Lisbon office market registers a 70% growth in demand during Q1 2015

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According to Cushman & Wakefield, the office market in the Greater Lisbon area has shown evidence of continuous growth in Q1 2015.

69 deals where registered in Q1 in the Greater Lisbon, totalling a take-up of 30,000 sq.m of office space, reflecting a 70% growth when compared to Q1 2014; and 60% above the average of the last five years.

The largest transaction was registered in Zone 6 (out of town) in Suécia II building in Carnaxide, which was totally occupied by Worten (4.085 sq.m). The second largest transaction was registered in Zone 2 – Defensores de Chaves 45, with the expansion of Allianz (approximately 3.000 sq.m). The third largest transaction was in Zone 6 with the expansion of Unit 4, an IT company, at the Zenith building in Miraflores.

The out-of-town areas (Zone 6) and Parque das Nações (Zone 5) where the most sought after in Q1, being responsible for over 50% of demand.

New demand for office space and continuous shortness of new supply over the last years where not enough to review market rents positively in the Greater Lisbon area. Generally, the rental values in different market zones stabilized; however, clearly there is a noticeable trend for landlords to reduce incentives conceded to new occupiers, mainly due to a more dynamic demand.

As opposed to that seen in office occupancy, the investment market has already responded in terms of values to the more active market. In Q1 2015 property values have increased, due to an adjustment by 25 basis points in prime yield in Lisbon’s CBD, Avenida da Liberdade, which is now at 6%, reaching the lowest value in the last 8 years and thus resulting in an increase in asset values. The increase in values was also seen in the remaining market zones, which also verified a decrease in yields.

greater lisbon takeup

The forecast for the year-end, points to a continuous decrease in yield, this is not only due to the increase in office space demand but also due to the huge interest from investors in this sector. Q1 also brought good news to the office investment market, in the first three months approximately €45 million where negotiated in this sector, registering a significative increase when compared with the €8 million transacted over the same period last year.

The recently published IPD results confirm the good performance of the office sector – during 2014 the office portfolio of the IPD universe had a return of 2.3% maintaining the tendency to increase seen since 2013.

       

 

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Filipa Mota Carmo

Filipa Carmo

Marketing Manager

Lisbon, Portugal

Phone +351 213 219 548

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