London, UK - London remains the most expensive European city in which to rent prime office, distribution and shopping centre space, according to Knight Frank’s Autumn 2009 European Market Indicators (EMI) bulletin, which covers 22 key European cities.
- Despite a substantial fall in its prime rent, the West End of London remains the most expensive location in Europe in which to rent office space
- Prime European office rents have fallen, on average, by approximately 12% in the last six months
- Following a period of sharp yield corrections, prime yields have hardened in London and are now stabilising in a number of other European cities
London’s prime office rents stand at EURO 795 per sq m pa (£65 per sq ft); prime distribution rents are EURO 153 per sq m pa (£12.50 per sq ft); while prime shopping centre rents are EURO 5,503 per sq m (£450 per sq ft Zone A).
In the six months since Knight Frank’s Spring 2009 EMI report, prime European office rents have fallen on average by nearly 12%, in Euro terms, while more marginal falls of around 8% and 6% have been recorded in the distribution and shopping centre sectors. Substantial falls in office rents have been seen in cities such as Madrid, London and Dublin, with occupier demand remaining subdued. However, there are signs that prime rents in Central London are now bottoming out, and it is anticipated that London office rents will begin to recover in 2010.
European investment market conditions have generally steadied during the last six months, though there are variations between cities. While prime office yields have shown outward movement in some markets, particularly in Eastern Europe, they appear to have now stabilised in key Western European cities such as Paris, Brussels and Madrid. In Central London, prime yields have hardened, and now stand at 5.50% in the West End, having reached 6.00% earlier this year. This reflects improved investor confidence and increased competition for prime assets in Europe’s major office centres.
Joe Simpson, head of international research at Knight Frank commented: “While the current economic situation continues to create challenging conditions for European occupier markets, there are clear signs that investment markets have begun to recover, with investor demand improving in core markets such as Central London and Paris CBD, and prime yields stabilising or even hardening in such locations.”
For further information, please contact:
Joe Simpson, head of international research, Knight Frank, +44(0)20 7861 1728
Naomi Curtis, commercial PR, Knight Frank, +44(0)20 7861 1744