Developers work to alleviate Lisbon office space shortage

News

05 September 2002

A number of developments are set for completion in the next 12 months, amid high demand from domestic and international companies for modern office schemes

Demand for central Lisbon office space continues to be high, despite a fall in activity in the lettings market during the first quarter of 2002, according to CB Richard Ellis’s Lisbon Market Index Brief.

Total office stock in Lisbon stands at 2.7m m2. Lisbon can be divided into six zones: the central business district (CBD) avenida da Liberdade; the CBD avenida de Republica; the Expansion Areas (Amoreiras, Pra!a de Espanha and 2nd Circular); the river front and historic centre; the Western Corridor; and Parque das Na!oes.

Demand for space in the CBD comes from multinational companies, professional services companies and banks, whereas the Western Corridor is more popular with hi-tech, telecommunications and pharmaceutical companies. Demand in Parque das Na!oes comes mainly from government departments and agencies.

There is a shortage of prime office space in Lisbon’s CBD, which has caused the vacancy rate to fall to around 1%. However, 34,000m2 of new space is expected to become available in the CBD over the next 12 months. Developments scheduled to be completed during this time include Edificio Duque D Avila and Paco do Saldanha.

A number of developments are also under construction in the Amoreiras area. These include Amoreiras Square, a 12,000m2 office scheme being developed by Mundicenter.

The majority of office lettings during the first half of this year have involved areas of less than 750m2. Exceptions include the letting of the 3,300m2 building at 87 avenida de Republica to Aon Gil y Carvajal and the letting of 4,000m2 at Miraflores Premium, in the Western Corridor, to Marsh.

Prime rents in Lisbon’s CBD are stable at Û22.5 per m2 a month. In Parque das Na!oes, prime rents are Û19 per m2 a month and in the Western Corridor they are around Û17.5.

Demand is strong in the investment market, particularly from German open-ended funds, but there continues to be a shortage of suitable product.

Yields have remained stable in the first half of this year, with prime yields reaching 7.40% in the CBD, 7.75% in Parque das Na!oes and 8.0% in the Western Corridor.

CB Richard Ellis

Tel 351 21 311 4400

Selected Lisbon investment deals, 2001-2002
Few deals have taken place in the first half of 2002 due to a shortage of suitable product
Building	Size m2	Gross yield %
Tetra Pak, Av Do Forte, Carnaxide (Dec 2001)	9,190	9.5
BP, Rua Castilho 168 (Dec 2001)	8,430	9.0
Arquiparque 3 (July 2002)	6,600	8.13
Centrum, 5 de Outubro 293 (Aug 2001)	6,400	8.6
Winterthur, Rosa Araujo 2 (Dec 2001)	5,300	7.4
Alto das Amoreiras (April 2002)	5,080	8.5
McKinsey HQ, Casal Riberio 14 (Dec 2001)	4,500	8.7
BIC, Av Fontes Pereira de Melo (May 2001)	3,470	9.5
Source: CB Richard Ellis

A number of developments are set for completion in the next 12 months, amid high demand from domestic and international companies for modern office schemes Demand for central Lisbon office space continues to be high, despite a fall in activity in the lettings market during the first quarter of 2002, according to CB Richard Ellis’s Lisbon Market Index Brief. Total office stock in Lisbon stands at 2.7m m2. Lisbon can be divided into six zones: the central business district (CBD) avenida da Liberdade; the CBD avenida de Republica; the Expansion Areas (Amoreiras, Pra!a de Espanha and 2nd Circular); the river front and historic centre; the Western Corridor; and Parque das Na!oes. Demand for space in the CBD comes from multinational companies, professional services companies and banks, whereas the Western Corridor is more popular with hi-tech, telecommunications and pharmaceutical companies. Demand in Parque das Na!oes comes mainly from government departments and agencies. There is a shortage of prime office space in Lisbon’s CBD, which has caused the vacancy rate to fall to around 1%. However, 34,000m2 of new space is expected to become available in the CBD over the next 12 months. Developments scheduled to be completed during this time include Edificio Duque D Avila and Paco do Saldanha. A number of developments are also under construction in the Amoreiras area. These include Amoreiras Square, a 12,000m2 office scheme being developed by Mundicenter. The majority of office lettings during the first half of this year have involved areas of less than 750m2. Exceptions include the letting of the 3,300m2 building at 87 avenida de Republica to Aon Gil y Carvajal and the letting of 4,000m2 at Miraflores Premium, in the Western Corridor, to Marsh. Prime rents in Lisbon’s CBD are stable at Û22.5 per m2 a month. In Parque das Na!oes, prime rents are Û19 per m2 a month and in the Western Corridor they are around Û17.5. Demand is strong in the investment market, particularly from German open-ended funds, but there continues to be a shortage of suitable product. Yields have remained stable in the first half of this year, with prime yields reaching 7.40% in the CBD, 7.75% in Parque das Na!oes and 8.0% in the Western Corridor. CB Richard Ellis Tel 351 21 311 4400 Selected Lisbon investment deals, 2001-2002 Few deals have taken place in the first half of 2002 due to a shortage of suitable product Building Size m2 Gross yield % Tetra Pak, Av Do Forte, Carnaxide (Dec 2001) 9,190 9.5 BP, Rua Castilho 168 (Dec 2001) 8,430 9.0 Arquiparque 3 (July 2002) 6,600 8.13 Centrum, 5 de Outubro 293 (Aug 2001) 6,400 8.6 Winterthur, Rosa Araujo 2 (Dec 2001) 5,300 7.4 Alto das Amoreiras (April 2002) 5,080 8.5 McKinsey HQ, Casal Riberio 14 (Dec 2001) 4,500 8.7 BIC, Av Fontes Pereira de Melo (May 2001) 3,470 9.5 Source: CB Richard Ellis