According to Savills latest research, take up in the European office market in H1 2022 reached 4.3m sq m, 11% above the five year H1 average.
Professional and business services remained the most active sector, with a 21% share of total take up, in line with H1 2021. This was closely followed by technology, information and communication (20%) and banking, insurance and finance (20%), both of which recorded a 6% increase year-on-year. Advanced manufacturing, pharma and industry has seen a drop in its share of take up from 13% to 6%, bringing it back to levels recorded in 2020 after seeing a noticeable jump in 2021.
When looking at the supply/demand ratio, most European office markets, led by France and Germany, remain undersupplied, with vacancy rates between 2% and 5% for Paris-CBD, Berlin, Cologne, Hamburg, Brussels, Munich and Stockholm.
Matthew Fitzgerald, Director, EMEA Cross Border Tenant Advisory at Savills, says: “Given economic headwinds, one could easily paint a negative picture for European office take up moving forward. However, there is still strong demand for high quality space in good locations that match with company culture and corporate sustainability targets.”
In Poland, the first half of 2022 saw record demand in Warsaw for office space leasing a total of over 479,400 sq m, which is 94% better y-o-y and only 26% worse than for the whole of last year.
Marcin Sabowicz, Associate Director, Worldwide Occupier Services Tenant Representation at Savills Poland, says: ”We observe that companies still want to attract their employees with new office space adjusted to their needs. The highest demand is in Warsaw’s CBD and City Center as vicinity to metro station is the most important factor in choosing office space for many tenants. In the face of the growing supply gap, we forecast an increase in rents caused by the reduced availability of space with a significant increase in the construction and management costs of the facilities, which indicates a shift towards the landlord’s market.”
Despite the volume of European real estate investment declining in the second quarter of 2022, offices traded for €43bn during H1 2022, in line with the five year H1 average, according to Savills. The asset class continues to take the largest share of total investment, recording 31% in 2022 so far.
Georgia Ferris, European Research Analyst at Savills, comments: “The number of European office transactions slowed in July, to the lowest month seen in recent years according to RCA data. This is perhaps underpinned by investors being more selective and putting a focus on the quality of product, with a premium placed on prime grade A offices.”