Concerns about the Eurozone's debt Since 2009, Europe's office rents have been dragging, with the first rate softening.

According to the Jones Lang LaSalle European Office Index, Europe's office rents are presently slightly lower for the first time since Q4 2009. In the first quarter of 2012, prime office rentals declined by 0.3 percent. Craigslist portland

The overall decrease obscured both increases and decreases in numerous major office rental markets. Brussels (-5.0 percent), Madrid (-1.9 percent), Barcelona (-1.4 percent), and Paris (-1.2 percent) all had rental decreases, while Luxembourg (+5.3 percent), Stockholm (+2.4 percent), and Hamburg (+2.1 percent) saw rental gains.

Rental markets will remain stable.

Growth predictions for 2012 have been lowered downwards as a result of the altered economic prognosis for the area as a whole. Markets with more stable economic conditions, such as the United Kingdom and Germany, are expected to do well, but struggling economies, such as Greece, Portugal, Spain, and Italy, will continue to face labor market and rent pressures. The Jones Lang LaSalle office clock depicts the spread between markets across the region, with the first market (Amsterdam) reaching 12 o'clock, indicating that its next move will be rental reductions, whereas 14 markets are still at or before 6 o'clock, indicating that rents are still on the way to bottoming out or stabilizing.

Leasing volumes are stable, however 2012 is expected to be lower than 2011.

In the immediate term, office occupiers are projected to remain cautious, with 2012 leasing volumes projected to be slightly lower than 2011, but in line with long-term trends. In Q1 2012, take-up totaled 2.3 million sq m, down 15% from Q1 2011, with leasing volumes in Germany falling from last year's highs and in Paris falling by 18%.

Absorption is down 16% from the first quarter of 2011.

Annual net absorption, which measures the change in occupied stock, was 3.1 million sq m, down 16 percent from Q1 2011. Western Europe's levels rose, owing to robust performance in German markets, while absorption in the CEE region slowed.

Despite the low amount of completions, the vacancy rate has remained consistent at less than 10%.

Over the quarter, the European vacancy rate remained steady at 9.9%, with stable aggregated vacancy in Western Europe but increasing vacancy in CEE countries due to occupiers releasing second-hand space back into the market. With an increase of +110bps to 20.3 percent, Budapest had the largest increase.

Jones Lang LaSalle's Director of EMEA Offices Research, Bill Page, says World Property Channel, "Vacancy rates will gradually fall in 2012 as a whole. Due to the small amount of new space being added to the marketplaces, this will be supported. Only roughly 600,000 sq m of office space were constructed in Europe in the first quarter of this year, a new low and 54 percent below the five-year average. Because finance is still scarce, the development response that would normally be expected is projected to be sluggish. Furthermore, many projects that are now being developed on a speculative basis may be postponed or cancelled, and stock that is going onto the market is sometimes already pre-let."

In Q1 2012, office investment transactions accounted for about €13 billion of the total volume of €21.6 billion, up 27 percent from Q1 2011. With only two markets moving, the weighted European office yield remained constant at 5.27 percent: Yields rose 50 basis points in Budapest as market confidence in the economy waned, but in Hamburg, robust investor demand for core goods resulted in a 10 basis point compression.

Chris Staveley, Head of EMEA Office and Industrial Capital Markets at Jones Lang LaSalle, noted, "Capital values have increased by 3.8 percent since Q1 2011, which, together with yield and demand stability, indicates consistent development. Rental rises in sought-after prime buildings will drive any growth we see across Europe, since secondary product interest remains low."

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