Europe Office Real Estate Market Size
| Study Period | 2020 - 2029 |
| Base Year For Estimation | 2023 |
| Forecast Data Period | 2024 - 2029 |
| Historical Data Period | 2020 - 2022 |
| CAGR | > 4.00 % |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Europe Office Real Estate Market Analysis
The Europe office real estate market is poised to register a CAGR of more than 4% during the forecast period.
- The performance of the European office real estate market is strongly connected to the growth of the region's economy. Though the European economy is recovering from the consequences of the COVID-19 pandemic, the office real estate industry may take some time to reach normalcy.
- European office take-up fell 14% below the five-year Q1 average during Q1 2023. The markets reporting the largest increase in take-up in Q1 against the five-year average were Oslo (+50%), Prague (+19%) and Madrid (+5%). At the other end, Dublin (-62%), Bucharest (-57%) and Lisbon (-55%) reported the largest decreases. In Lisbon, the drop in take-up is largely due to the lack of stock available. 2022 was a record year for take-up in Lisbon with the highest 272,000 sq m recorded, but it now faces the challenge, much like other markets, of not having enough quality stock for occupiers where there is pressure to let Grade A space.
Europe Office Real Estate Market Trends
Offices Remain a Core Sector
Although the COVID-19 pandemic has changed the way people work, there is still a high demand for office space. According to INREV, a European organization that shares knowledge of the non-listed real estate business, offices are still a favored asset category for European investors, particularly those headquartered in France and Germany.
Prime office yields increased by an average of 19 bps during Q1 2023, led by Amsterdam (+40 bps), Frankfurt (+40 bps), and Berlin (+30 bps). On an annualized basis, yields have moved out by +90 bps, reflecting an average of -22% capital value fall since the peak in Q1 2022.
In percentage terms, the core markets of Amsterdam (-33%), Berlin (-33%), Cologne (-32%) and Paris (-31%) have observed the most significant capital value adjustments-clearly, the previously lowest-yielding markets have been most impacted by the rising debt costs. Previously higher-yielding markets, including Lisbon (-11%), Dubai (-10%), and Stockholm (-9%), have observed a smaller correction so far. Pricing currently remains resilient in Stockholm, given the CPI-linked rental agreements.
Rise in Rental Prices of Office Properties in European Cities
The office market has historically been the most popular asset type among real estate investors, accounting for 40-50% of the total investment volume. The major share of European investment activity is concentrated in Paris and London, as well as Germany's big four (Berlin, Frankfurt, Munich, and Hamburg).
The rental prices of prime office spaces per square meter varied greatly across different European cities in 2022, ranging from over 1,700 euros in London to less than 200 euros in Riga. Prime office properties typically meet specific criteria, including a good location in major commercial centers, public transport accessibility, and energy efficiency. London, England, had the most expensive prime office spaces with the West End, Marylebone, and Knightsbridge/Chelsea submarkets commanding the highest prices. Other European cities with high-end office rents included Paris, Milan, and Dublin.
Frankfurt and Munich were the German cities where rental costs for prime office real estate were the highest in the first quarter of 2023. In the capital city, Berlin, the square meter rent was 43 euros - just two euros below the rental rate in Frankfurt and Munich.
Europe Office Real Estate Industry Overview
The office real estate market in Europe is relatively fragmented. The market is anticipated to regain normalcy by the end of 2023. Companies are gearing up to meet future needs, and many companies are entering the market for further opportunities. Hochtief Aktiengesellschaft, AF Group ASA, JLL, Cushman & Wakefield, Engel & Völkers Germany, etc., are major market participants in the Europe Office Real Estate Market.
