European Grade A Office Availability Ratio Declines As Occupiers Focus On Best in Class Space

The pandemic highlighted the need for occupiers to have space that is attractive to employees and creates the right working environment to support a flexible working strategy, collaboration, and staff wellbeing, as well as ensuring access to amenities within, or near to, the office. That is no longer simply an aspiration, it is driving decision making and feeding through into the data and the ongoing bifurcation of the office market,

says Nigel Almond, Head of Data Analytics at Cushman & Wakefield.

Occupiers want modern space, with greater flexibility and space utilisation, that meets the latest environmental, wellbeing and digital connectivity standards. With regulations coming into force across Europe requiring certain minimum standards to be met to lease space, the focus on Grade A will intensify as these assets are fit for purpose today and for the future. As occupiers relocate, and in some cases downsize, we see a release of Grade A stock back to the market, hence driving higher the amount of non-grade A space and overall availability ratio. We’ve also seen signs in the last quarter of construction activity slowing. Just 15.4m sqm of space is currently under construction, of which less than half is on a speculative basis, while office completions totalled 0.97m sqm in Q3 2022. Both these measures are below the three-year average, a slowdown which may be a response to rising construction costs and economic headwinds. Regardless of the cause, it will ensure the amount of grade A space remains restricted which will in turn support price levels,

adds Nigel Almond.