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EMEA City Office Snapshot | Q4 2021

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Read more about occupier sentiment recovery in our latest snapshot

A continued recovery in take-up across European markets in the second half of 2021 saw net-absorption expand further in Q4 2021. EMEA’s take-up upward trajectory continued over Q4, with (12-month rolling) activity up +12.7% quarter-on-quarter (q/q), enabling net-absorption to rise 53 basis points above the bottom of the market witnessed in Q1 2021. Improving occupier sentiment is feeding through into strong pre-letting activity, a resurgence of larger deals and improving occupancy rates. However, take-up activity in several markets remains below pre-pandemic levels despite a strong year-end rally.

Our EMEA (12-month rolling) completions index increased +25.3% (y/y) as a total of 6.36mn sqm of new office space completed in 2021. Vacant space continued to climb, but the weighted average vacancy rate is only 7.6%, with 72% of markets below the 10% vacancy threshold. Limited changes in market conditions were recorded - some 44% of markets remain tenant-favourable, and the outlook to Q4 2022 is almost identical at 43% of markets. Headline rental values remained robust over Q4 2021, with 78% of markets indicating stable conditions, albeit many are propped up by incentives. In contrast, 16% of markets recorded rental growth for prime assets in CBD locations against a backdrop of low availability.

Looking forward, net-absorption should accelerate but could be hampered by delays to planned developments amidst rising construction costs. This could amplify supply-demand imbalances as vacancy continues to trend downwards. Our 12-month outlook supports this, highlighting that 58% of markets expect either contractionary (16%) or no movement (42%) in vacancy. Landlord-favourable markets are expected to diminish to 11% over the same period (down from 16% in Q4 2021) as they convert to neutral conditions. This points to 2022 entering a new phase of rebalancing as neutral markets (46%) leapfrog tenant-favourable markets (43%), the latter having held sway over the last 15 months. The flight to quality will continue, with 33% of markets expecting further uplift in prime rents for assets CBD locations over the course of 2022.

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EMEA City Office Snapshot | Q4 2021

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Damian Harrington

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Damian Harrington is a Director and Head of Research for both Global Capital Markets and EMEA at Colliers. He has over 20 years of experience in the real estate industry living and working from various locations across EMEA including London, Dubai, Prague, Helsinki and Amsterdam. Damian is responsible for producing research for internal and external clients. His expertise helps to provide clients with global capital market trends and analysis, and connects them with strategic and actionable insights, such as the changing nature of global capital and the impact on global capital flows. Damian has produced numerous research papers and generated analysis of markets across all asset types - from residential to offices, retail to logistics and hotels to niche sectors such as life sciences, air cargo and data centres. Damian is a member of the EMEA location strategy team and a key member of Colliers ESG focus group.  He speaks regularly at internal global conferences, external industry events hosted by GRI, ULI and other key industry bodies, plus key annual events such as MIPIM and EXPO REAL.

Damian holds a Masters degree in European Property Development and Planning from University College London, a BPI Bachelor of Planning from the University of Amsterdam and a BA (Hons) in Town and Country Planning from Manchester University. He is also a qualified surveyor, holding an MRICS with the Royal Institute of Chartered Surveyors.

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Peter Leyburn

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Peter is Head of Enterprise Clients, Occupier Services EMEA. He is focussed on ensuring Colliers' Occupier Services enterprise clients are receiving best-in-class solutions to manage their organisations and portfolios.

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Andrew Hallissey

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Well respected within the industry, Andrew is an Executive Managing Director with over 20 years of global experience within Corporate Real Estate. Andrew has a wealth of knowledge having advised dozens of Fortune 500 companies throughout the world on developing real estate transformation solutions.

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