Italy Office Real Estate Market Size (2024 - 2029)

The Italy Office Real Estate market is experiencing a notable evolution in its market size, driven by strong fundamentals and a robust pipeline of new projects, particularly in Milan and Rome. Despite the challenges posed by the COVID-19 pandemic, which led to a decline in non-residential investments and adjustments in sale prices and transaction volumes, the demand for high-quality office spaces has remained resilient. This demand is contributing to a widening rent gap between grade A and grade B buildings, as new developments that meet stringent ESG criteria are quickly occupied. The market's connection to credit quality has also shown stability, indicating a positive outlook for future growth.

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Market Size of Italy Office Real Estate Industry

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Italy Office Real Estate Market Summary
Study Period 2020 - 2029
Base Year For Estimation 2023
Forecast Data Period 2024 - 2029
Historical Data Period 2020 - 2022
CAGR 5.00 %
Market Concentration Medium

Major Players

Italy Office Real Estate Market Major Players

*Disclaimer: Major Players sorted in no particular order

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Italy Office Real Estate Market Analysis

The size of Italy Office Real Estate Market is USD 1.5 billion in the current year and is anticipated to register a CAGR of over 5% during the forecast period. The performance of the Italian office real estate market was greatly impacted by the COVID-19 pandemic. Particularly as a result of the crisis, non-residential investment significantly decreased, and sale prices, transaction volumes, and new finance activities have all been corrected. The number of new vehicles issued, the value of their stock prices, and the value of their real estate assets were all affected. This has also affected Spanish real estate investment trusts with a focus on this industry. In contrast, the commercial real estate market's connection to credit quality has not yet experienced a significant drop.

  • Strong fundamentals drove quarterly take-up of over 108,000 sqm in Milan (+26% on Q3 2021) and approximately 40,000 sqm in Rome, matching record-level YTD results in Milan with approximately 370,000 sqm.
  • The pipeline for new projects is very strong in the markets of Milan and Rome. About 117,000 square meters were expected to be completed in Rome by 2022, in line with the volumes seen in 2018 and 2019; in Milan, the pipeline is expected to provide a sizeable amount of square meters. The risk of a sharp increase in vacancies in Milan as a result of new products entering the market is still low.
  • Up until now, the demand for high-quality premises has caused newly built offices to be quickly occupied. The percentage of recently finished or still-being-built offices that were fully occupied in 2021 was 81%.
  • The majority of the pipeline, primarily in the sub-markets that accounted for 43% of 2021 take-up volumes, appeared to be well positioned. Additionally, 38% of the floor space scheduled for delivery in 2022 was already occupied.
  • The difference in rent between grade A and grade B buildings will widen as a result of the growing demand for new, high-quality products that adhere to stringent ESG criteria. Prime rents had already increased from pre-pandemic levels by the end of the year, reaching EUR 620/sq m/year (USD 659.95) in Milan and EUR 475/sq m/year (USD 505.61) in Rome.

Italy Office Real Estate Industry Segmentation

Office real estate is the construction of buildings for leasing and selling purposes to companies from different sectors. This report aims to provide a detailed analysis of the office real estate market. It focuses on the office real estate sector's market insights, dynamics, technological trends, and government initiatives. Italy's Office Real Estate Market is Segmented by Key Cities (Rome, Milan, Naples, Turin, and Other Cities). The report offers market size and forecasts for the Italy office real estate market in value (USD billion) for all the above segments.

By Key Cities
Rome
Milan
Naples
Turin
Other Cities
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Italy Office Real Estate Market Size Summary

The Italian office real estate market is experiencing a period of recovery and growth following the challenges posed by the COVID-19 pandemic. The market's size is significant, with a strong presence in major cities like Milan and Rome, where demand for high-quality office spaces remains robust. The pandemic has accelerated trends towards sustainability and flexibility in office design, with companies increasingly prioritizing employee wellness and environmental considerations. This shift has led to a heightened demand for grade A buildings that meet stringent ESG criteria, resulting in a widening rent gap between premium and standard office spaces. The market is characterized by a strong pipeline of new projects, particularly in Milan and Rome, which are expected to meet the ongoing demand for modern, sustainable office environments.

Despite the initial downturn in non-residential investments due to the pandemic, the Italian office real estate market is showing signs of resilience and growth. Milan continues to be a focal point for investment, contributing significantly to the country's office volume, with investor confidence bolstered by rising absorption rates and rental prices. The market is highly competitive, with both global and regional players actively participating. The trend towards hybrid work models and the increased importance of ESG factors are reshaping occupier expectations and influencing investment decisions. As the market moves towards normalcy, opportunities for further growth and investment are anticipated, particularly in prime locations like Milan, which remains a desirable gateway city in Europe.

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Italy Office Real Estate Market Size - Table of Contents

  1. 1. MARKET INSIGHTS & DYNAMICS

    1. 1.1 Market Overview

    2. 1.2 Market Dynamics

      1. 1.2.1 Market Drivers

      2. 1.2.2 Market Restraints

      3. 1.2.3 Opportunities

    3. 1.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 1.3.1 Threat of New Entrants

      2. 1.3.2 Bargaining Power of Buyers/Consumers

      3. 1.3.3 Bargaining Power of Suppliers

      4. 1.3.4 Threat of Substitute Products

      5. 1.3.5 Intensity of Competitive Rivalry

    4. 1.4 Industry Value Chain Analysis

    5. 1.5 Technological Innovations in the Office Real Estate Market

    6. 1.6 Government Regulations and Initiatives in the Industry

    7. 1.7 Insights into Rental Yields in the Office Real Estate Segment

    8. 1.8 Insights into the Key Office Real Estate Industry Metrics (Supply, Rentals, Prices, Occupancy/Vacancy (%))

    9. 1.9 Insights into Office Real Estate Construction Costs

    10. 1.10 Insights into Office Real Estate Investment

    11. 1.11 Impact of the COVID-19 on the Market

  2. 2. MARKET SEGMENTATION

    1. 2.1 By Key Cities

      1. 2.1.1 Rome

      2. 2.1.2 Milan

      3. 2.1.3 Naples

      4. 2.1.4 Turin

      5. 2.1.5 Other Cities

Italy Office Real Estate Market Size FAQs

The Italy Office Real Estate Market is projected to register a CAGR of greater than 5% during the forecast period (2024-2029)

Knight Frank, Savills plc, Engel & Volkers Commercial, CBRE Italy and JLL Italy are the major companies operating in the Italy Office Real Estate Market.

Italy Office Real Estate Report Snapshots

ITALY OFFICE REAL ESTATE Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)