Growth in Rents and Yield Compression Signal Broad-Based Improvement in European Commercial Real Estate

• European commercial real estate values rose in 2025, driven by rental growth and yield compression across all sectors
• Prime office rents recorded the strongest rental growth, outperforming high-street retail
• Cushman & Wakefield’s DNA of Real Estate monitors prime rents and yields in 46 European cities

The latest DNA of Real Estate report from Cushman & Wakefield reveals that the European commercial real estate market recorded consistent growth throughout 2025. Prime rents increased and prime yields compressed across major sectors, reflecting both stronger occupier demand and renewed investor interest in high‑quality assets.

Nigel Almond, Senior Director, Global Property Research & Intelligence at Cushman & Wakefield, stated: "Strengthening occupier demand and renewed investor confidence are simultaneously driving rental growth and yield compression, with almost 80% of the office, prime high‑street retail and logistics markets we monitor in Europe posting value increases in 2025. This continues the positive momentum observed in the second half of 2024, with European office values now 10.9% above the trough recorded two years ago, followed closely by high‑street retail (+10.7%) and logistics (+9%).”

Offices

Continued demand for high‑quality, well‑located assets in central areas drove a 4.6% increase in European prime office rents in 2025, in line with the 4.9% rise recorded the previous year. More than 70% of the markets analyzed saw growth, with strong performances in the United Kingdom (+8.6%) and France (+8.2%), driven by Paris and Lyon. In southern Europe, Milan (+9.6%), Lisbon (+5.3%) and Barcelona (+5.0%) also posted solid results, as did Warsaw in Central and Eastern Europe, which grew 9.1%. In these markets, strong occupier demand combined with limited supply of high‑quality central space remains the key driver of rental increases.
Prime office yields compressed by 9 basis points over the last year, settling at 5.37%, with nearly half of all markets recording downward movement. Southern Europe, the Benelux, the UK and Central and Eastern Europe posted double‑digit compressions. Although still above post‑pandemic lows, the office sector recorded the largest cumulative compression: 16 basis points from the peak of 5.53%, marking six consecutive quarters of decline.

High‑Street Retail

Prime high‑street retail rents in Europe rose 4.4% in 2025, above the 3.6% recorded in the previous year. Nearly 60% of monitored markets saw increases, reflecting broader growth in this segment.
Strong demand, improved retailer sentiment and limited supply continue to support this upward trend. Several key shopping streets recorded double‑digit increases, including Calea Victoriei in Bucharest (+33%), New Bond Street in London (+14.6%), and Spuistraat (+17.6%) and Lijnbaan (+13.6%) in The Hague and Rotterdam.
Prime high‑street retail yields compressed by 11 basis points to 4.76%, the most significant downward movement across all sectors in 2025, and 15 basis points below the recent peak of 4.91% in Q1 2024. Over the same period, Southern Europe and Central and Eastern Europe saw the strongest compressions — 29 basis points to 3.81% and 20 basis points to 5.91%, respectively — while the UK and Ireland recorded a 17‑basis‑point compression to 4.83%.

Logistics

European logistics rents increased 3.6% in 2025, slightly above the 3.4% recorded the previous year. More than 70% of markets saw growth, reinforcing a broad‑based upward trend in the sector. Strong occupier demand, supply shortages and the introduction of new facilities with higher specifications remain the main drivers behind this performance. Brussels (+17.6%) and Paris (+12.0%) led the increases, followed by Lisbon (+8.7%) and the UK regional markets of Leeds (+10.5%) and Birmingham (+8.7%), which also posted very robust results.
Prime logistics yields compressed by 7 basis points, reaching 5.20%, now 13 basis points below the recent peak of 5.33% in Q2 2024. In 2025, the largest compressions occurred in southern Europe (-23 bps), the Nordic countries (-17 bps) and the Benelux (-13 bps). The Italian, Spanish and Portuguese markets (Milan, Rome, Barcelona, Madrid and Lisbon) recorded compressions between 20 and 25 basis points, while the Nordic markets of Copenhagen, Helsinki, Oslo and Stockholm posted declines between 10 and 30 basis points, reflecting a broad improvement in sentiment and growing investor confidence in the European logistics sector.

Paulo Sarmento, Managing Director of Cushman & Wakefield Portugal, added: "The 2025 data confirms that Portugal remains among the most resilient markets, keeping pace with the rest of Europe with increases in prime rents and yield compression across all three sectors. This highlights very strong demand for high‑quality, well‑located assets in a context of limited supply — a trend we believe will continue into 2026.”