News Article Cushman&Wakefield Europe logistics office rental growth report retail
by Property Forum | Report

Cushman & Wakefield’s latest DNA of Real Estate research, covering trends in prime rents and yields across Europe, highlights further strengthening in leasing and investment markets in the first quarter of 2022 as economies fully reopen from the pandemic.

Key findings

  • Q1 prime rents rose quarter-on-quarter in office, retail and logistics sectors for the first time since the pandemic began, with yields compressing for the second quarter in a row
  • Prime logistics yields are now below high street yields in a growing number of markets and lower than office yields in a few city centres
  • Rental growth expected to continue in office and logistics despite increased headwinds

Tracking performance across office, high street retail, and logistics markets in 23 countries, the research reveals that quarter-on-quarter growth has been recorded for the first time in two years. For the seventh consecutive quarter, the logistics sector displayed the strongest quarterly growth at +2.7%, with offices registering a growth of +1.1% and high street retail a +0.1% increase.

Nigel Almond, Head of Data Analytics, EMEA at Cushman & Wakefield, said: “For the first time since the onset of the pandemic rents across all three sectors grew on a quarterly basis, with yields also compressing for a second quarter across all sectors at the European level. While retail’s rental growth was the lowest of the three sectors, it is perhaps more significant than logistics continuing to excel as it ends a run of eight successive quarters of falling rents and marks an improvement in investor sentiment towards the sector.”

At a sector level, clear differences remain and reflect broadly consistent trends seen over the course of the pandemic.


Nearly all logistics markets have seen rental growth over the pandemic, with prime European rents across the 43 tracked markets up by 11.3% since Q4 2019. A majority (38 out of 43 markets tracked) have reported a rise in rents with a further four showing flat compared with Q4 2019. The UK has posted the strongest rise at 23.1% followed by Germany at 12.7% and Central and Eastern Europe (CEE) at 9.8%. Only Budapest has registered a fall (-2.1%), reflecting an oversupply of space, albeit rents have now started to recover.

Over the first quarter of 2022 logistics rents rose 7.7% year-on-year, its strongest year-on-year growth since Q4 2000 (8.0%). All regions posted year-on-year growth led by the UK (+15.0%), CEE (+7.7%) and Germany (+7.6%) underlining the continued strength of demand and shortage of best-in-class products.

Investors continue to clamour for the best-in-class products, leading to further yield compression. Prime yields across the 43 European centres now average 4.12% (8bps lower over the quarter and 63bps lower over the year). Prime yields across Germany and France average just 3.0% and 3.03% respectively. This has led to prime logistics yields falling below prime high street retail yields in many markets and more than half of the cities tracked (19 out of 37). In seven cities, logistics yields are now below office yields. Across the UK (3.75%) and France (3.03%), logistics yields are significantly below levels in the office sector (4.56% and 3.59% respectively) for comparable centres.


The office sector, which was impacted by weaker occupational demand at the height of the pandemic leading to rents falling by 0.9%, has largely recovered. Prime headline rents are now 2.6% above pre-pandemic levels in Q4 2019. However, across CEE and other peripheral European markets rents remain below Q4 2019 levels (-1.3% and -5.6% respectively).

Nine out of the 46 office markets tracked show rents below their Q4 2019 level. Turkey posted the biggest fall (-28%) as the country struggles with broader economic challenges, and exchange rate volatility impacting dollar-denominated rents. Barcelona (-4%) and Dublin (-4%) also showed more notable falls. Rents were flat in seven markets with the majority (30) posting a rise, with the UK regional office markets of Birmingham, Bristol, Edinburgh, and Leeds all showing double-digit growth.

Office rents across Europe accelerated to +1.1% quarter-on-quarter in Q1 2022, up from +0.8% in Q4 2021 and from (0.0%) in Q1 2021. This pushed annual growth to +2.9% with all core regions now witnessing an uplift in rents year-on-year.

Office yields were broadly flat, only 1bp lower to 3.95%, with the average across continental Europe at 3.70%. German office yields an average 2.65% versus 4.56% for centres across the UK and 3.59% in France. Since Q4 2019 all key markets have displayed modest compression, with the Nordics (-35bps) and Benelux (-31bps) seeing the biggest falls. The UK (-17bps), France (-13bps) and CEE (-12bps) showed the most modest compression.


Stresses in the retail sector continue to ease, with rents turning positive (quarter-on-quarter) for the first time since Q4 2019, albeit a very modest +0.1% rise. Only three markets registered a fall this quarter, with four registering an increase. Out of the 41 centres monitored, rents are on average 14% below pre-pandemic levels (at Q4 2019) with retail clearly suffering the most of all sectors across this period. Currently, 37 of the 41 retail markets tracked show rents still below Q4 2019 levels. Only three markets, Milan (+5.8%), Rome (2.4%) and Vienna (3.7%) have posted growth over this period, with improving confidence in the job market and a return of international tourism supporting rental growth in Italy.

A recovery in occupational markets is filtering into rising investor appetite towards the sector with prime yields falling 4bps over the quarter to 4.18%, leaving them 10bps lower than a year ago. The UK (-25bps) and Nordics (-10bps) saw the biggest quarterly falls. No market registered a rise over the quarter. Apart from the Nordics (-1bp) and more peripheral markets Including Bulgaria and Switzerland) (-59bps), all markets currently post yields above their pre-pandemic level.

Sukhdeep Dhillon, Head of EMEA Forecasting at Cushman & Wakefield, added: “Despite increased headwinds, the near-term outlook remains stable. Rising inflation, largely driven by food and energy prices, is becoming more of a concern for Central Banks, raising expectations for interest rate rises. Notwithstanding, the office and logistics sectors’ continued demand for best-in-class space will drive further growth in rents. Retail rents will be nearing their bottom and are set to remain flat with modest falls in selected markets. In the investment market, yields in the office and retail sector are expected to remain largely unchanged, with strong fundamentals driving further compression in the logistics sector.”