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- December 1, 2015: Vol. 9, Number 11

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Low levels of new office supply augur well for rental growth – but not everywhere

by Richard Fleming

The Polish capital, Warsaw, already has an office oversupply situation, following years of construction of new class A space, and the City of London is heading in the same direction. This is vividly illustrated in the “Forecast growth in supply and demand for office space” chart below, taken from the upcoming H2 2015 the Invesco Real Estate House View, with both Warsaw and the City of London showing as outliers in the relationship between employment growth and stock growth. This will likely have an impact on rental growth in those locations.

According to Kim Politzer, director – European research at Invesco Real Estate, in the 10 years to 2008 (effectively, pre–global financial crisis) employment growth in the EU–27 averaged 1 percent per year, while from 2008 to 2014 employment fell by 0.2 percent per year. The forecast for employment growth over the next five years is 0.5 percent per year.

“The cities on the left-hand side of the chart are all growing ver

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