According to analyses by Savills, the European office market saw largely stable development of average prime yields in the second quarter of 2026, standing at 4.9%. Local adjustments were observed: yields in Dublin fell by 10 basis points to 4.75%, in Milan by 25 basis points to 4.00%, and in Brussels by 5 basis points to 4.75%. In contrast, the prime yield in Oslo rose by 25 basis points to 4.75%, due to an interest rate hike by Norges Bank, and in Düsseldorf it increased by 10 basis points to 4.60%.
Savills noted that the conflict between the USA and Iran temporarily slowed the recovery of investment activity in 2026, as transaction processes required longer closing times. Nevertheless, increased investment appetite for European office properties is again evident, particularly for assets considered securely profitable and requiring little refurbishment. The persistent lack of selling pressure means that owners are sticking to their price expectations. The scarcity of available, prime properties also supports price development for top-tier assets.
Increasing Cross-Border Investment
James Burke, Director, Global Cross Border Investment at Savills, highlighted that cross-border investments in European office properties accounted for 36% of total activity in the first half of 2026, according to Real Capital Analytics data. This represents the largest share since 2022. Particularly high activity is observed from buyers within Europe, including Spanish family offices, French SCPIs, German institutional funds and insurance companies, as well as Czech corporations. Swedish outbound investments are also gaining momentum. A moderate but notable increase in activity from owner-occupiers is also observed.
Dynamics of the Rental Market and Vacancy Rates
Savills' analysis shows that average office vacancy rates in European Central Business Districts (CBDs) have risen by 220 basis points since 2019 to 4.9%. At the overall market level, the increase over the same period was significantly higher at 500 basis points, reaching 9.5%. This reflects a growing tenant preference for prime locations.
Mike Barnes, European Office Research Director at Savills, emphasised that user demand in the European office markets continues to provide compelling arguments for investors. Take-up has proven resilient overall, but the composition of demand has changed. Tenants reportedly require longer to make decisions about new space, and the proportion of lease renewals remains high. This reflects both economic caution and the costs of interior fit-out. Simultaneously, the limited supply of prime space in central locations drives rental growth, particularly for buildings with high specifications and energy efficiency.
