The buoyant Central London market, and to a lesser extent, Paris, are bucking the trend as the rate of new office completions plunges across most European markets. New research by CB Richard Ellis (CBRE) suggests completions could fall by as much as 30% over the whole of 2011 and decline further in 2012 as the low level of construction starts during the economic crisis feeds through into reduced levels of new office space.

The shortage of available debt and uncertain economic environment prompted many developers to downscale or delay planned projects in the wake of the financial crisis. As a result, new office completions in major European markets will experience a sharp contraction in the next two years and will remain subdued throughout 2013, the adviser predicted.

European office development in the main Western European markets in 2011 is expected to fall by one third compared to 2010, and by over 40% on the market peak recorded in 2008. While the longer term development pipeline is still difficult to measure at this point, preliminary forecasts for 2013 point to only a modest pickup of 12% on 2012 development levels. This will leave office development completions nearly 50% lower than at their peak in 2008.

Most European cities are expected to see a particularly sharp year-on-year reduction in office development completions, including Barcelona (-69%), Amsterdam (-66%), and Madrid (-50%). The correction will be particularly prominent in 2012, which represents the low point of the development cycle. Office completions in the main Western European cities are expected to decline to 1.8 million m2 - a fall of 21% on 2011 levels.

London is one of the few major European office markets where the recovery in property values and rents has reignited substantial interest in new development and conditions are in place for a relatively quick recovery. Central London in particular is predicated to see completions in 2013 triple compared to 2011 and could rise further in 2014 when a number of tower office schemes are due to complete in the City of London.

Paris is also beginning to see signs of a revival in the office development cycle, with a number of speculative development schemes recently started in the Western Crescent, Inner Rim and the construction of 63,000 square metre Majunga Tower at la Defense, which is expected to complete in 2013.