Luxembourg’s office market notched up record-breaking take-up rates for the first two quarters of 2021, even if a massive EU project in Kirchberg accounted for nearly half of the overall amount.
That is one insight gleaned from the “Luxembourg Office MarketView Q2 2021” report published by CBRE, one of the country’s major property brokers, on Wednesday.
Luxembourg office space take-up during the first half of the year was more than 270,000m2, roughly four-fifths of 2020’s full-year total and higher than the annual totals recorded in 2019, 2018, 2017, 2016 and 2014. However, the European Parliament’s KAD2 building, at 127,000m2, made up 47% of the headline figure.
While total take-up for the first half of the year reached a record high, CBRE said that “the number of transactions… is perfectly in line with the long-term average.”
Among notable signings during the second quarter, CBRE said insurer FWU let 1,094m2 in Howald; Swiss Life let 916m2 in Kirchberg; the professional services outfit Throgmorton let 800m2 and Maison Moderne (the company that publishes Delano) 705m2 in the Gare district; and Armacell International let 1,130m2 and Cronos International 941m2 in Capellen.
CBRE said Luxembourg’s office vacancy rate stood at 3.7%, meaning that roughly 169,000m2 of space was available out of the country’s total stock of 4.55m square metres. In the capital, the rates vary between 2% for the central business district and Kirchberg to “just over 5%” in Limpertsberg. Across all localities, the rates “remain under 10%”.
Prime rent remained at an average of €52 per square metre per month in the central business district, with rates averaging €38 in the Gare district and €35 in Cloche d’Or.
Few office projects were finished during the second quarter, with just the 10,000m2 WOC building in Capellen completed. According to the report, “a further 108,000m2 is expected to come online this year from small- to medium-sized buildings.”
CBRE recorded €651.55m in commercial real estate deals during the first half of the year, but noted that transaction activity is typically higher in the second half. “The largest transaction of the first half was the Atenor acquisition of the Renault property for more than €120 million,” the property firm wrote.
In addition, there were three office deals which closed, with a collective value of “just shy of €300m”, CBRE stated. “The largest transactions were the Lone Star acquisition of H2O in Howald and the Generali acquisition of Melius in Cloche d’Or.”