According to data from Danos–An Alliance Member of BNP Paribas Real Estate, activity in the office sector remained sluggish in the first quarter of 2024 compared to 2023 in Europe. About 1.82 square meters of office space was transacted in the 18 key European markets the company is looking at, down 5% compared to Q1 2023. Quarterly volumes were 17% below the 10-year quarterly average.
Trends vary between markets: Munich, Frankfurt, Central Paris and Berlin saw a significant rise (100 bp or higher). Central London and Amsterdam experienced moderate increases. In Milan and Warsaw, the vacancy rate markedly declined.
Over the past 12 months, Madrid (+12%), Warsaw (11%), Amsterdam (+10%), Central Paris and Central London (+7%) have seen the most significant increases in values.Many European markets saw further declines in volumes such as Rome (-64%), Dublin (-39%), Amsterdam (-38%), Hamburg (-21%) and Central London (-17%). On the contrary, Barcelona (+61%), Frankfurt (+28%), Munich (+17%), Lyon (16%) and Central Paris (+14%) "closed" the quarter with an increase.
The overall vacancy rate in Europe stood at 7.6% in Q1 2024 (flat from Q1 2023). Expansion into many markets is a consequence of a growing geographic mismatch between supply and demand. Low availability prevails in central submarkets, particularly with new buildings ensuring demand. However, much higher vacancy rates are found in peripheral areas.
Trends vary between markets: In Germany there is a significant increase (100 percentage points or higher) in particular in Munich, Berlin and Frankfurt, as well as in the center of Paris. Central London and Amsterdam saw moderate increases. In Milan and Warsaw, the vacancy rate decreased significantly, while in Athens the available office rate remains low at 4%.
The very low availability of prime assets and the attractiveness of quality buildings located in the most sought-after districts continue to drive up values in the sector. As analysts explain, the workplace plays a key role in attracting and retaining talent, both in terms of the quality of the space and location. In the last 12 months, prices have risen in Madrid (+12%), Warsaw (11%), Amsterdam (+10%), central Paris and central London (+7%). In Athens, rents for prime locations are high at €372 per square meter per month, but they show a stabilization trend.
In large office spaces of more than 1,000 square meters, the prices both in the center and in the northern suburbs range above €30 per square meter, while rents are lower in the Southern Suburbs, where, however, the office stock is increasing with new developments.
As market players explain, modern office spaces are moving in the direction of mixed developments, incorporating additional amenities for end users (F&B, gyms). At the same time, there is strong investment interest in existing buildings aimed at reconstruction, in line with sustainable development.
