Rental growth remained positive across all sectors in Q2, with prime rents rising 0.8% for office, high street and logistics on a quarterly basis at the European level. This is the sixth consecutive quarter in which rents have risen across all three sectors on a quarterly basis. There are clearer signs that the outward shift in yields is over with compression evident in some select markets. Prime capital values rose for the second successive quarter.
Office
For the seventh consecutive quarter prime office rents grew by more than 5% on an annual basis. Such sustained growth has only been surpassed twice in the past. Core European markets including the UK, Benelux, Germany, the Nordics and Southern Europe witnessed some of the strongest growth. Office yields continued to edge out in Q2 2024, albeit a more modest 6 bps, and well below the double digit rises witnessed in each quarter of 2023. Prime office yields now average 5.53% across the 45 markets tracked.
Retail
Prime high street shops bounced back this quarter with rents up in 10 out of 40 markets tracked, the highest number since Q4 2016, supported by stronger growth in Budapest, Milan and Vienna. Yields were stable in more than three quarters of the markets tracked with some modest outward shifts also recorded. Nonetheless, prime yields averaged 4.88%, edging in for the first time in two years.
Logistics
Logistics rents continued their strong pace, rising by 5.6% compared to a year ago, the eleventh consecutive quarter rents have risen by over 5%. The strongest growth was in the UK (9.1%), Benelux markets (8%) and Nordics (5.2%). The average yield for the 42 markets across Europe was stable at 5.32%, with more than 80% of markets reporting no change.
