In this quarter’s EMEA City Offices review, we highlight the following key areas:
- ECONOMY: Increasing divergence between robust activity in services and a struggling manufacturing sector is starting to make its mark on European growth. Despite solid GDP growth in Q1 2019 (EU28: 0.5%), Q2 is expected to be much lower.
- EMPLOYMENT: The labour market remains resilient. Employment growth of around 0.9% is forecast for 2019 across the EU28, and the unemployment rate had fallen to a new low of 7.5% in June.
- TAKE-UP: Despite the positive influence of co-working and broader corporate expansion, the 12-month rolling take-up average for EMEA dropped by -2.8% (y/y) at end Q2 2019. This represents a big change from a year ago when the same measure indicated growth of 10.8% (y/y).
- PRE-LEASING: In the majority of major city markets, a shortage of availability is curtailing leasing activity, pushing occupiers into taking pre-lets. Pre-leasing activity has been absorbing much new development coming to market over the next 24 months.
- VACANCY: The EMEA weighted vacancy average reached 6.4% in Q2, compared to 8% just two years ago, indicating that availability remains very tight, with vacancy at record lows.
- RENTAL GROWTH: The rental growth trend remains positive, with average growth of +2.8% for all the EMEA markets surveyed, on an annual rolling basis.
This report also includes a macroeconomic overview, market supply and demand, rents and occupier conditions, country markets updates before finishing with our forecast.