With business and consumer confidence at its highest level since the GFC, attracting and retaining talent has become the biggest challenge for employers. In Europe, this issue is being further compounded by a severe lack of available office space across the continent’s CBDs, according to Savills.
Vacancy rates in Europe’s CBDs are currently experiencing unprecedented lows. In terms of available space, Savills reports that the tightest markets are Berlin (2.5%), Paris CBD (3%) and Munich (3.6%).
'In order to remain competitive, occupiers need to be in a position to attract and retain the very best talent, which more often than not requires a CBD location with access to public transport and amenities,' comments Matthew Fitzgerald, director, Savills European Tenant Representation team.
'With the severe shortage of available office space across these locations, it means occupiers are now being forced to choose between accepting rapidly increasing occupancy costs and talent retention or an office in a more affordable, less attractive location.'
CBD rents
According to Savills, prime CBD rents increased by 5.2% yoy on average in Q2 2017. Unsurprisingly, rental growth was particularly strong in cities where vacancy is the lowest or where is decreased the fastest, namely Berlin, (+33.2%), Stockholm (+16.7%) and Amsterdam (+15%). Interestingly, prime rents in non-CBD locations increased by 3.9% yoy on average.
'With rising occupancy costs and limited options for space, occupiers are now having to plan further and further in advance of their lease expiries and engage in strategic planning to ensure business continuity is not effected,' comments Fitzgerald.
Whilst CBDs remain, by far, the preferred locations, Savills suggests that some companies have no other choice than moving into suburban areas with more choice of office space. Oslo, Copenhagen, Munich, Stockholm are all cities that have seen this overspill from the CBD.
