19:09 European office rents soften slightly in Q1 2012 | |
| Prime office rents fell by 0.3 percent in Q1 2012, according to the
Jones Lang LaSalle European Office Index. This is the first overall
recorded reduction in rents since Q4 2009. The net reduction masked both rises and falls across several prime office rental markets. Falls were recorded in Brussels (-5.0 percent), Madrid (-1.9 percent), Barcelona (-1.4 percent) and Paris (-1.2 percent) whilst rental increases were recorded in Luxembourg (+5.3 percent), Stockholm (+2.4 percent) and Hamburg (+2.1 percent). In Q1 2012 rental rates remained stable on the main office markets of Russia and Ukraine. At the same time prime office rental rates in Moscow increased by 20 percent compared to Q1 2011 showing the maximum growth among European cities. St. Petersburg demonstrated 10 percent increase (and along with Zurich holds the fourth place in the region by rate dynamics after Moscow, Warsaw and Oslo). In Kiev rental rates remained at the same level over a year amounting to $420 (around €324) per 1 sqm annually. Thus Ukrainian capital holds the 19th place in rating of the European cities with the highest rating rates in premium segment. Moscow ($1,200, or €901) firmly keeps the third place after London and Zurich; St. Petersburg ($550, or €413) holds the 12th position passing ahead of such cities as Frankfurt and Munich. In the wake of the adjusted economic outlook for the region as a whole, growth forecasts for 2012 have been revised downwards. Markets with more robust economic conditions such as the UK and Germany are likely to perform well, while struggling economies such as Greece, Portugal, Spain and Italy will see on-going strains in occupational markets and rents. The Jones Lang LaSalle office clock shows the spread between markets across the region, with the first market (Amsterdam) reaching 12 o’clock, indicating its next move will be rental reductions, whereas 14 markets still remain at or before 6 o’clock, indicating that rents still bottom out or stabilise. Office occupiers are expected to remain cautious in the short term and current expectations are for leasing volumes over 2012 to be slightly lower then 2011 - but in line with long term averages. Take-up in Q1 2012 totalled 2.3 million sqm, 15 percent below Q1 2011 with leasing volumes in Germany decreasing from the high levels of last year and an 18 percent reduction in Paris. Annual net absorption, representing the change in occupied stock, totalled 3.1 million sqm, which is 16 percent lower than in Q1 2011. Levels in Western Europe increased driven by strong performance in the German markets whereas absorption slowed in the CEE region. The European vacancy rate remains unchanged at 9.9 percent over the quarter with stable aggregated vacancy in Western Europe, but increasing vacancy in CEE markets driven by occupiers releasing second hand space back into the market. Budapest showed the highest increase with increases of +110 bps to 20.3 percent. Office transactions accounted for almost €13 billion of the Q1 2012 volumes (€21.6 billion), up 27 percent on Q1 2011. The weighted European office yield remains unchanged at 5.27 percent, with movements in only two markets: Yields moved up by 50 bps in Budapest as investor confidence declined over the economic outlook whereas strong investor demand for core product in Hamburg led to 10 bps compression. Source: europaproperty.com | |
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