Europe Office Real Estate Market Leaders
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Hochtief
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Aroundtown SA
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Gecina
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Engel & Völkers Germany
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Savills
*Disclaimer: Major Players sorted in no particular order
Europe Office Real Estate Market News
- May 2023: CBRE Group, Inc. announced that its property management group has formed a global strategic partnership with Deepki that will bring Deepki Ready, one of the world's most extensive landlord-focused real estate sustainability data intelligence platforms to the commercial properties CBRE manages for investors around the world. CBRE has been using Deepki for properties it manages in the United Kingdom for more than two years; Deepki is now being deployed across CBRE-managed properties throughout Continental Europe, with plans to begin using Deepki in the Americas and the Pacific region as the next step in a global rollout.
- April 2023: Global real estate professional services firm JLL and iO Partners announce that JLL will transfer its existing Leasing, Capital Markets, Valuation Advisory, Consulting, and Project Management delivery businesses to iO Partners in the Czech Republic, Hungary, Romania, and Slovakia. The two companies have formed a preferred partnership enabling them to service clients in the Czech Republic, Hungary, Romania and Slovakia. The agreement will give iO Partners a strong presence in these four countries with experienced employees, efficient systems and processes, and a strong ongoing partnership with JLL.
Europe Office Real Estate Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Economic Growth
4.2.2 Urbanization and Urban Renewal
4.2.3 Foreign Investments in the Sector
4.3 Market Restraints
4.3.1 The Uncertainty Surrounding Brexit
4.4 Market Opportunities
4.4.1 Technology and Innovations in the Sector
4.4.2 Co-working and Flexible Office Spaces
4.5 Value Chain / Supply Chain Analysis
4.6 Industry Attractiveness - Porter's Five Forces Analysis
4.6.1 Threat of New Entrants
4.6.2 Bargaining Power of Buyers/Consumers
4.6.3 Bargaining Power of Suppliers
4.6.4 Threat of Substitute Products
4.6.5 Intensity of Competitive Rivalry
4.7 Government Regulations and Initiatives
4.8 Technological Trends
4.9 Insights into Rental Yields in the Office Real Estate Segment
4.10 Insights into the Key Office Real Estate Industry Metrics (Supply, Rentals, Prices, Occupancy (%)/Vacancy (%))
4.11 Insights into Office Real Estate Construction Costs
4.12 Insights into Office Real Estate Investment in Europe (in Major Cities)
4.13 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Geography
5.1.1 Germany
5.1.2 United Kingdom
5.1.3 France
5.1.4 Italy
5.1.5 Spain
5.1.6 Russian Federation
5.1.7 Rest of Europe
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration Overview
6.2 Company profiles - Real Estate Players
6.2.1 JLL
6.2.2 Cushman & Wakefield
6.2.3 CBRE
6.2.4 Savills
6.2.5 Engel & Volkers Germany
6.3 Company Players - Developers
6.3.1 STRABAG International GmbH
6.3.2 Hochtief
6.3.3 AF Group ASA
6.3.4 Aroundtown SA
6.3.5 Soares da Costa
6.3.6 Gecina*
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
8. APPENDIX
Europe Office Real Estate Industry Segmentation
Office real estate is the construction of buildings for leasing and selling purposes to companies from different sectors. The Europe Office Real Estate Market is segmented by Geography (Germany, United Kingdom, France, Italy, Spain, Russian Federation, and the Rest of Europe). The report offers the market sizes and forecasts for the European office real estate market in value (USD) for all the above segments.
| By Geography | |
| Germany | |
| United Kingdom | |
| France | |
| Italy | |
| Spain | |
| Russian Federation | |
| Rest of Europe |
Europe Office Real Estate Market Research FAQs
What is the current Europe Office Real Estate Market size?
The Europe Office Real Estate Market is projected to register a CAGR of greater than 4% during the forecast period (2024-2029)
Who are the key players in Europe Office Real Estate Market?
Hochtief, Aroundtown SA, Gecina, Engel & Völkers Germany and Savills are the major companies operating in the Europe Office Real Estate Market.
What years does this Europe Office Real Estate Market cover?
The report covers the Europe Office Real Estate Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the Europe Office Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
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Europe Office Real Estate Market Report Snapshots
