Modest growth persisted throughout quarter four (Q4) 2010 in Europe’s office markets with Jones Lang LaSalle's Office Rental Index rising 0.8% over the quarter and by 5.4% over the year. Jones Lang LaSalle’s European Office Clock also highlighted an increase in occupier activity over the quarter with take-up increasing 20% in both CEE and Western European markets; however the research also predicts that the outlook for 2011 is moderate as macro risks remain.

Yield compression and modest rental growth continued to drive capital values as market activity and confidence improved.

Bill Page, head of European Office Research comments 'Over 2010 the European office market performed ahead of expectations. Increasing take-up and rents coupled with decreasing supply is an outcome only the most positive were expecting – but –and there is always a but – economic risks remain and not just in those nations affected by the sovereign debt crisis. While 2011 will see continued improvement better economic fundamentals are required for sustainable traction in the leasing market.'

The economic recovery across the region in the Q4 continued at around the same level as seen in Q3, however recovery continues to be two-speed with Germany and the Nordic countries indicating the strongest growth in contrast to Ireland, Greece, Portugal and Spain, which are experiencing ongoing difficulties.

Prime rents across the region continued their modest growth with Jones Lang LaSalle's European Office Index increasing by 0.8% over the quarter compared with 0.7% in Q3. In contrast to a year ago, office rents are now 5.4% higher after four consecutive quarters of growth. Rents remained stable in over half of the Index markets; however there were a number of notable exceptions. Rents fell in Barcelona (-2.6%), Madrid (-1.9%) and Edinburgh (-1.7%) while rents increased in seven of the Index markets. The most substantial increases were in Lyon (5.2%), Milan (4.0%) and Stockholm (2.6%) as well as the German markets of Berlin, Dusseldorf and Munich. The strong performance differential in many markets between highly sought after prime and Grade A space and less popular secondary space remains and this trend is likely to continue until economic growth gains momentum.