The weighted average European prime office yield increased by +0.2% from 5.8% at the end of 2008 to 6%, a much smaller increase than the +0.5% movement seen between Q3 and Q4 2008, according to Jones Lang LaSalle’s (JLL) Q1 2009 European Office Yields Report.

The yield range across Europe continued to widen both between core and emerging markets and within core markets.

JLL believes that some markets, typically core markets which have already seen large price corrections, are now within touching distance of their prime yield ceilings in the current cycle, and expects many of those markets to reach that point by the end of the year, including London and Paris. Yields could even decrease marginally in some cases.

Looking ahead, Tony Horrell, head of European Capital Markets at JLL, said: “This view that some markets are close to their prime yield ceilings is largely based on improving buyer sentiment for the best quality product, where investors believe yields have reached a level where they feel confident to transact. It also represents investors seeking to secure the very best assets before the bottom of the market on the assumption that the best assets are typically traded before markets begin to pick up again.”