Commercial property continues to be built across Europe, even though office vacancy rates are on the rise, according to a new study by Patrizia Immobilien AG.
Investors are continuing to look towards the commercial sector in Europe as it offers high yields and good returns. With rising demand, it is therefore not surprising that construction activity has boomed. This new report highlights that around 11 million sq m of new office space will be built on the continent by 2017, 900,000 sq m of which will just be in Warsaw, Poland, alone. This means that across the 27 markets analysed, commercial space will increase by 5.5 per cent in the next four years.
This is all occurring even though vacancy rates in offices have been on the rise. In the last five years, the average rate across the 27 markets was 3.6 per cent. Empty offices have been a particular problem in Budapest (21.4 per cent), Dublin (21.4 per cent) and Barcelona (15.4 per cent), and only Stockholm, Berlin, Munich, Hamburg and Frankfurt showed no signs of this vacancy rate rising across all markets.
Investor risk has been much more safe in London, Paris and Copenhagen; all of which are viewed as safe havens for investment, with vacancy rates of just between six and nine per cent.
Karin Siebels, Patrizia research, said: “It is important to know whether the vacancy rates are due to undesirable structural developments or rather the modest economy is responsible. In places where many no longer marketable spaces are lying vacant, which send the vacancy rate soaring, this often has little impact on prices for modern and well-equipped space. Core investors should concentrate on relatively low-risk markets such as London."