Office Market
At the start of the year, approximately 10 msm of space is under construction, the lowest level in five years and down approximately 30% from the recent peak. Although demand is forecast to recover, it remains below longer run averages and so will only provide mild downward pressure on vacancy and upward pressure on rental growth. The bifurcation in demand for high-quality buildings in high-quality locations will remain. Corporate occupiers are encouraged to undertake detailed analysis of local market conditions to fully understand sub-market variations in their preferred locations.
CORPORATE OFFICE OCCUPIERS ACROSS EUROPE REMAIN ACTIVE, WITH APPROXIMATELY 10.5 MSM OF SPACE LEASED IN 2025, JUST 3% BELOW THE 2024 TOTAL. Beneath this headline number, the demand for high- quality buildings continues. Leasing of grade A space increased 8% year-over-year (YOY), while activity in secondary space declined by 14% YOY. Consequently, grade A vacancy sits at a tight 3.5%. Importantly, in aggregate, companies are requiring more space, with net absorption continuing to track in positive territory. Key markets, including London, Dusseldorf, Barcelona and Milan, all recorded positive net absorption over the past year. Looking to the year ahead, tenant demand is expected to improve from current levels. Net absorption is forecast to increase to 2 msm in 2026. On the other side of the ledger, new supply pipelines are shrinking as the impacts of recent construction cost increases continue to be felt.
KEY HIGHLIGHTS
GDP GROWTH IS FORECAST TO SLOW IN 2026 as the impacts of diminished trade take effect in certain sectors.
FIGURE 2: EUROPEAN OFFICE NET ABSORPTION, NET NEW SUPPLY (MILLION SQUARE METRES) AND VACANCY RATE
REGIONAL OFFICE DEMAND TO IMPROVE IN 2026 to approximately 2 million sqm of net absorption.
NET ABSORPTION NET NEW SUPPLY VACANCY RATE (rhs)
4.5
10%
8%
3.5
6%
2.5
NEW SUPPLY HAS DECLINED BY 30% FROM RECENT PEAKS, which is expected to start placing downward pressure on vacancy.
4%
1.5
2%
0.5
PROCAPITAL - BELUX
2015 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21
‘22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 2029
Source: Cushman & Wakefield
6
7
Cushman & Wakefield
EMEA Office Fit Out Cost Guide 2026
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