A recent analysis by Savills indicates an impending decline in European office completion volume. Stable market activity of around 3.5 million square metres is expected for 2026, which nonetheless represents a 28 per cent decrease compared to the peak year of 2022. The ongoing labour shortage in the construction industry significantly affects the sector and leads to delays in project completions. Accordingly, 21 per cent of the office space originally planned for 2025 has been postponed to 2026.
For 2027, the international real estate consultant forecasts a further year-on-year decline in completion volume of 23 per cent to 2.7 million square metres. This trend primarily results from a lack of new project starts since 2023. Another indicator of the cautious development activity is the proportion of speculatively developed office space: in the coming two years, only 1.5 per cent of space in the development pipeline will be built speculatively, which marks a decrease compared to the figure of 3.0 per cent four years ago.
Within Europe, Bucharest (3.6 per cent), London West End (3.6 per cent), and London City (3.2 per cent) show the highest proportion of speculatively developed space relative to the total office stock, with completion dates by the end of 2027. Mike Barnes, Director, European Office Research at Savills, noted that while some developers are pressing ahead with projects despite the uncertain market conditions to benefit from potentially higher rents and a normalisation of the investment market, equity is being deployed more selectively overall.
Christina Sigliano, EMEA Head of Global Occupier Services at Savills, underlines the expectation that vacancy rates for prime, centrally located office space in European metropolitan areas will remain low, at approximately 2 to 3 per cent. This will exert upward pressure on prime rents and offer opportunities for asset managers to convert secondary space into premium space.
This development is also observable in the German market. Jan-Niklas Rotberg, Managing Director and Head of Office Agency Germany, explains that the completion volume in the six largest German cities will be below the long-term average in the coming two years. The availability of new-build space varies considerably by region. While Düsseldorf offers a comparatively large amount of new-build space, the short-term supply in Hamburg is already considered scarce.
The situation is exacerbated by a record low in building permits for offices in 2025, which is likely to dampen new construction volume in the long term as well. Given persistently high demand for high-quality space, a further intensification of scarcity in the premium segment is therefore foreseeable.
