Sentiment in the European office market has, until the credit crunch hit, been relatively upbeat, as buoyant business confidence coupled with improving employment prospects added weight to office sector performance. Nevertheless, more expensive borrowing and a heightened uncertainty in global finance and credit markets have left their mark on real estate since the late summer of 2007.

In general, positive signs in terms of both office supply and office demand have been seen across the occupational market in Europe throughout the past 12 months. Recovery in both indicators has been at a gradual rather than a dramatic pace over the past few years, as occupiers and landlords displayed a still cautious stance, and this attitude continued through 2007.

UPS AND DOWNS

The chart to the right, “Supply and Take-Up,” shows how supply and take-up has developed over recent years. The European office market has enjoyed a modest pick-up in rental growth, as su