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EMEA City Offices Snapshot | August 2021

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2021Q2CityOfficeSnapshot1536x1040

Pre-letting activity in EMEA has returned with vigour, driven by the lack of existing grade-A stock.

Market momentum seen in Q4 2020/Q1 2021 has continued in Q2 2021 with office take-up across EMEA expanding by 5.3% (q/q). Pre-letting activity has returned with vigour, driven by the lack of existing grade-A stock. That said, take-up across markets remains below pre-pandemic levels, with the majority of occupier demand comprising lease renewals and re-gears. 

Most (outward) vacancy rate movements have plateaued or at least slowed in 2021, with some inward movements registered in locations where grade-A stock is in short supply. While 57% of markets surveyed expect further outward movement in rates over the next 12 months, this is down from 75% at Q1-end. The release of sub-let space continues to plateau, and in some cases, diminish by up to 20% (q/q). Development pipelines in markets close to 10% vacancy or above are closely controlled, with limited additions or even (downward) revisions made.

Tenant-favourable markets now represent 52% of markets (44% in Q1) and this is expected to expand to 56% of markets by Q2 2022, while landlord-favourable markets would diminish to just 6% of the EMEA total. Prime headline rents continued to hold firm overall, albeit propped up by rising incentives, and some 10% of markets indicated prime rental headline growth in Q2, including Paris – CBD (+2%), Helsinki (+3%) and St Petersburg (+3%). Some markets have seen rental levels decline, and 16% of markets expect further downward pressure in prime rents over the next 12 months, including Warsaw, Madrid & Frankfurt. Download our Snapshot below.

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EMEA City Offices Snapshot | August 2021

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Damian Harrington

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