CBRE: Western European Office Market Takes-Off With Highest Demand Since Financial Crisis

•  London recorder highest demand increase: 29%
•  Paris was the city with the highest volume of rented office spaces in the past two years
•   In Milan the volume of rented spaces doubled

The demand for office space across Western Europe has hit its highest level since the financial crisis, according to the latest research from CBRE, the global real estate advisor.

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Corporate real estate occupiers are returning to the market with new office space requirements as demand in the second quarter (Q2) of 2014 rallied by 21% on the first quarter, marking the highest Q2 office take-up in Western Europe since the economic downturn. Central to this was strong activity in Milan and Lisbon, while London retained its dominant position as a popular destination for corporate occupiers with a 29% quarterly take-up increase. Milan’s take-up more than doubled in Q2 to 94,000 sq m while Lisbon recorded one of its strongest quarters in recent years. In addition, the Paris office market which had been subdued during the downturn with occupiers lacking the confidence to relocate, posted its highest office take-up level for two years in Q2, representing a 28% uplift from Q1. Across Europe as a whole, aggregate take-up rose by a healthy 12.2% compared to the first quarter of the year.

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As a result of this increased demand, the aggregate office vacancy rate in Western Europe fell in Q2. Central London saw a third consecutive quarterly decline in vacancy rates with prime space now in very short supply. Likewise, increased demand for office space in Brussels, Paris and Amsterdam also contributed to vacancy declines. Frankfurt saw the most noticeable drop, where vacancy fell sharply for the second consecutive quarter due to the removal of obsolete stock and the conversion of older commercial buildings into residential units. Despite this, the overall vacancy rate remained flat across Europe for Q2 skewed by a large volume of new office completions in core Central and Eastern European (CEE) markets which are yet to be occupied. For example, office stock is forecast to grow by at least 10% in Prague, Warsaw, Moscow and St Petersburg over the next 18 months, a large percentage of which is being built on a speculative basis.

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The knock-on-effect of office vacancy declines, particularly in Western Europe, is likely to put upward pressure on prime rents in the longer term. Madrid, for example, has seen its prime rent increase from €24.50/sq m per month to €24.75/sq m per month in Q2, its first rental growth since the recession, symbolic of improved economic stability. The strongest performing office markets continue to see the steepest rises in prime rents, Dublin saw rents rise by a huge 14.2% in Q2 to €430.50/sq m per annum driven, in part, by strong demand from Technology, Media and Telecoms occupiers. London’s West End market recorded a 2.4% increase in rental growth across the same period.

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Tim Hamilton, Senior Director, EMEA Global Corporate Services, at CBRE explains: “We are seeing greater corporate appetite to lease or acquire space, particularly across Western Europe, which is encouraging. It signifies that corporate occupiers who have been hamstrung in recent years by tightening budgets and stringent cost management strategies resulting in a contraction of take-up levels, are now in a position to flex their muscles and take new space. As the markets become more buoyant, the growth in prime office rents is likely to become more widespread over the next 12 months particularly given the short supply and a relatively thin office development pipeline. Having spent a number of years taking advantage of falling rents, occupiers will need to start factoring in potential future rental increases into their strategic decision making.”

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Top 10 innovative constructions

Daily “The Telegraph” compiled a top of the most innovative buildings in the world, selected upon architecture and materials used for construction. 

#10-Ripleys Believe it or Not Museum (Ontario, Canada)

The Believe it or Not franchise showcases curiosities in a number of locations, however, the design of the museum at Niagara Falls Ontario deserves to make the exhibition itself. The building represents an upended skyscraper on its side that has taken some of the road with it, as a taxi floats inexplicably and pedestrians and construction workers cling on.

#9-Piano House (Huainan, China)

 Music-lovers of Huainan, China, can revel in this building, designed by architecture students from the Hefei University of Technology. The focal transparent violin contains the escalators and the staircase for the main piano-shaped building which is currently used to by city planners to display plans and proposed developments.                           

#8-CyberTecture Egg Building (Mumbai, India)

 Designed by James Law, Cybertecture International and engineer Ove Arup, the “egg” houses 33,000 sqm of office space in 13 storeys, achieving this using around 15 percent less area than a conventional building of this size. The structure supports floor plates without the need for obstructive columns.

The building achieves sustainability and energy efficiency through its passive solar design, the inclusion of an elevated garden which aids in cooling the interior through thermolysis, use of photovoltaic panels and wind turbines on the roof, and the facility to recycle sullage.

#7-The Basket Building (Ohio, United States)

The headquarters of the Longaberger Basket Company serve as a striking advertisement for its wares, albeit 160 times larger at 192 feet long by 126 feet wide. Completed in 1997, the seven-storey ‘basket’ features handles that can be heated during cold weather to avoid ice damage.

#6-Kansas City Public Library (Missouri, United States)

The ‘Community Bookshelf’ of Kansas Library’s Central Parking garage features 22 popular and varied titles reaching a height of some 26 feet, which were chosen by literature fans of the city. They serve both as a reminder of the public’s favourite books and an attractive disguise for the car park behind that was built to satisfy demand in 2006.                

#5-The Shard (London, England)

Modelled on a shard of glass, Europe’s current tallest building at 306 metres was constructed in three years. It consists of 72 floors, the uppermost of which houses an open-air observation deck. It dominates the London skyline and is a popular tourist attraction.           

#4-HARPA Concert Hall and Conference Center (Reykjavik, Iceland)

The award-winning design by artist Olafur Eliasson with Henning Larsen architects was influenced by Iceland’s renowned natural scenery and the Northern Lights, and in its waterfront location, dramatically reflects both the sky and harbour in its glass façade. LED’s illuminate at night to produce a truly stunning landmark.

#3-Linked Hybrid (Beijing, China)

Constructed by Steven Holl Architects between 2003 and 2009, the 220,000 sqm mixed-use complex consists of eight connected towers. The architect says the design was intended “to counter the current privatised urban developments in China by creating a new twenty-first century porous urban space, inviting and open to the public from every side.”

#2-Shenzhen Baoan International Airport - Terminal 3 (Huangtian, China)

The recently completed 1.5km, 500,000 sqm terminal is a striking visual from above and was designed by architects Massimiliano and Doriana Fuksas to resemble a manta ray. Honeycomb shaped panels punctuate the roof, allowing natural light to filter through.

The distinctive white conical columns rise to touch the roof at heights of up to 80 metres. Air conditioning vents are enclosed within stylised ‘white trees’. Shenzhen Airport Group was so pleased with the design that it is attempting to copyright it.

#1-Metropol Parasol (Seville, Spain)

Designed by the German architect Jürgen Mayer-Hermann, who won a competition for ideas to redevelop the site, the Parasol overcame construction difficulties that saw it more than double in cost to €100m after six years of work and a redesign.

The Metropol Parasol has revitalised the Plaza de la Encarnación, which was for years reduced to being used as a parking lot and gained a reputation as a dead zone between the city’s popular tourist attractions.

The structure consists of six large mushroom-shaped parasols which provide shade from the city’s often hot climate and stands some 90 feet high and nearly 500 feet long. To avoid disturbing the Roman Ruins in the area, supporting columns could only be placed in certain locations, requiring an unusual design.

Read also: Top seven tallest buildings in the world

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OCTAGON CONTRACTING & ENGINEERING

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