News summary 15 August

European offices are in the spotlight this month, with high demand for leasing and sales, according to our news summary for 15 August. We also feature the sale of a luxury five-star Venice hotel.

Third best half-year Poland office investment

By: Avison Young

Summary: In the first half of 2022, demand for offices in the Polish largest regional cities was higher than throughout 2021 at €1.3 billion, while total investment volume in H1 2022 was €2.9 billion – the third best period since 2016. The office investment market was the undisputed leader, accounting for 44% of transactions in H1, 2022 and also 43% of total Q2 investment volume in Poland. Half of the transactions in the first six months of the year were in Warsaw and half elsewhere. Retail investment volume was €797 million.

Key quote: Marcin Purgal, Senior Director, Investment, says, “Investors’ activity in the office sector increased by 60 percent compared to last year.”


Strong European office leasing demand


Summary: Despite market uncertainties, Quarter 2, 2022, saw strong European leasing activity, according to the latest Office Property Clock. The European Office Rental Index rose 1.3% q-o-q and +3.6% y-o-y. Q2 take-up totalled 2.6 million sq m, up +22% y-o-y and also 1% above the five-year Q2 average. The European office vacancy rate was unchanged at 7.2%, but is likely to soften slightly towards year-end, say analysts. Most markets are poised for steady prime rental growth over the medium term, with multiple clocks reset into the “growth accelerating” quadrant.

Key quote: “The impact of the pandemic on office markets is now waning, with many companies adopting a ‘hybrid’ working model. Companies are rethinking their strategies, in many cases reducing their office space requirements. Regionally, both Western Europe (+20% y-o-y) and CEE (+42% y-o-y) experienced healthy improvements in quarterly take-up. At a city level, the strongest Q2 leasing volume gains were witnessed in The Hague (+877% y-o-y), Dublin (+134% y-o-y), Hamburg (+95% y-o-y), Dusseldorf (+74% y-o-y) and also Munich (+56% y-o-y). Most notable declines in demand levels were recorded across Luxembourg (-72% y-o-y), Edinburgh (-47% y-o-y) and Stockholm (-31% y-o-y).”


Central London office year-to-date investment at four-year high


Summary: Central London take-up totalled 0.4m sq ft in July. Despite the quiet month, year-to-date take-up totalled 6.8m sq ft, higher than the last two years. Supply remained stable for the third month in a row at 24.1m sq ft. But this is high compared to the long-run average. Under offers remained high totalling 4.3m sq ft at the end of the month. This is an increase of 26% on the 10-year monthly average. Investment volumes were subdued at £196m, but year-to-date investment totalled £8.4bn; the highest for the period since 2018.

Key quote: “Central London investment volumes totalled £196m in July in what was a relatively quiet month for investment activity. Despite falling below the 10-year monthly average level of £1.2bn, year-to-date investment volumes totalled £8.4bn, the highest for the period since 2018.”


Barcelona Pau Claris office purchase

By: KanAm Grund Group

Summary: KanAm Grund Group’s open-ended real estate fund LEADING CITIES INVEST has sold the Pau Claris complex in Barcelona, Spain. The company bought the property in 2019 and sold it at a profit. This is the fifth transaction for the investment fund since the beginning of the year. The buyer is Franklin Real Asset Advisors, which acted on behalf of one of its clients. The parties agreed not to disclose the price of the deal. The office building at Carrer de Pau Claris 158-160, in the heart of Barcelona, totals around 6,200 square meters.

Key quote: “The disposal of Pau Claris will reduce the share of Spanish properties in the fund to about 15%. The current focus is on Germany, where the fund’s exposure is about 23%, followed by France (approx. 19%), Spain and Finland (around 13%).”


Five-star Venice Hotel Excelsior sold


Summary: COIMA SGR, a leading real estate investor, developer and asset manager, has agreed the sale of the five-star Hotel Excelsior in Venice to hotel owner and operator London & Regional Hotels on behalf of the Lido di Venezia II Fund (LDV II). The sale, which includes concessions on the facing beaches and also other ancillary assets, guarantees the repayment of 100% of the original €92 million loan to the Hotel Excelsior from Intesa San Paolo and Unicredit that COIMA inherited from the previous fund manager. The sale at a value over the fund’s most recent valuation also makes available significant additional funds to restructure the €45 million legacy debt of the nearby Hotel Des Bains, which also sits within the LDV II Fund. The image is from Wikipedia and is reproduced under CreativeCommons.

Key quote: Manfredi Catella, Founder and CEO of COIMA, says, “The sale of the Hotel Excelsior represents an important milestone in the financial restructuring plan of the Lido di Venezia II Fund, executed by COIMA. The hotel has been revitalized and will remain an important historical and cultural landmark on the Venice Lido. We will now focus on completing the plan for the regeneration of the Hotel Des Bains, which is such an important part of the Venetian cultural heritage.”