European Commercial Property Markets Overview

DTZ points to the virtual elimination of office demand growth. Occupiers have generally shelved expansion plans, although more tenant-friendly conditions--greater supply, lower rents and more flexibility on the part of the landlords--may encourage more activity in 2003. Falling levels of demand have seen a significant rise in availability across all markets resulting in a continuous downward pressure on rents in all parts of Europe.

Despite the air of uncertainty facing the leasing market, the investment market remains buoyant. Although statistics from DTZ reveal that investment transactional volume was lower in the majority of European markets in 2002, this was due as much to the shortage of available investment opportunities as to the decline in occupier markets as manifested in weaker demand and falling rents--both of which forced buyers to be more selective.

DTZ EuroInvest director Peter Collins commented: 'Negative events over the last couple of years have had a significant impact on investor expectations and intentions, however property continues to be a popular with investors due largely to the poor performance of equities and by the sustained low interest rate environment which provides attractive debt opportunities at this time.