Lack of product will boost 3.4% rental increase in Europe

Lack of product will boost 3.4% rental increase in Europe


The international real estate consulting company remarks that users chose to temporarily meet their demands for work spaces using more flexible options, both to face immediate availability and the current political uncertainty.

Mike Barnes, from the European analysis department at Savills, explains that «a favorable economic context in Europe will create more office based jobs and a greater demand for office spaces, particularly for high quality offices in good locations. Oxford Economics, estimates that 2.8 million office jobs will be created in the EU’s 28 countries in the coming five years, which represents a 4.4% growth».

In all EU’s member states, professional science and technology will be the office based sector where employment will grow the most in 2019, with an expected increase around 1.8%, This represents approximately 280.000 jobs being created in this sector within the next 12 months, which will generate pressure to increase rents as the demand for prime product grows. Berlin had an average prime rental price increase of more than 15% in 2018, followed by Oslo (10.9 %) and París (9.7 %). In Milan, Frankfurt, Barcelona and Dublín in particular, prime offices will be even more expensive, with increases of 9.1 %, 6.6 %, 6.4 % and 6.3 %, respectively.

Eri Mitsostergiou, director of European analysis at Savills, states that «the average avilability rate was 6.1 % in the third quarter of 2018 against 6.9% at the end of 2017 and we estimate that it dropped to 5.9% by the end of 2018. Berlin (1.4 %), Hamburg (4.5 %), Munich (2.5 %) and Stockholm (3 %) had almost no offices avilable. As a result, we expect rents in these cities in particular to keep rising above this year’s average».

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