Occupiers in European cities are faced with a variety of different market conditions. Some cities, like London, Paris, Frankfurt and Stockholm are at or near the top of the rental cycle and are unlikely to see rising rents and may even continue to see small falls. Others are one or two years away from their peak. Moscow hasn’t yet seen the start of a conventional rental cycle because, although demand has been strong, the city has an unusually elastic supply pipeline for both offices and residential property. Moscow was hit by oil price hikes after 2014 and saw substantial rent falls so is nearing the start of a new rent cycle.
Figure 10 summarises the expected outlook for occupier rents in key European cities where forecasts have been made. Significantly, there are no predictions of substantial rent falls. This is highly reflective of the limited supply side in many European cities, particularly in or near the historic centre where demand is high but land for development and planning permits are scarce.