Seven major European cities will continue to face high vacancy rates in office buildings over the next two years despite a more robust European market, a new study claims.
The study, compiled by German real estate fund provider Oppenheim Immobilien-KAG (OIK), said the high vacancy rates would persist in Frankfurt, Amsterdam, Milan, Stockholm, Warsaw, Luxembourg and Brussels.
However, it stressed that the reasons varied according to the city. While vacancies in Frankfurt, Amsterdam and Milan would be driven by a weak local economy, as well as new buildings coming onstream, those in Warsaw, Luxembourg and Brussels would be solely a result of new building.
“Stockholm is a special case. A lot of new office buildings came on stream in 2000 and 2001, so the considerable vacancies persist,” said Stefan Wundrak, a researcher at OIK, adding that it had nothing to do with the Swedish economy, which was in relatively good shape.
Overall, the study found that the prospects for the European office space market were good as vacancy rates would fall between now and 2008.
It said the market would be further buoyed up by strong demand for real estate among European and foreign investors, the latter including those from the US, the Middle East and Australia.
“Amid scarce supply of real_estate at home, European investors are increasingly looking at opportunities elsewhere on the continent,” commented Siegfried Cofalka, OIK managing director.