Economic Context
Moody's slightly lowered its outlook for Luxembourg this quarter, with GDP growth now forecast at 1.7% in 2026, still ahead of the euro zone. Inflation is the main concern: HICP inflation jumped to 5.2% in September, well above the ECB's 2% target. The ECB raised its rates for a second time, and Luxembourg's 10-year government bond yield reached its highest level since 2010. Against this backdrop, occupiers and investors remain selective, and activity depends on a small number of large transactions.
Occupier Market
Office take-up reached ~62,000 sq m in Q3 2026 across 36 transactions, more than double the volume of a year earlier. Two deals drove the result. EY leased ~30,000 sq m in Crystal Park in Cloche d'Or, the building PwC will vacate in 2027, in the largest letting since 2022. In Capellen, NSPA took up ~12,000 sq m in its two new office buildings. The rest of the market stayed small-scale, with 21 of the 36 deals below 500 sq m. After nine months, take-up stands at ~131,300 sq m, in line with 2025, but from the lowest deal count since at least 2021. Prime rents rose in three districts. Lettings in The Henri lifted the CBD prime rent to €55/sq m/month, and Station and Cloche d'Or also moved up.
Investment Market
Office investment reached €275 million in Q3 2026 across five transactions, against €30 million a year earlier. One deal accounts for more than half of the volume: Sogécap sold Crystal Park in Cloche d'Or for ~€160 million, shortly after EY signed for the whole building. In the CBD, Churchill 5 went to a foreign private investor for €42 million and Rue de Plaetis 5 sold for ~€35 million. After nine months, volume stands at ~€339 million, above the full-year 2025 total and the highest nine-month figure since 2022. Large lot sizes are back, but the market still relies on a few deals. Prime yields moved out by 10 bps to 5.00% in the CBD and by 10 bps to 4.70% for long-term prime.
