After a number of years with a turn down in demand, the Greater Lisbon offices market started the year with an increase in the number of transactions for the first time in 7 years. A total of 63 transactions were closed between the months of January and March 2014, totalling a take up of 17,000 sq.m and reflecting a positive evolution of over 40% when compared with the first quarter of 2013.
The remaining indicators also confirm a feeling of greater confidence, which has already been observed in other real estate market sectors. The vacancy rate was registered at 11.9% in March 2014, breaking the barrier of 12% and correcting 70 basis points when compared with the same period for the previous year.
This breath of fresh air in the market is also confirmed by the lease values. A slight correction in prime revenue was observed in Greater Lisbon for the first time in 4 years, increasing by 50 cents/sq.m/month in March 2014 when compared with 2013 to 19€/sq.m/month, thereby returning to June 2011 values. The investment market also confirms this reversal in the sector, following a correction in prime yields of 25 basis points in the last quarter of 2013, the office yield fell by 50 basis points during the first 3 months of the year, currently standing at 7%.
Parque das Nações was the most sought-after zone during the first quarter, with a total of 6,500 sq.m negotiated, representing approximately 40% of total demand. The Western Corridor was in 2nd place in terms of demand, representing 25% of interest, with 4,500 sq.m negotiated.
With the exception of Zone 2, all of the remaining sub-zones in Greater Lisbon registered reductions in the vacancy rate, with a special highlight on Parque das Nações, which corrected this indicator at 180 basis points, when compared to the last quarter of 2013.
According to Carlos Oliveira, partner and director of the office department at Cushman & Wakefield Lisbon, “The forecast for evolution in the market throughout the remaining months of the year is to maintain the evolution observed during this first quarter, retaining a slightly positive growth in demand when compared to previous years, and a subsequent improvement in the market’s vacancy rate.”