Savills Portugal

Confidence strengthens as demand builds

Strong demand momentum eases concerns over new supply volumes.

The positive momentum continues in both Grade A and Grade B office markets. While average rents remain below pre-pandemic levels, suggesting strong potential for further upside, vacancy rates in some markets have already returned to the ultra-tight level seen before the pandemic.
Average Grade A office rents in the C5W strengthened by 3.4% quarter-on-quarter (QoQ) and 8.3% year-on-year (YoY) to JPY35,723 per tsubo per month.
The average Grade A office vacancy rate in the C5W tightened by 0.2 percentage points (ppts) QoQ and 1.4ppts YoY to 1.5%.
Average large-scale Grade B office rents grew by 3.2% QoQ and 6.8% YoY to JPY26,717 per tsubo per month.
Vacancy rates in the Grade B market decreased by 0.6ppts QoQ and 1.2ppts YoY to 1.4%.
With prime office vacancies continuing to tighten amid strong demand, attention is shifting to whether less accessible and older buildings can attract tenants through value-add repositioning and asset enhancement strategies.
The large supply anticipated in 2025 appears to be progressing smoothly, with many upcoming developments benefitting from strong pre-leasing activity driven by robust tenant demand.

Rents and occupancies continue to rise steadily in Q2/2025. Strong demand and healthy pre-leasing activity suggest that the significant new supply in 2025 and beyond will be absorbed with little difficulty. As prime assets continue to see strong take up, the spotlight is now on whether demand can extend to less accessible and older buildings especially through value-add repositioning.
Savills Research & Consultancy