Offices

January 2025 Forecast

Slow recovery in leasing to continue

Supported by an increase in office-using employment and higher and more stable office attendance rates, we expect a further year of modest recovery in leasing levels. We anticipate that leasing levels will rise by 5–10% through 2025, edging closer towards historic averages.

Mid-year review

• Office-using employment continued to grow across the main European markets during H1 and is expected to grow by just under 1% in 2025. Although below the long-term average (1.7%), this growth will be positive for demand.
• Average office attendance rates are stable, but more occupiers are experiencing overcrowding on peak days.
• Demand softened slightly in the first half of 2025, down 2.5% compared with H1 2024.
• We now expect a 5% increase in leasing this year, based on slower economic growth expectations and softer take-up data for the first half of the year.

January 2025 Forecast

Supply set to tighten

We expect vacancy to move steadily lower through 2025. This is driven by higher leasing activity, a lack of recent development, and companies’ growing preference for high quality space – a segment of the market where vacancy is already far tighter. As overall availability levels move down more decisively through 2025, vacancy spreads between prime and poorer quality buildings will also widen further.

Mid-year review

• European office vacancy has not yet started to fall, rising 17bps to 8.67% during H1 as leasing activity fell back slightly.
• The CBD vacancy rate plateaued while vacancy in less central submarkets continued to trend up as the gulf between the two widened further. The vacancy rate now stands 5.1% higher outside CBDs (figure 7). Occupiers’ focus on CBDs, driven by their employees’ desire for the transport links and amenities often present in those areas, is a persistent theme in the market.
• We expect aggregate European vacancy to peak at 9% this year as completions continue to decline from the 2021 peak to less than 4.6m sq m for 2025, down from a post-pandemic (2020–2024) average of 5.2m sq m.

January 2025 Forecast

Prime rents to rise more slowly

While demand pressure is expected to grow slowly, the scarcity of good, well-located buildings should support some uplift in prime rents in most markets. The market shifts we anticipate are enough to generate overall nominal prime rental growth across Europe of 2.5–3% in 2025. Most major office markets are expected to see a moderate rise in rents in 2025, generally of between 2–4%. For most of the larger cities, this represents a slower rate of growth than in 2024.

Mid-year review

• CBRE’s European prime office rent index grew 3.4% in H1, contributing to year-on-year growth of 7.2%
• Strong prime rental growth has already been seen this year in Amsterdam (17.6%), Frankfurt (8.2%), London West End (6.3%), and Paris (4.2%), among others (figure 8).
• We continue to expect the rate of prime rental growth to be lower than in 2024, but the rental growth already seen in H1, lower vacancy in CBDs, and more occupier interest in those central locations suggests some further rental growth to come this year.
• We forecast further rental growth in key cities with London – West End (12.5%), Rome (10.6%), and Frankfurt (8.2%) are expected to see especially strong rates of growth throughout the year as a whole.

Figure 7: CBD vacancy spread to rest of city (%)

Figure 8: Prime office rental growth 2024-25, selected markets (%)