LISBON

By the end of 2023, the Lisbon office market had absorbed 112,474 sq m, which is equivalent to a 59% decrease compared to 2022. This decrease is in line with what has been observed in other European office markets.

This result is strongly impacted by the close comparison with the historical and inflated figures for 2022, a year in which large-scale pre-letting operations were registered. The year 2023 ended with 152 operations carried out, with an average area of 740 sq m.

The availability rate stood at 9.33 per cent, up from 8.25 per cent at the end of 2022, an increase due to the flight to quality trend, with companies looking for better locations and buildings that fulfil certain ESG & Sustainability criteria.

Prime rents value closed the year at 28€/sq m/month, which represents an increase of 8% when compared to 2022. This result is proof of the solidity of all the market fundamentals which, even in the face of an extremely challenging year, remained attractive and very competitive. The average rent for the Prime CBD zone closed at 23.81€/sq m/month, which represents an increase of 9% when compared to 2022.

Market behaviour by area

The New Office Zone (Zone 3), Parque das Nações (Zone 5) and the Western Corridor (Zone 6) accounted for more than 60 per cent of the total take-up.

Except for the CBD Zone (Zone 2), which kept its take-up volume stable when compared to 2022, all the other market zones witnessed decreases in activity, with the Historic & Riverside Zone (Zone 4) and the Prime CBD Zone seeing the sharpest falls.

Sectors and Pipeline

The top ten deals of 2023 contributed 31 per cent of the market’s total take-up volume, with the TMT & Utilities and Pharmaceuticals & Healthcare sectors leading the table of top deals.

The pipeline for the next two years in the capital totalled 280,000 sq m. Among the largest speculative projects are Torre Ocidente – Colombo; Oriente Green Campus; Campo Novo, WELL Be and República 5.

Frederico Leitão de Sousa, Head of Offices at Savills, emphasizes: “2023 was a year marked by a challenging macroeconomic context in various European countries, which ended up having an impact on the national property market. However, it was also a year marked by the dynamism of the office segment which, even in a climate of uncertainty, remained attractive, including an increase in prime rents. By 2024, the economic indicators are expected to stabilise, which will translate into greater dynamism in terms of investment. On the other hand, Lisbon is expected to receive a pipeline of around 280,000 sq m in the next two years, a figure that confirms the enormous potential of the Portuguese capital for this segment.”

PORTO

At the end of 2023, Porto’s office market had a total absorption volume of 50,048 sq m, which translates into a 14% drop when compared to 2022. Even so, the “Invicta” maintained a resilient level of activity, accounting for 64 operations, 12 of which with areas above 1,000 sq m.

Market behaviour by zone

The CBD Boavista zone contributed with a total take-up volume of 15,774 sq m, a figure that reflects a very significant increase of 56 per cent compared to 2022. The CBD Baixa and Out of Town areas had the lowest absorption volumes, with year-on-year decreases of 45 per cent.

Sectors and Pipeline

As in Lisbon, in Porto it was also the TMT & Utilities sector that topped the table in terms of absorption volume, accounting for 30 per cent of the total.

In turn, prime rent values remained stable at 18€/sq m/month, but it is already on an upward trend in 2024. The average rent rose by 4% to 16.46€ at the end of 2023 (CBD Boavista Zone).

For the next two years, the city of Porto will have a very significant pipeline of slightly more than 90,000 sq m, whose main projects will be Matadouro, VIVA Offices and Mutual.

Graça Ribeiro Cunha, Offices Associate at Savills Porto, underlines: “Porto's office market remains stable in terms of office occupancy, although there has been a reduction of 8,000 sq m (14%) on last year’s figures. This reduction is justified by the visible imbalance between demand and supply. For 2024, the new projects in the pipeline, characterised by their high level of demand (certification, comfort, sustainability) and their size and location, will certainly be highly attractive. Prime rents are also expected to rise, as some of the new projects are already asking rents of 20€/sq m.