Market Trends of Europe Flexible Office Industry
This section covers the major market trends shaping the Europe Flexible Office Market according to our research experts:
Western Europe Leading the Market
With the rise in self-employment after the global financial crisis, cities such as London, Amsterdam, Dublin, Berlin, and Copenhagen have been the crucibles of the European flexible space boom.
They are not merely the cities where the market has grown the most rapidly, but they have also seen the greatest number of new providers and models. The value of office real estate investments in European cities was highest in the German cities incuding Berlin, Hamburg, Munich, and Frankfurt as of the second quarter of 2021. These four cities attracted a total investment value of about EUR 7.6 billion (USD 8.14 Billion).
The office property sector is one of Europe's biggest markets, Central Paris attracted EUR 4.3 billion (USD 4.61 Billion) in the second quarter of 2021. Central London was the third-ranking city and the only other that attracted investments of over EUR 1 billion (EUR 1.07 Billion). The other European cities had office real estate investments valued below EUR 1 billion (USD 1.07 Billion).
As of the first half of 2021, the West end area of London had the highest prime headline rents at EUR 125.5 (USD 134.56) per square meter per month. This was roughly EUR 50 (USD 53.61) per square meter more than Paris and London (City), which had the second- and third-highest rents, respectively, displayed.
Substantial Drop in Leasing Activity in Europe
The coronavirus (COVID-19) pandemic significantly reduced leasing activity in the European office market in 2020 and 2021. Although take-up in both years fell short of the five-year norm, there was a noticeable increase in the second half of 2021. The take-up of 4.31 million square meters in the first half of 2022 indicates that the European office market is on the fast track to recovery. Some of the busiest office real estate investment markets in Europe continue to be found in the big four German cities of Berlin, Hamburg, Munich, and Frankfurt, as well as Paris and London.
The annual rental prices per square meter of prime office spaces varied greatly across different European cities as of the second quarter of 2021. Office properties generally fulfill a number of criteria in order to be considered "prime properties".
These criteria range from good location (in the major commercial centers) to public transport accessibility and energy efficiency of the premises. It can be seen that the most expensive prime office spaces were rented out in London, the United Kingdom, according to figures from 2021.
The rental cost of prime office properties in London reached a value of EUR 1,405 (USD 1,505) per square meter per year. Paris and Stockholm completed the top three with rental rates of EUR 930 (USD 996) and EUR 700 (USD 750.35), respectively.
