You are here : HOME > NEWS > Faster than expected recovery?

Faster than expected recovery for EMEA office markets ?

Damian Harrington, Head of  EMEA Research at Colliers International
Damian Harrington, Head of EMEA Research at Colliers International

During an online event held recently by Colliers International, Damian Harrington, Head of EMEA Research, made an upbeat forecast, believing that EMEA office markets will stage a swifter and stronger recovery from the Covid-19 pandemic crisis than expected: “The market will come back, possibly quicker than expected, in the second half of 2021. Even though vacancy is going to increase, it is going to be primarily from the release of less attractive space, while the demand and the availability of core space is going to get tighter, creating higher prime rents, long-term.

Harrington went on to say that the recovery of the EMEA office market was linked to the wider context of the economic recovery path of countries across the region. Although office take-up had declined in the first three quarters of 2020 as a result of decisions being put on hold the market is still not looking as bad as during the Global Financial Crisis (GFC) of 2007-09.

Net absorption and take up may continue to drop to the end of this year and into 2021, but I still don’t think we’ll quite hit GFC levels. Even when we do get the bottom, I think the rebound is going to be a lot sharper because unemployment rates are not as high as they were during GFC. Furloughing (a UK government scheme to avoid job losses, with other schemes operating in other countries – ed.) and government stimulus are sustaining employment levels, which supports a quicker rebound when markets do return. Post-GFC, it took about five years from the trough before labour markets got back to parity. This key factor looks very different this time around”.

Harrington pointed out that prime headline office rents had remained largely unchanged across EMEA, although greater incentives were being offered, particularly in more densely occupied markets. Although office vacancy levels had started to trend upwards, the EMEA average was only up to 6.5 per cent, over 200 basis points below the cyclical (14 year) average.

There is however, a slight caveat: “The impact on European business sentiment and the outlook for GDP is waning in light of the second wave of Covid-19, so the challenge of mitigating this pandemic until vaccines are available can feel enormous. Yet the market will recover. China is already moving through the recovery phase into consolidated growth, with GDP figures for Q3 2020 representing a 4.9% increase in economic output year on year. Most other Asia-Pacific countries are working through their second wave of Covid-19, with active cases diminishing, and their economies recovering”.
Tim Harrup
News in short
The office market is entering a new age | 22/1
Editpress building set for transformation in Luxembourg | 21/1
CASA distribution centre has a new owner | 20/1
Phicap in expansive mood following takeovers | 19/1
Patron Capital makes first Belgian acquisition | 18/1
Motel One set for Antwerp | 15/1
A third hybrid business centre for 'The Office' in Luxembourg city | 14/1
Savills buys North District landmark | 13/1
Logistics market benefits from crisis | 12/1
Foreign acquisitions continue despite Covid | 11/1