In this quarter’s EMEA City Offices Q2 review, we highlight the following key areas:
- ECONOMY: European economic growth had already begun to cool at the start of 2020, before the impact of the COVID-19 pandemic took hold in March. Fast forward to the end of H1 and the virus’ impact is clearly visible in the GDP figures across Europe.
- EMPLOYMENT: Like GDP, employment growth had been slowing by the end of 2019, with many economies reaching full employment. The immediate impact of COVID-19 has pushed out unemployment rates close to levels seen in 2008 and the 1930s, primarily due to the contraction of the retail and hospitality industries. Major European cities have been hit hard, especially those dependant on tourism and those driven by centralised, high-density office populations reliant on public transport.
- TAKE-UP & PRE-LEASING: The 12-month rolling take-up figure for H1 2020 is expectedly down, but only by -17.2%. Many occupier expansion plans have been put on hold in the immediate aftermath of COVID-19, but large individual deals have buoyed overall take-up in some markets.
- VACANCY: The average vacancy rate across EMEA moved up only slightly to 5.8% by the end of Q2 2020, from 5.5% in Q4 2019. This reflects how tightly balanced office markets remain, in-line with our April prediction of limited movement in vacancy by up to 200bps maximum as of year-end 2020.
- RENTAL GROWTH: By H1 2020, our EMEA office rental index grew by a surprising 1.5% Y/Y, but most of this increase was recorded by end Q1, before the full impact of COVID-19 took hold.
This report also includes a macroeconomic overview, market supply and demand, rents and occupier conditions, country markets updates before finishing with our forecast.
