Improving economic conditions and growing cross-border activity among occupiers and investors suggest that the European property market will strengthen in the coming year, according to research by DTZ Debenham Thorpe.
But the report, European Commercial Property Market – An Overview, claims that the scale of the improvement will vary significantly.
Demand from foreign multiples such as Disney Store and The Gap is shaping domestic retail markets, particularly in Paris.
In Belgium, low retail vacancy rates are being maintained by tight planning controls restricting shopping centre development, while in Spain and Portugal large numbers of department stores and out-of-town schemes are being built. Some 15 schemes are planned or already under way in Lisbon alone.
The report says that there is unlikely to be an improvement in the European office letting market in 1995. In France, around 11% of total stock is vacant. Demand remains weak here and in other western European nations.
Further east, the outlook is brighter. In Warsaw there is a 100% occupancy rate and future supply will be restricted by land title problems.
Industrial demand across Europe is greatest for new warehousing and distribution facilities, as emphasis shifts from heavy to light manufacturing. Speculative space will remain limited.
The investment market is dominated by western European institutions, with German open-ended funds being the most active across the continent.
