10-11 million sq m.
Ever since the fourth quarter of 2009, the modern office market in Europe is characterized by a two-digit level of vacancy rate - according to data about the end of 2011, the rate was about 10.2 percent. There is, however, a noticeable systematic downward trend, determined primarily by too low supply in relation to the demand for modern office space. At the end of June 2011 the demand amounted to only about 670 thousand square meters - more than 50 percent below the average for the past 10 years.
A similar situation occurs in Poland. With the revival on the demand side, lowering of vacancy rate and a very low number of new projects put into service, the highest trading rents in Warsaw are growing again. The best office space in the center can be rented out for 22-25 Euro / sq m / Month, and in some Class A+ office buildings, asking rents may be higher. The rents outside the city center, for the best office space, now stand at 15 - 15,5 Euro / sq m / Month. In the second half of the year in some regional cities, rents are likely to rise - summed Tomasz Czuba, Head of Office Leasing in Poland.