Q2 office leasing activity in Western Europe saw highest take up since 2006
The euro zone economy continued to outperform initial forecasts for this year. Second quarter 2017 office leasing activity saw the highest take up in Western Europe since 2006, according to JLL’s Office Property Clock Q2 2017 report.
Economic tailwinds, such as election results in the the Netherlands and France that reinforced EU unity, are in line with the overall office market performance, where leasing activity continues apace on the back of strengthening employment.
European office vacancy decreased by 20 basis points to 7.8 percent in second quarter, the lowest since fourth quarter 2008, according to the report. Second quarter office completions totaled 981,000 square meters. While this is up 9 percent from first quarter, it represents a 22 percent decline on the 10-year second quarter average.As development activity is set to increase across the Big 5 German cities, vacancy rates are likely to stabilize toward the end of 2017.
After an active first quarter 2017, robust occupier demand pushed European office take-up to 2.9 million square meters in second quarter 2017. While the total European aggregate was down 3 percent in second quarter 2016, activity in Western Europe was up by 3 percent year-over-year. JLL forecasts European take-up to reach approximately 11.8 million square meters in 2017 as demand continues to expand in Europe.
The European Office Rental Index rose by 1.1 percent quarter-over-quarter in second quarter as well, and at 2.1 percent, annual European office rental growth continues to exceed the 10-year average of 1.2 percent. In addition, excluding the United Kingdom, rental growth reached 3.6 percent in second quarter, highlighting intensifying occupier activity across mainland Europe.