Strong European economic performance, particularly among Eurozone countries, is driving rents higher as demand for office and industrial space increases across the continent, according to the latest Euro Cities research from Gerald Eve and its international partners.
Belgium, Czechia, Netherlands and Portugal were among the countries seeing the biggest uplift in both office and industrial rents during 2017. At 13%, Spain had the largest increase in prime office rents across Europe (see charts opposite).
Worst performing in the two sectors were Norway and Turkey, with the UK also seeing a fall in office rents and Poland the only other country to show a fall in industrial rents over the course of the year.
The respective changes in rental performance reflect the EU’s strengthening economic performance – and the Eurozone in particular – as business confidence feeds through to increased demand for space. Particularly notable is the return of countries such as Ireland, Portugal and Spain, which were among the hardest-hit by the financial downturn and subsequent Eurozone crisis of the early 2010s.
Patricia LeMarechal, partner at Gerald Eve, said: “2017 may have been a year of political uncertainty across Europe, but any uncertainty this caused was more than outweighed by economic performance across the Eurozone. To see rents across the continent rise in this manner – and investment markets remaining robust as a result – is a reflection of both the latent demand in Europe’s commercial centres, and the relative paucity of new development in recent years.
“There remain reasons for caution over the course of 2018 – the spectre of Brexit looms, especially over the UK, and the fragile coalitions formed following elections in Germany and Italy could yet be a source of instability – but the positives outweigh the negatives. Europe saw considerable pain following the financial crash, especially away from the core northern economies, but the general upward pressure on rents gives grounds for optimism.
“Opportunities are created, and risks exposed, but central to reacting is access to genuine insight from on-the-ground local experts with a deep understanding of their markets. The value of Gerald Eve’s international alliance can be seen in both this research and the services and advice that clients have access to through these partnerships.”
The research – which analyses the current performance and future prospects of industrial and office space in 29 cities across 16 European countries – is to be launched at MIPIM and draws on the collective expertise of Gerald Eve and its strategic alliance partners across the continent.
You can view the full research report here.