Skip to content

Press release

28 OCT 2021

Increased demand for office space in Europe boosts hopes of a market upturn

RICS Commercial Property Monitor Q3 2021, Europe

  • Tenant demand edges up across the office sector for the first time since before the pandemic
  • Industrials, multifamily and data centres lead the way in terms of rental growth
  • Almost half of survey participants now feel the market is in the upturn stage of the property cycle

Almost half of respondents to the Q3 2021 RICS Commercial Property Monitor in Europe believe the market is in an upturn phase as tenant demand for offices increases for the first time since before the pandemic.

In Q3 2021, demand for commercial property across the office and industrial sector increased, on the main across Europe. The Commercial Property Sentiment Index* improved in nineteen of the twenty European nations covered by the monitor. Greece, the Netherlands, the Czech Republic, Austria, Portugal, Ireland and the UK are showing positive signs, but Cyprus slipped this quarter, with respondents pointing to the pandemic still hampering local economic growth.

The Occupier Sentiment Index** also improved to -3% (net balance) this quarter, up from -13% in Q2 and shows that demand for commercial property is starting to stabilise. 55% more respondents continue to report an increase in demand for industrial units, whilst demand for retail remains subdued (-26% net balance). Interestingly for the first time since prior to the pandemic, demand for office space improved with +5% of respondents reporting an increase.  

Following the trends in demand, rents for the coming three months remain mixed. Prime office rents are now expected to a see a modest rise in the year to come (1.4%) and rents remain firmly positive for prime industrial (+5%), data centres (+4%), multifamily residential (+3%), aged care facilities (+3%) and student housing (+2%). Rents are still expected to fall for hotels, prime and secondary retail and secondary offices over the next year.

Looking at investment in the European market, there are signs of stabilising, as the Investment Sentiment Index*** has also turned positive (+5%) for the first time since before the pandemic started. However, in an extra question that was added to the survey to gauge investment sentiment for climate risk, 66% of respondents said that investors considered climate risk in their decisions.

The strengthening investor demand sees more respondents believing the market to be in an upturn phase and only 21% of European respondents feel the market is in a downward phase.  At the country level, a strong majority of survey participants are currently of the opinion that market activity is expanding across Greece, Croatia, Spain, Italy, the UK and Ireland.

Tina Paillet, RICS Senior Vice President, commented: With the majority of Europe’s restrictions lifting and COVID cases in decline it’s promising to see the first signs of this being reflected in the latest data.  As a forward leading indicator, these results will bring confidence to markets and underpin the value of Europe’s commercial property. The continued optimism about the growth in the market and continued focus on sustainability positions Europe as a front runner for reducing the built environment’s carbon emissions and helping meet net-zero targets.


Notes for editors:

 * The Commercial Property Sentiment Index is an unweighted average of the OSI and ISI. (See below) Regional indicators are weighted using estimates of the stock of commercial property provided by LaSalle Investment Management and are adjusted on an annual basis.

 **The RICS Occupier Sentiment Index (OSI) is constructed by taking an unweighted average of readings for three series relating to the occupier market measured on a net balance basis; occupier demand, the level of inducements and rent expectations.

*** The RICS Investment Sentiment Index (ISI) is constructed by taking an unweighted average of readings for three series relating to the investment market measured on a net balance basis; investment enquiries, capital value expectations and the supply of properties for sale.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

For more information:

John Bayliss

Alexandra Booth

Rebecca Hunt