AEW has published a new report that examines the impact of COVID-19 on the European office market. As investors focus on the long term impact of working-from-home on future office demand, AEW's European Research & Strategy team found that occupiers are reassessing their needs for office space as working from home has been implemented.

The report stated: “On the back of the 2020 GDP decline, we forecast rents to come down by nearly 10% this year. So far, in 2020 Q2 take-up is down over 20% and vacancy has ticked up by 20bps from a record low of 5.4% in Q1 2020. The good news is that expected new supply remains at less than half the level seen pre-GFC.”

AEW added that some Central and Eastern Europe (CEE) markets, plus Dublin and Barcelona, face large supply pipelines. Construction is also picking up in Amsterdam, Lyon, Berlin and Munich, but these markets are protected by record low vacancy rates below 4%.

The report concluded: “In the largest European office market, Paris, we highlight that based on our in-house database the pipeline is significantly larger than previously indicated. The new office pipeline for Paris is mostly concentrated in La Défense and inner rim sub-markets.”