Skip Ribbon Commands
Skip to main content

News Release


Significant Rental and Take-Up Declines across Europe’s Office Markets

According to Jones Lang LaSalle’s Q1 European Office Clock

London, 14th May 2009 – According to Jones Lang LaSalle’s Q1 2009 European Office Rental Clock, European prime office market rents decreased by 8.0% over the quarter, a fall not witnessed in the Index before. The Index is based on the performance of 24 markets, and highlights that prime rents decreased in the majority of the markets, led by Moscow and London (down -28.6% and -21.1 respectively), though Madrid (-12.5%) and Warsaw (-10.7%) also showed double-digit rental falls over the quarter, whilst the major German cities saw rental corrections of between 2% and 5%, marking their first falls in this cycle.

As office occupiers have increasingly downsized and made more efficient use of existing space, office take-up has slowed throughout 2008 and resulted in further declines in take-up volumes in the first three months of 2009. Overall European office leasing volumes reached 1.9 million sq m (20.5 million sq ft), a fall of 37% over the quarter (-40% to Q1 2008) and 31% below the five-year average. The Central and Eastern European (CEE) markets in particular have been affected by the deteriorating economic conditions and outlook: leasing volumes decreased over the quarter by -41%. In western Europe, substantial falls in take-up have been recorded in Utrecht (-82%) and Dublin (-71%), but large markets like London (-65%), Madrid (-56%), Munich (-44%), and Paris (-23%) also saw significantly lower activity in Q1 2009 compared to the first three months in 2008.
Weak demand and completions of more than 2 million sq m (21 million sq ft) in Q1 caused the overall European vacancy rate to increase from 7.7% in Q4 2008 to 8.5% over the quarter. Driven by high completion levels in Moscow the aggregated CEE vacancy rate jumped to 13.6% in Q1 09 from 4.9% a year ago.  Vacancy rates in Europe vary now between 2.4% in Luxembourg and 18.5% in Dublin.  

Commenting on the Q1 Clock, Thierry Delvaux, Managing Director of Jones Lang LaSalle Budapest said: “Despite the pessimistic forecasts Budapest closed a solid first quarter. The vacancy rate did not rise however the current 13.7% will not be sustainable throughout 2009 due to the high completion levels. Similarly to other markets, office rents in Budapest are under increasing pressure and prime rents are expected to slightly fall in 2009. ”