Nery Alaev discusses rental growth in Europe.
According to research carried out by global real estate consultancy JLL, Dublin and Stockholm were among some of the top cities for office rental growth. Alongside the two European cities were Dubai and Oakland East Bay in the United States of America.
I’ve decided to look further into the news and summarise.
Growth in Stockholm is strong.
Developing world
As well as Europe, there was positive news for global offices, as rents on prime office assets across the 110 major markets covered by the JLL Global Office Index increased by 3.6% year-on-year in Q2 2016 – this is the fastest pace of annual growth in four years.
Jeremy Kelly of JLL said:
“Global office demand is proving resilient in many of the world’s dominant commercial real estate markets, despite increased political and economic uncertainty that is leading to corporate occupiers striking a more cautious tone.
Office supply continues to tighten on the back of a shallow development cycle, and this is creating continued upward momentum in aggregate rental growth.”
Focus on Europe
In the second quarter of, 2016 office leasing volumes in Europe were down 3% year-on-year, although at 2.9 million m² they were ahead of the 10-year average.
In Q2, European take-up grew by 4% year-on-year – this is a clear sign of the upbeat sentiment on the continent. While leasing activity in London has been affected (something I’ve covered previously) in the run-up to and following the EU referendum, general sentiment elsewhere in European leasing markets is one of ‘business as usual’ – does this mean that the wider market is Brexit-insulated? Time will tell.
Furthermore, the European Office Index rose by 1.5% quarter-on-quarter in Q2, the strongest increase in five years, bringing aggregate annual growth to 4.3% Strong statistics indeed – one wonders if Brexit’s impact will be felt in full during Q3 and Q4?
Nery Alaev
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.