We continue to see positive momentum in both leasing and investment at the prime end of the market. Rental growth was positive for ten consecutive quarters across office, high street and logistics sectors at the ‘All Europe’ level. Yields have now edged inwards for all three sectors for the third quarter in a row.
Office
Prime rental growth in the office sector remained positive at 1.1% over the quarter, in line with the Q1 reading. Annual growth was 4.2%. Over 90% of markets have reported either stable or positive growth on a quarterly and annual basis, with the strongest growth over the quarter in France, Germany and Southern Europe. Prime yields moved in a further 4bps to 5.4%, with inwards movements in most markets or regions.
Retail
The high street continued to blossom. Prime high street rents grew 1.2% over the quarter pushing annual growth 4.4%. A quarter of markets posted growth over the quarter with the strongest growth in Central and Eastern Europe, Southern Europe and the Nordics. Prime yields edged in 3bps to 4.80%, with the biggest movement in Southern Europe. Close to 80% of markets reported stable yields in Q2.
Logistics
Prime rental growth accelerated in the logistics sector to 1.3% over the quarter – the strongest of all sectors. Rents were up 3.7% year-on-year. French and Benelux markets posted the strongest growth over the quarter. Over 70% of markets were stable, highlighting growth is focused on select locations. Prime yields moved in 2bps to 5.23%, with over 80% of markets reporting stable yields.
