THE COMMERCIAL real estate market cycle has turned further in favour of the occupier across Europe, the Middle East and Africa (EMEA), but more occupiers are adapting a “wait and see” strategy, according to Jones Lang LaSalle’s latest office report.
The study shows that some markets in EMEA have shifted to the “rents falling” section of the clock – a position that indicates market conditions that favour occupiers. London’s City and West End markets, together with Brussels and Zurich, have shifted into this section. Prime rents in London’s West End, the most expensive in the report, fell 4.3 per cent in Q2, while London City rents fell a further 1.6 per cent after a drop of almost 4 per cent in Q1. Brussels has shown a decline of 3.4 per cent in rents.
Dublin is among a number of markets which are on the cusp of rental decline but the agency says that rates are not expected to decline significantly over the next year. Prime rents were stable in Q2 and will remain at this level in the short term, notes the report.
Take-up in Dublin in Q2 increased significantly – up 45 per cent in comparison to Q2 2007. Vacancy rates increased marginally by 10 basis points over Q2 to stand at 12 per cent.
“Although the balance has shifted in favour of occupiers for the first time in many years, other factors are helping to maintain some stability in the market, although we have seen a significant fall off in demand over the last quarter,” says Deirdre Costello of Jones Lang LaSalle in Dublin. “The economic situation and lack of availability of development funding has had the effect of slowing down some new office developments and requiring that they be planned more rigorously and phased into the market. This should slow down development activity and may prevent an oversupply of office accommodation.”
Tom Bayne-Jardine, MD of European Corporate Solutions at Jones Lang LaSalle, said: “Although Grade A space remains in short supply, vacancy rates across the region are up. At the same time the rate of rental growth has tailed off steadily across the region with rent reversals in some markets.”
