Office rents in Europe 2023–2026

The tech sector has taken a notable step backwards across most European cities in recent months, with Finance and Legal becoming the most active sectors across Europe.

The impact of the COVID-19 pandemic on office markets is now waning, with many companies adopting a hybrid working model. Companies are re-thinking their strategies, in many cases reducing their office space requirements.

European office vacancy increased by 40 basis points to 7.6 percent during the fourth quarter of 2022, including Utrecht (+260 basis points to 7.6 percent), the Hague (+250 basis points to 5.7 percent), Dublin (+130 basis points to 13.3 percent) and Milan (+120 basis points to 13.1 percent). Only five markets saw a decrease in available supply during the last quarter of 2022.

Office completions are on the rise, totalling 1.7 million sq. m. in the fourth quarter of 2022 and 5.3 million sq. m. in the year as a whole, the highest annual volume since 2009. Paris (770,000 sq. m.), London (730,000 sq. m.), and Berlin (716,000 sq. m.) accounted for the lion’s share of office space being delivered in 2022. Development levels are expected to remain elevated compared to the 10-year average (4 million sq. m.), with over 6 million sq. m. expected to complete in 2023.

However, faced with ever rising construction and finance costs, many developers are likely to delay decisions to start new office schemes, especially speculative new-build construction. Refurbishments are likely to remain an important part of the market.

Prime office rents continue to outperform. The JLL European Office Rental Index has increased by 2.6 percent since the previous quarter, the highest quarterly rise since the second quarter of 2010. Annual office growth reached 7.2 percent in 2022, the strongest uplift since 2008. The considerable rental growth is a testament of resilience of best-in-class, amenity rich, well-located office space with strong sustainability performance.

Most European office markets continue to be positioned in the ‘growth quadrants’ of the Office Clock. Rental increases were witnessed in 10 of the 23 index markets, including Dusseldorf (+26.7 percent quarter-overquarter), Hamburg (+6.3 percent quarter-over-quarter), London (+4.0 percent quarter-over-quarter), Frankfurt (+3.4 percent quarter-overquarter), Milan (+2.2 percent quarter-over-quarter) and Paris (+2.2 percent quarter-over-quarter) among others. Dublin was the only market that recorded a drop (-3.0 percent quarter-over-quarter), while other European index markets saw no change.

European office vacancy 2022

+7.2%

7.6% European prime office rental growth year-over-year