Rome OFFICE. Market Report Colliers International Italia

Transcription

1 Rome OFFICE Market Report 2017 Colliers International Italia

2 Occupier Market OFFICE Take-up reached the highest level in 2017 During 2017, office take-up exceeded 200,000 sqm (specifically 220,000 sqm), a value never achieved before in the last ten years. In fact, a volume of 200,000 sqm was reached only in 2010 but as a result of three transactions that exceeded 10,000 sqm each. Market dynamics of the city of Rome, therefore, are confirmed as being linked to large transactions. More specifically, three relevant deals were recorded: 43,000 sqm were let by ENI at Europarco, 22,000 sqm by Engineering in the Greater Eur and 16,000 by IBM in the Nuova Fiera di Roma. Thanks to the first two transactions explained above, take-up in the Greater Eur accounted for 48% of the market. In certain cases in the past, companies, that were not able to identify the appropriate space within current supply, decided to build their headquarter according to their own specific requirements. On the contrary, in these two recent transactions, location was the driver, as well as the qualityperformance standards of the properties. For these reasons, ENI decided for a new built to suit solution and Engineering started a strong refurbishment of an existing building. Moreover, in the Greater Eur two building sites were completed: Palazzo Italia in Piazza Marconi and Via dell Arte, 25. Both are speculative refurbishment projects whose marketing will show the Roman market s reaction to this new product, that is modern, efficient and in a good location in terms of accessibility. In this area there are two relevant projects of different asset class to mention: the new conference centre known as La Nuvola, was inaugurated and the first events have been organised. The second project is Hotel La Lama that, after the closing of the sale process, will finally be completed. In the future, this asset will be complementary to both the conference centre and office hub of the Greater Eur. The fluctuating market activity with a rather high vacancy rate does not put pressure on rents, which remain stable, at least the prime ones. In particular, there is still not enough pressure on quality supply to drive up values. With regard to average rents, the trend continues to seesaw and linked to grade B buildings, that represent and important part of the office stock, especially in the CBD.

3 The take-up grows in all the submarket, except for the Centre. The location, that allows a good accessibility, and the grade of the buildings, were the tenants driver. The Greater Eur satisfies all these requirements and was in fact the most dynamic submarket in terms of take-up volume and area band required (> 6,000 sqm). There is a high stock of high quality and large-scale buildings, with good accessibility by car and with public transports. In the Greater Eur there are also various buildings waiting to be refurbished. One example is the towers of the former Ministry of Finance. However, due to the non constant trend of the take-up volume, landlords prefer to start refurbishment project only after a pre-let agreement. However, there are a lot of potential projects still stuck, due to the lack of the demand, that should trigger the starting of works, even if Rome needs a deep renovation of the office stock. Analysing the take-up by area band, the city of Rome had an almost stable activity in the 1,000-3,000 sqm band, with an average of 1,650 sqm taken-up. Large areas can be found the Greater Eur and the Periphery, while the CBD has a lack of supply in this area band. In terms of rent band, 40% of the market stands in the /sqm/year band, followed by the /sqm/year band where 17% of the deals were recorded. The Roman market is characterised by lower rents compared to Milan and other European capitals. In terms of business sector, the highest activity concerned industrial and consultancy companies, that accounted for 51% of the total volume. The public sector is still lacking and it represented just 3% of the volume, even if in the Capital City the public administration is the biggest office occupier. Since many years, Public Administration is talking about the reorganisation and rationalisation of its real estate assets, but this process did not started yet, while in reality it could represent a good opportunity for the city development.

4 Supply Take-up Key Indicator 2017 Take-up and supply by grade 2017

5 The investment market OFFICE Strong investment increase in the CBD At the end of 2017, the investment volume in all asset classes recorded a slight decrease, while the office market, though moderating compared to 2016, reached 1 billion. The localisation of investment deals differed widely. In fact, in 2017 investments were focused for more than 50% in the CBD (with an increase of more than 200% of 2016) and in the Greater Eur, where investment reached 245 million. In the fourth quarter, there were minor office transactions in terms of number and volume. However, it should be emphasised the sale of a totally vacant office building that will be reconverted into hotel. In the entire year, there were no transactions of a single asset with no greater value than 100 million unlike the last 10 years, when transactions for a single asset exceeding 200 million were recorded. Domestic investors always dominated the Roman market until In the last year, in fact, foreign investors have succeeded in closing relevant transactions, accounting for 50% of total volume. Two investors nationality arise: American and French ones. This trend was recorded in 2014 too, even if with a far below total volume: national component only accounted for 20% of total volume. The analysis of the investment trend in the next years will confirm or deny this new trend that was quite marked in In terms of leasing situation, it s interesting to observe that the percentage of investment in totally or partially vacant building increased during the year, reaching a share of 37%. This level have been reached and maintained in Milan in the three-years period This condition brought benefits in terms of regeneration of the office stock. If confirmation of this trend is given, this phenomenon could lead to a new trend capable of both bringing benefits in the Roman market and triggering a virtuous process.

6 Simone Roberti Head of Research Stefania Muzio Market Research Colliers International Italia SpA Via Durini, Milano Tel