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Prime Rental Growth Across Europe Accelerates As Demand For Best in Class Space Holds Firm

  • Positive rental growth across all asset classes in Q4 2022, on quarterly and annual basis  
  • Drive towards best-in-class space supports rental uplift  
  • Yield move out in most markets in Q4, notably office and logistics 
  • Rents only minimise yield impact as values fall over Q4 and the year as a whole 

London, 02 February 2023 Cushman & Wakefield’s latest DNA of Real Estate research report, which examines trends in prime rents and yields across Europe, highlights a divergence between occupational and investment markets in Q4 2022.  
At the prime end, occupational indicators remained resilient with the average growth rate for key office markets tracked across Europe accelerating 2.1% in Q4 2022. This compares with 1.7% in the previous quarter. Positive quarter-on-quarter growth was also evident for high street retail, with rents growing on average by 1.1% and 3.5% for logistics in Q4 2022 compared to Q3 2022. 

Nigel Almond, Head of Data Analytics at Cushman & Wakefield, said: “As markets fully reopen from the back of the global pandemic, we have continued to see strong demand for best-in-class Grade A office space across Europe. This is particularly true for offices which meet the latest environmental standards, are attractive to employees and create the right working environment to support a flexible working strategy, collaboration, and staff wellbeing. As a result, prime office rental growth at the European level rose 6.2% in Q4 2022 compared with Q4 2021, its strongest annualised reading since mid-2008, and well up on the 1.7% growth registered a year ago.”   

For core European office markets the strongest growth was mainly driven by Germany (8.7%), Benelux (7.3%) and semi-core markets (covering Ireland, Italy, Portugal and Spain) which grew 7%. This is also continued growth in some peripheral markets of Europe, which typically lag more established European markets, where growth rose 11.3%. 

In the logistics sector, continued demand for premises and rising construction costs have maintained the upward pressure on rents. Average growth across European markets was up 3.5% quarter-on-quarter. This pushed full year growth to 13.9%, breaking the record rise of 12% set last quarter. This was the highest growth rate since the data began in the early 1990s. France (12%), CEE (4.2%) and peripheral markets across Europe (5.4%) showed the strongest growth over the quarter. 

While headwinds helped to see most retail markets remain flat over the quarter, pockets of growth in peripheral markets of Europe (4.5%) helped push average growth across European markets to 1.1% quarter-on-quarter.  

Rate rises hit investment markets 

Rising interest rates, elevated levels of inflation and concerns over economic growth has impacted investor demand. Despite occupational markets remaining solid, especially towards the prime end, yields continued to edge out, with much of the movement evident in the fourth quarter. 

Logistics and offices witnessed the strongest outward movements during 2022. The average rise for prime logistics centres monitored across Europe was +68bps in 2022 (to 4.88%). Q4 saw a more noticeable 41bps shift, led by the UK (+81bps) Nordics (+51bps) and France and Germany both on +40bps.   

Office yields edged out +61bps over 2022, with half of this (+31bps) evident in Q4 2022. Again, the UK led the way with a +44bps outward movement in Q4, quarter-on-quarter. Retail, which was hit hard in the pandemic, saw more modest movements. Across the European markets monitored yields moved out by just +22bps over the year to 4.41%, with much of this (+17bps) evident in Q4 2022 alone.   

Almond added: “Strong rental growth in the office and logistics sectors has not been sufficient to offset the movement in yields, albeit helping to moderate the fall in values. Most markets and sectors have seen capital values fall during the fourth quarter and for 2022 as a whole. During Q4 2022 the logistics sector saw a marginally bigger quarter-on-quarter fall in values than offices, at -5.4% and -5.0% respectively. This compared with a more modest -2.8% fall for retail at the European level. These falls are the strongest quarterly drops since the tail of the financial crisis in 2009.  

“Further downward pressure can be expected in the near term. With the expectation of economic growth improving in the latter half of 2023 and inflation falling closer to target levels in 2024, we would expect a recovery in values in 2024.” 

About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In 2022, the firm reported revenue of $10.1 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit


Richard Coleman, Head of Communications EMEA
Richard Coleman

Head of EMEA Communications • London

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