The European office market saw a differentiated development in demand during the first half of 2026, primarily influenced by the services and technology sectors. According to a current study by Savills, professional and business services accounted for 24 per cent of total office space lettings in Europe. This represents a slight decrease compared to the 26 per cent in 2025, with lawyers, auditors, and consulting firms remaining active in the market.
A significant change is noticeable in the technology sector, whose share of overall activity rose from 14 per cent to 22 per cent. This development is driven both by expanding companies in the field of Artificial Intelligence and by the continued activity of established technology firms. In parallel, the share of the banking, insurance, and finance sector decreased from 21 per cent to 16 per cent, which corresponds to the long-term average. Flexible office concepts, known as 'flex offices', maintained their share of three per cent of office demand, as companies increasingly sought transitional solutions and plug-and-play services in view of the space shortage in prime locations.
The average vacancy rate for office space in Europe remained stable at 9.4 per cent in the second quarter of 2026. Savills' analysis further differentiates these figures: in central business districts (CBD locations), the vacancy rate was 4.9 per cent. Particularly in prime CBD locations, this rate was only around 2 per cent, which intensified upward pressure on prime rents. This lower vacancy rate in CBD locations compared to earlier market cycles reflects tenants' increased preference for centrally located office spaces.
Mike Barnes, European Office Research Director at Savills, highlighted that Dublin, London West End, Berlin, and Munich recorded the strongest letting activity in the first half of 2026 compared to their five-year averages. Dublin showed an increase of 63 per cent, London West End 36 per cent, Berlin 30 per cent, and Munich 28 per cent. London West End benefited from intensive activity in the AI sector, while Berlin and Munich concluded larger transactions for Commerzbank and JetBrains, respectively. Strong owner-occupier activity by Dublin City Council in the first quarter of 2026 significantly contributed to exceeding historical highs in the Irish capital.
Prime rents in Europe rose by an average of 3.7 per cent in the twelve months to the end of the second quarter of 2026. Munich (+11%), Frankfurt (+10%), and Warsaw (+10%) led this development, as tenants reported a noticeable shortage of prime space in metropolitan areas. The lowest level of new construction activity in over a decade further reinforced sustained rental growth in the primary markets.
Christina Sigliano, EMEA Head of Global Occupier Services at Savills, explained that average rents for prime office space in Europe have risen by 27 per cent since the end of 2019. This is three times the average rent increase of 9 per cent for office space in secondary CBD locations. This trend is primarily explained by tenants' demand for higher-quality space in central locations, which serves employee attraction and retention, as well as the modernisation of office space to reduce Scope 3 emissions.
