Solid Q4 demand confirms the trend of a ‘stable but strong’ European office market
Strong occupier demand continued across most of Europe in Q4, with take-up reaching 3.3 million sq m. While down 11% on a record Q4 2015, quarterly leasing activity was up 4% on the 10-year average. Looking ahead, it will be the supply response rather than a slowdown in overall demand that is likely to define the next stage in the cycle. However, the more pronounced supply responses are so far limited to the very tightest office markets across Europe.
Prime Rent represents the top open-market rent that could be expected for a notional unit of the highest quality and specification in the best location in a market, as at the survey date.
The Prime Rent reflects an occupational lease that is standard for the local market. It is a face rent that does not reflect the financial impact of tenant incentives, and excludes service charges and local taxes. Stockholm is the only city where it is market practice to quote the rent as Prime Effective Rent, therefore the rent is including incentives (i.e. rent free periods as well as relocation costs, tenant fittings, etc.). The Prime Rent represents Jones Lang LaSalle’s market view and is based on an analysis/review of actual transactions for prime office space, excluding any unrepresentative deals. Where an insufficient number of deals have been made for prime office space, an assessment of rental value is provided by reference to transactions generally in that market adjusted accordingly to equate to prime.
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