European real estate assets experienced prime rental growth in the third quarter across the key sectors of high streets, offices, and logistics. This was the seventh consecutive quarter of rental growth.
Office
Offices rents were up in over three quarter of markets over the year, although just one third reported growth over the third quarter. With occupiers focused on best in class, centrally located offices rich in amenity and meeting the latest ESG credentials we continue to see robust levels of growth. Only three markets across all sectors reported negative rental growth (quarter-on-quarter) in the third quarter. Office yields were flat in 38 markets up from 25 last quarter. Overall the European average yield edged in 3bps to 5.5%.
Retail
High street rents are accelerating on a quarterly and annual basis. On an annual basis, half of the 40 markets tracked showed growth with none seeing a decrease. There was very strong year-on-year growth in select locations such as Budapest, Warsaw, London, Milan and Paris. Low vacancy rates and improved occupier demand is supporting stronger growth in select markets. The European average yield remained at 4.88%.
Logistics
Logistics rents grew by 0.4% over the quarter, down from 0.8% last quarter. Annual growth slowed to 4.2%. Nine markets reported growth over the quarter down from fourteen in Q2. The strongest growth was seen in Helsinki, Marseille and Newcastle. Prime yields edged in 1bp to 5.31%, with four markets reporting an inward shift – Sofia, Helsinki, The Hague and Newcastle.
