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Records tumble in Luxembourg - CBRE



The Luxembiurg office of real estate broker CBRE has produced its analysis of the office market in the Grand Duchy during 2018.
It finds that office take-up in the fourth quarter totalled a very active 89,400 m, bringing the annual volume to 250,000 m. This is one of the best years on record and the 5th consecutive year of +200,000 m take-up. Overall, demand dynamics across the board are positive from healthy take-up and net absorption.

Service companies were the big movers in the final quarter. Deloitte (31,000 m) and Alter Domus (10,600 m) both moved into their new facilities in Cloche dOr, heightening the profile of this growing district. Additionally,
Grant Thornton let 5,915 m in Green Square. Also coming into the sector are flexible office providers. Welkin & Meraki let all 2,443 mof a building in the CBD, as the flexible office trend continues in Luxembourg, albeit at a slower pace this year. Overall, services dominated new leases in 2018, accounting for
35% of all activity.

Public entities closed more than 21,000 m of space in the final quarter for an expansive year. The CSSF continues to demand space beyond their three year old HQ, taking 5,400 m in the Moonlight building alongside the Ministry of Finance (4,200 m). The Chambre des Salaires acquired the entire building (4,340 m) at 2/4 Rue Pierre Hentges.

Vacancy


Approximately 162,000 m of office space is considered vacant out of a total stock of 4.22 million m. CBRE points out that this is less than a years worth of take-up, indicating a shortage of available space. Strong demand and limited new completions has led to a decrease in vacancy to just 3.8% at the end of the year. Major markets are under intense pressure. The CBD, Kirchberg, and Airport markets are recording availability of around 1%. Decentralised markets are absorbing some of this unmet demand. Lux-West has gone from 9.0% vacancy in 2017 to 5.3% today.
Esch-Belval is recording availability of 6.5%, but this is almost entirely concentrated in the Terre Rouges buildings. In Gasperich, around 7.7% of the stock is available. One-third of this (10,200 m) is to be found in Dyapason.

Taking into account the project pipeline through 2020, vacancy in these districts is expected to stay somewhat elevated. Other large vacancies include the newly completed Green Square (10,585 m) in Hamm, the Helios Buildings (7,600 m) in Gasperich, and H2O (7,300 m) in Howald.
Tim Harrup
08-02-2019


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