Real estate advisory firm Savills has revealed that the average rent in a European central business district (CBD) grew 2.5% in the first quarter of 2017, with non-CBD rents also rising by 3.5% due to a lack of high quality office space forcing tenants toward locations outside of city centres.
The report also reveals that rental growth has exceeded the five-year average in 12 of the 15 European markets analysed. Increasing demand and limited space has forced CBD rents up by 7.5%, with an accompanying 6% rise in non-CBD areas. Savills has also noted that as new supply becomes available, market growth is expected to slow across most locations.
Across Europe the overall office vacancy rate is 8%; with all but three markets – namely Berlin (2.5%), Stockholm (2.75%) and Paris CBD (3.43%) – experiencing the lowest vacancy rates. However, the report claims that a downturn in vacancies offers the prospect of development activity, particularly on the peripheries of the CBDs.
Director of Savills Worldwide Occupancy Services, Matthew Fitzgerald, said: "Fringe locations that can provide quality office space with good transport links are benefiting from the spillover out of the CBD."