Where to find 5000 sqm in europe 1

EMEA | OfficeAPRIL 2014

Large Office Space Where to find 5,000 sqm in Europe

As the economic climate improves, we expect a revival in demand by large occupiers across the region, starting in the second half of this yearThe increase in cost driven decisions in recent years, as well as new technologies in the workplace and changing workplace strategies, have transformed tenants’ office space requirements. With cost, location and corporate image being the three most important factors in building choice for the corporate occupiers, combined with the increasing need for flexible space and green credentials, suitable large office space can be hard to find and needs to be secured months before it is occupied.

802AMSTERDAM

BERLIN

BUCHAREST

BUDAPEST

DÜSSELDORF

FRANKFURT

GENEVA

HELSINKI

ISTANBUL

LISBON

LONDON

MAD

RID

MILAN

MOSCOW

MUNICH

PARIS

PRAGUE

SOFIA

STOCKHOLM

STUTTGART

VIENNAWARSAW

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ZURICH

Highlights• There are 802 immediately available large office premises in

the top 23 European markets. The availability of the space in particular cities varies significantly;

• The highest number of immediately available space is in Moscow, Paris, London, Amsterdam and Munich;

• The majority of large office units in each market are available outside the city core;

• Moscow, London, Paris, Istanbul and Warsaw enjoy high availability of new and under construction office space;

• Once the best option has been chosen, the occupiers need to anticipate from six to ten months for the relocation process.

2 Large Office Space | Colliers International

AVAILABLE OPTIONSBY LOCATION

AVAILABLE OPTIONSBY CONDITION OFTHE PREMISES

29%NEW

21%2014PIPELINE

50%PREVIOUSLYOCCUPIED

OTHERDISTRICTS

81%

19%CBD

So what options are available for companies looking for immediately available, large (5,000 sqm) office premises in Europe? We analysed 23 major European cities1 and found over 800 options for corporates wishing to occupy 5,000 sqm of good standard office space. This number includes a variety of premises in new, recently refurbished and good institutional grade, second-hand buildings, as well as properties planned to be delivered by the end of 2014.

While, logically, we can conclude that the greatest number of options are available in the largest markets such as: London, Paris, Munich and Moscow; the availability of such large units in particular markets and the types of properties available are a clear reflection of the local market dynamics.

Where is the new stock?As most of the Eastern European cities and Istanbul are seeing high development activity levels, the overall proportion of new, and soon to be delivered, space in these geographies (70%) is higher than in Western European markets (40%). However, looking at particular cities: Paris and London enjoy high availability of such space, in contrast to other Western European markets. After Moscow, these two cities have the highest number of large offices available in new and under construction properties in Europe.

In Southern Europe there are many options available in new buildings in Madrid (13) and Milan (11). The credit crunch and resultant drop in demand, left these markets with a large amount of new premises that have remained vacant for a number of years. High vacancy rates and low demand have resulted in a gradual decline of rents in both of these markets and a further downward adjustment can be expected, in particular, in non-core locations.

To CBD or not to CBD?In terms of location, less than 20% of the schemes are situated in a Central Business District, for both existing and those under construction. This is a common feature for all the markets. If we consider the Central London area as a CBD, these proportions change, with the share of centrally located units rising to 25%.

From all the markets analysed, the highest number of options for centrally located existing buildings are in: Moscow (18), Paris (15) and Madrid (13). Paris will see the highest number of CBD schemes delivered in 2014 (5).

Eastern Europe and TurkeyThe highest availability of large office premises in Europe is in Moscow (98) which, at the end of 2013, had more than 1.3 million sqm of vacant space. In contrast to other markets, the majority of the 5,000 sqm options in Moscow are available in new buildings. With another 29 buildings (with offices of this size available) to be delivered this year, occupiers appear to have a wide choice. The only other CEE city which offers more than 40 options is Warsaw.


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After Moscow and Warsaw, the highest number of available options in this part of Europe are in Istanbul (31), Prague (29) and Budapest (25). In CEE and Turkey, the share of the available stock which is either new or under construction is much higher than in Western European markets. As much as 44% of large premises are available in new buildings, while a further 27% is planned for delivery in 2014. This is a reflection of lower volumes of stock per capita compared with Western Europe, and the shift towards the provision of higher quality office premises which suit modern occupational needs. However, these large pipelines in Moscow, Istanbul, Warsaw and Prague; might lead to further increases in their respective vacancy rates and a weakening in rents in the year ahead.

Western EuropeParis, including La Défense office district, can offer 65 options to large tenants. Moreover, if we take into consideration Hauts-de-Seine, the second largest office market in the Île-de-France region, this number increases significantly to 156 options. The availability of new premises and those under construction is particularly high. This is broadly due to above average levels of new and refurbished office space being delivered in recent years which, due to a lower demand (in particular in 2013), has remained largely vacant. The whole Île-de-France region, which is the largest office market in Europe, offers almost 230 options.

Central London has as many as 60 options available, with the highest number of available premises in the City and West End submarkets. If we expand the analysed area to Greater London, the number of buildings with at least 5,000 sqm units available climbs to 72. In contrast to most Western European markets,

the number of new and under construction premises in London significantly surpasses the second-hand ones. The number of under construction properties (with 5,000 sqm space available) planned for delivery in 2014 is higher than in any other market. Despite funding still being an issue, it is more than clear that there is a boom in office development in London, with the highest number of speculative completions for over a decade to be delivered this year.

Both London and Paris are seeing a growing trend of second-hand properties being refurbished, resulting in the relatively low availability of used premises. The renovations in Paris have increased by one third in the last two years. With the increasing number of occupiers demanding high-quality and energy-efficient space, we can expect this trend to continue and expand to other European markets. Additionally, London is seeing increasing amounts of redundant office space undergo conversion to residential, which offers more favourable returns for investors and developers. Similar trends with conversions of obsolete office stock, into alternative-use buildings are taking place in Amsterdam, Frankfurt and Munich.

The metropolitan area of Amsterdam, also has an abundant supply of large office premises (60 options), as the city has seen below average take-up levels, in particular from larger corporate occupiers. Within the city there are 37 options available, while in Schiphol, one of the most popular office areas, only one such office is unoccupied, demonstrating the popularity of that location.


About Colliers InternationalColliers International is a global leader in commercial real estate services, with over 15,800 professionals operating out of more than 485 offices in 63 countries. A subsidiary of FirstService Corporation, Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world.

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Primary Authors:

Simon Ford Director | EMEA Corporate Solutions+44 20 7487 [email protected]

Zuzanna Baranowska EMEA Research Analyst +44 20 7487 [email protected]

Colliers International EMEA Headquarters50 George Street London W1U 7GA United Kingdom

TEL +44 20 7935 4499

This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2014. All rights reserved.

The main German markets of Munich, Berlin and Frankfurt have more than 40 buildings each with a minimum space of 5,000 sqm available. The common feature for these markets is a predominance of second-hand space, a clear reflection of lower development activity in recent years. A similar number of options (41) are available in Vienna, where, as much as 38% of the options are available in new and recently refurbished properties. Such high availability of new premises is a result of low demand for large units.

When can you move in? Once business approval has been confirmed, negotiations can take an average of two to four months, while fit out work takes, on average, four to six months. The local property law varies significantly across EMEA and this has a significant impact on how straight forward negotiations are. For example, the Dutch and German markets have highly prescriptive laws that mean leases are short and negotiations rarely take more than two months. That being said, it is necessary to emphasise that the time needed to conclude negotiations can vary significantly based on local legal factors, and more specifically on the flexibility and requirements of the landlord and tenant.

Negotiations: two-four months