Europe to see 9.8% drop in prime office rents for 2020
Europe will see a 9.8 percent decline in prime office rents in 2020, according to AEW.
The manager says demand for office space is expected to slow down sharply in the short term, as occupiers adopt a wait-and-see approach and reassess their office space needs as a result of the COVID-19 crisis. So far, in 2020, second quarter take-up is down more than 20 percent, and vacancy has ticked up by 20 basis points from a record low of 5.4 percent in first quarter 2020.
This demand shock is expected to be short-lived, however, and AEW predicts prime office rents will start recovering from 2021. Prime office rental growth is therefore expected to reach 2.5 percent per year between 2021 and 2024.
“The good news is that expected new supply remains at less than half the level seen pre-GFC,” says AEW in its latest research report. “For the 2020-24 period we project new supply at 1.3 percent of existing stock [per annum] relative to the pre-GFC period at 2.7 percent [p