Office Completions In Key Markets Improve Moving Into 2014
Aggregate office completions across EMEA are expected to rise by around 30% by the end of the year from the cyclical low recorded in 2012 (London, Amsterdam, Frankfurt, Moscow, Warsaw and Paris driving growth)
Aggregate office completions have markedly improved in 2013 with pipeline growth strong for the year ahead, according to the latest research from CBRE, the global real estate advisor.
Aggregate office completions across EMEA* are expected to rise by around 30% by the end of the year from the cyclical low recorded in 2012, largely driven by increased office construction in key markets, namely London, Warsaw, Moscow and Paris. This is due in part to some major new schemes coming to the market, which were started in 2010-11, when the economic outlook appeared to be improving.
Looking ahead, the aggregate EMEA completion level is due to rise by a further 17% in 2014. A key driver of this will be London’s office completion rate, which is expected to increase by 68% to the end of 2014, reaching the highest level recorded since 2003 at 624,000 sq m.
Similarly, Amsterdam’s office development pipeline rate will increase 57% to 55,000 sq m by the end of 2014, Frankfurt by 52% to 314,000 sq m and Moscow 51% to an impressive 1,300,000 sq m in total. Completion levels in Paris and Warsaw for 2014 are forecast to remain close to the current high levels they are recording. Although much of this new office space is pre-let, there are some major speculative schemes which will improve occupier choice in the prime segment.
Outside of these core markets completion levels across most European markets have broadly remained below trend throughout the economic downturn, with completed space being heavily driven by pre-let activity.
Mark Caskey, Head of Global Corporate Services, CBRE, said:
“It is encouraging to see that the aggregate level of office completion, across EMEA, is up for 2013 with a healthy construction pipeline for the year ahead. However, occupiers with larger strategic requirements are likely to retain a pre-let strategy in the longer term to satisfy financing requirements and the search for available space.
“Looking at London recent upbeat economic data, including improved GDP and employment figures, should further boost corporate confidence. Although the 68% increase in office completions across the capital in 2014 will add some much needed high quality space to the market, with occupier demand picking up sharply in recent quarters a high proportion of this space is already committed. Therefore, competition for prime office space is expected to prevail.”