Trend in Office Leasing in Europe: Companies Are Seeking Smaller Spaces but Are Willing to Pay Higher Rent for Them
Hybrid work arrangements and remote work are among the main reasons for the weaker performance of the office space market in Europe during the first half of this year. However, the declining volume of lease transactions is also influenced by tenants’ cautious approach due to economic uncertainty. Another factor is the shortage of larger, high-quality spaces available for rent, especially in attractive parts of European cities. While demand for prime office space is growing in Barcelona, Brussels, and Dublin, traditional markets in London, Paris, Milan, and Germany’s largest cities are seeing a double-digit year-over-year decline in leasing activity. According to the real estate consulting firm 108 REAL ESTATE, tenants’ needs are clearly changing—there is a prevailing interest in smaller, higher-quality spaces in attractive locations, for which companies are willing to pay higher rents. The highest rents have risen by nearly 5% year-over-year.
