Where Do European Property Values Go From Here?

Office Will Increasingly Bifurcate Price Gap Between Older and Newer Office Buildings

10Yrs+ 1-10 Yrs New Building Premium (RHS)

It is no longer a ‘one-office’ market anymore. Since the pandemic, the type of office occupiers require has evolved, with a focus on high-quality, high spec, energy efficient, well located ‘prime’ offices. This has led to a divergence in prime and secondary office rents and values. The price gap between newer office buildings (less than 10yrs) and older buildings has widened, with the premium for new CBD offices now standing at 35%. This has increased from 14% in 2010. European office markets saw a similar flight to quality during the GFC. A trend that tends to prevail during times of uncertainty.

40%

200

180

35%

160

30%

140

25%

120

20%

100

80

15%

60

10%

40 Commercial property price (CPP)

5%

20

0%

0

2010

2013

2016

2019

2022

Source: RCA, Cushman & Wakefield Research Note: Western Europe CBD Offices. CPP Indicator Split by Building Age or Years Since Building Was Renovated / Refurbished (Data refers to Q1)