The Index is based on the performance of 24 markets, and highlights that prime rents decreased in the majority of the markets, led by Moscow and London (down -28.6% and -21.1 respectively), though Madrid (-12.5%) and Warsaw (-10.7%) also showed double-digit rental falls over the quarter, whilst the major German cities saw rental corrections of between 2% and 5%, marking their first falls in this cycle.
As office occupiers have increasingly downsized and made more efficient use of existing space, office take-up has slowed throughout 2008 and resulted in further declines in take-up volumes in the first three months of 2009. Overall European office leasing volumes reached 1.9 million sq m (20.5 million sq ft), a fall of 37% over the quarter (-40% to Q1 2008) and 31% below the five-year average.
The Central and Eastern European (CEE) markets in particular have been affected by the deteriorating economic conditions and outlook: leasing volumes decreased over the quarter by -41%. In western Europe, substantial falls in take-up have been recorded in Utrecht (-82%) and Dublin (-71%), but large markets like London (-65%), Madrid (-56%), Munich (-44%), and Paris (-23%) also saw significantly lower activity in Q1 2009 compared to the first three months in 2008.
Weak demand and completions of more than 2 million sq m (21 million sq ft) in Q1 caused the overall European vacancy rate to increase from 7.7% in Q4 2008 to 8.5% over the quarter. Driven by high completion levels in Moscow the aggregated CEE vacancy rate jumped to 13.6% in Q1 09 from 4.9% a year ago.
Vacancy rates in Europe vary now between 2.4% in Luxembourg and 18.5% in Dublin.
Commenting on the Q1 Clock, Chris Staveley, Head of Jones Lang LaSalle's Cross Border team commented: "Many office projects have been cancelled or postponed in recent months; however the dramatic slowdown in office take-up is putting increased pressure on prime rental levels. These market indicators demonstrate that widescale recessionary conditions have arrived to strongly impact the region's occupational markets."
