Prime Office Yields at Point of Inflection
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Prime office yields continue to stabilise as we approach the bottom of the investment cycle and in some locations prime yields have begun what will be a slow and bumpy journey back towards long term averages. Jones Lang LaSalle’s European office index aggregate yield moved in by just 5bps. The majority of this was accounted for by Western Europe, with the blended Central and Eastern European yield remaining flat.
The vast majority of European markets saw yields remain stable on the quarter or move in marginally. Out of the 46 markets we track, only three markets recorded yield decompression, these were Eindhoven and Bucharest, which moved out 25bps, and Utrecht which moved out 20bps. A total of 10 markets showed prime yields moving in over the quarter, between 50bps in Leeds and 5 bps in Brussels, Gothenburg and Malmö. These 10 markets are joined by London City, where yields corrected in by 25bps in Q2, as the only markets which have shown yield compression in this cycle.
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John Gardiner
Associate Director
EMEA Research
john.gardiner@eu.jll.com
Petra Blazkova
Head of Capital Markets Research
EMEA Research
petra.blazkova@eu.jll.com