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''Increasing Polarisation'' in European Office Markets

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''Increasing Polarisation'' in European Office Markets

By - Friday 08 June 2012

There is a widening gap between the best and worst performing European office markets, with polarisation in the sector expected to continue throughout 2012. Director of Europe, the Middle East and Africa research at CBRE Richard Holberton explained countries badly affected by the eurozone debt crisis are seeing greater declines in their office sectors, while those more removed from the single currency are holding up better. He cited Greece, Spain and Portugal as locations where the office markets "either remain in decline or are showing very limited signs of recovery".

At the other end of the scale, Nordic destinations are performing well, as is Germany thanks to its strong underlying economy, Mr Holberton added. "As the economic challenges in Europe continue, we are seeing a more pronounced divergence in the performance of key office markets," he asserted, concluding that this is unlikely to change during 2012 because the problems affecting the continent are expected to persist. Looking at the picture as a whole, the CBRE research described prime office rents across the 27 members of the EU as "stable", with the firm's EU-27 Prime Office Rent Index climbing by 0.1 per cent in the first quarter of the year.

Last month, a report from BNP Paribas Real Estate drew a similar conclusion about the state of office markets in western Europe. The firm noted there was little fluctuation in prime rents, while take-up levels were down due to a reduction in the number of large transactions completed in the three months from January to March. Germany was also highlighted in the research as one of the top performing office markets, with rents in the country's main cities increasing by four per cent year-on-year. In addition, Frankfurt, Munich and Hamburg attracted some of the largest investment deals in the sector at the start of 2012, with property investment activity expected to "stay resilient all year long", according to BNP Paribas Real Estate.

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