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Europe’s office leasing market opened 2025 with renewed momentum, as occupier demand pushed first-quarter take-up volumes to 1.9 million square metres — a 4% year-on-year uplift, according to new analysis from Savills. The property advisor now anticipates a 5% rise in full-year activity, citing a robust start and stabilising vacancy trends.
Cities such as Prague, Dublin, and London City outperformed their five-year take-up averages by 41%, 29%, and 26%, respectively. Germany’s six key urban centres collectively posted a 13% annual increase, while Madrid extended its streak of growth into a fourth consecutive quarter, underscoring enduring resilience in select Southern European markets.
Vacancy rates edge up as central locations hold steady
Vacancy rates, which have steadily crept up in recent years, ticked only marginally higher in early 2025, rising by 10 basis points to 8.4%. Savills notes that availability is expanding predominantly in secondary locations, while central business districts remain comparatively insulated from the broader softness.
Despite modest vacancy increases, constrained supply of high-quality office stock has fueled upward pressure on rents. Prime rental levels climbed 4.5% year-on-year, with standout surges in London’s West End and Cologne, both registering 21% growth, and Paris CBD close behind at 18%.
Development activity shows signs of recovery amid tight supply
Development volumes have also regained momentum. Total completions rose 5% in 2024 to reach 3.8 million square metres, though this remains 11% below the five-year norm. Savills expects deliveries to climb further in 2025 to 4.3 million square metres before contracting significantly in 2026 to 3.1 million, potentially marking the lowest annual figure since 2017.
Notably, speculative construction is falling sharply. The proportion of unlet new space now accounts for just 1.6% of total office stock, down by half over the past three years. As developers secure tenants earlier in the build cycle, occupiers are facing fewer options and rising costs for premium space. This scarcity is likely to sustain upward rental momentum in core markets over the next few years.
Refurbishments and sustainability shape market dynamics
Meanwhile, development viability is returning in established European cities, supported by firming yields and rental escalation. Outside these prime zones, landlords are increasingly focused on retrofitting existing assets to meet environmental standards and satisfy occupier expectations for sustainable, high-performing buildings.
From an investment perspective, attention is increasingly directed at assets with superior energy performance. Central and Eastern European capitals dominate new office supply delivered over the past decade, with Bucharest (39%), Warsaw (37%), Budapest (32%), and Prague (27%) leading. London City and Dublin have also seen notable development pipelines in recent years, positioning them as key destinations for capital seeking modern, regulation-compliant assets.
