A Cushman & Wakefield Research Publication - 2017 Global Forecast

GLOBAL

AMERICAS

APAC

APPENDIX

EUROPE

OFFICE SECTOR The shortage of high quality office space in Europe’s major office markets has intensified which is continuing to push development activity higher, albeit still considerably more restrained than the peak of the last two cycles. Since 2009, office completions have been consistently below the 10-year historic average as the process of deleveraging and the unwinding of non-performing loans restricted development finance in the early part of the cycle. This was followed by a risk-off investment and business environment due to continued economic, financial and political uncertainty in subsequent years. The combination of low development and moderate demand has led to an unprecedented seven-year period of positive and stable, yet modest, rental growth which has gradually improved the viability of development. This is especially true now in a period of sustained employment growth and low interest rates, and so there is a greater willingness by investors to target higher risk opportunities. As such, office

EUROPE KEY FACTS

Slower office-based employment growth We expect office-based employment growth to slow to just 1.5% per annum by 2019.

Importance of information and communications sectors

Budapest, Dublin, Copenhagen and Madrid are expected to have the strongest growth rates in this sector over the next 3 years.

Stockholm, Amsterdam and Helsinki

Significant rise in completions

Less than 2.5% of stock is expected to be completed in the majority of these markets offering the potential for reduced vacancy and rental growth.

Over the next 3 years, development completions are expected to increase significantly in Istanbul, London, Brussels, Vienna and Dublin.

Limited rent growth

What to watch

Brexit-related uncertainty is expected to inhibit office-based job growth in the near term, particularly attracting and retaining European workers.

Warsaw, Sofia, Prague and Budapest are expected to see high levels of completions which will push vacancy rates upwards and limit rental growth for all but the very best space.

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