Office

The office sector continued to lead the charge for rental growth, with the European average prime office rent up 0.7% quarter on quarter (q/q), maintaining annual growth at a robust 3.3%. 

Nigel Almond, Head of Data Analytics EMEA, says: “Although the number of markets reporting stable rents rose marginally in Q3, the outlook remains positive. Demand remains strong, albeit slowing off recent highs. Vacancy rates continue to fall with the European average at just over 6%, their lowest level since the early noughties. A shortage of Grade A space in many cities continues to drive rents higher for the best quality space, albeit the pace of growth is anticipated to slow into 2020 to around 2% per annum.”

Retail

The picture across European retail remains mixed. In the more mature markets of north western Europe retail remains under pressure, notably outside of prime, with very marginal rental growth. Changing consumer habits, including rising online sales and higher rental costs are impacting the profitability of stores in some locations. In some 80% of monitored markets, rents and yields were flat. 

Logistics

The logistics sector continues to benefit from strong occupational and investor demand. Prime rents grew a further 0.5% over the quarter to an annualised 2.8%. Logistics also registered the strongest yield compression for the 12th quarter in a row, with the average prime European yield 6bps lower at 5.59%.