Europe's office market is defined by intensifying demand for best in class space and a growing imbalance between supply and occupier demands, according to Cushman & Wakefield's latest EMEA Offices Update.
In 2025, Grade A leasing reached a record 52% of all office leasing activity in EMEA, prime rents rose for the 20th consecutive quarter and Grade A vacancy tightened to just 3.5%. At the same time, development pipelines fell to their lowest level since 2016, creating a more competitive landscape for occupiers and renewed opportunity for investors. Lenders also returned with loans of up to 60% loan to value and margins below 200 basis points, reinforcing wider improvements in confidence.
Quality has become the central focus for occupiers across Europe, and this is tightening the availability of high specification space.
"The fundamentals at the top end of the market are strengthening," said Kiran Patel, Head of Office Sector Research, EMEA. "With less than one year worth of take-up currently under construction, prime offices are well positioned for a strong performance over the next few years including sustained rental growth amid tightening supply."
Flight to quality drives leasing activity
Prime supply tightens further
Overall vacancy held steady at 9.8% in the fourth quarter, with considerable variation across markets, with Marseille reporting the lowest level at 3.5%, while Stockholm reported the highest at 18.5% driven by out-of-town vacancy. Prime supply continued to tighten as Grade A availability fell to 3.5%. Several major markets, including Birmingham and Edinburgh, now have less than one year of prime supply, contributing to rising competitive pressure among occupiers.
Rental growth sustained for a 20th quarter
Prime office rents maintained their upward momentum, increasing by 1.4% in the final quarter and by 4.6% over the year. The UK and France led performance, driven by London's West End, Paris CBD, Leeds, Newcastle and Lyon, all of which saw strong occupier demand for quality space.
Shrinking pipeline signals tighter market ahead
Cross border capital returns as investment confidence improves
Outlook
Looking ahead, Cushman & Wakefield anticipates continued rental growth in 2026 and 2027, although at a moderated pace. Impacts from the conflict in the Middle East are continuing to develop, bringing inflationary pressures and reducing expectations of further rate cuts (particularly in the UK) while adding to the elevated levels of risk globally. The primary challenge for the market remains the limited pipeline of high-quality development. With new starts constrained and Grade A space being absorbed quickly, supply shortages are expected to intensify, reinforcing competition and supporting further rental resilience.
