Western Europe: Corporate Occupier Conditions

Transcription

1 EMEA Corporate Occupier Conditions - November 2012 Western Europe: Corporate Occupier Conditions In a holding pattern

2 2 On Point EMEA Corporate Occupier Conditions November 2012 WESTERN EUROPE: Corporate Occupier Conditions Latest surveys and data indicated that the Eurozone is still struggling, despite some recent encouraging policy developments such as the ECB s new plan for bond purchases and the German support for the ESM. Uncertainty however remains high amid concerns about Spain s debt, contagion in Southern Europe and the social, political and economic implications of upcoming austerity drives. Office take-up in Q3 reached 2.3 million sq m in Europe a 5% decrease q-on-q. Volumes for Q are down 15% on 2011 levels, although the decline in Western Europe was less pronounced at just -2%. Healthy activity in Paris and Munich supported overall activity levels. Current forecasts see annual take-up for 2012 at circa 10% below 2011 totals though roughly in line with the 10 year average as occupiers continue to focus on consolidation, cost-cutting and in situ opportunism rather than transformative real estate agendas. After a pause in Q2, overall vacancy levels in Europe trended downwards in Q3. The European vacancy rate dropped 20bps to stand at 9.7% with falls in Paris and all German markets notable. London however did see vacancy rising by 70bps the highest increase in Western Europe. Modern space in good locations is quickly absorbed, but one element restricting a faster decline in vacancy are further releases of second hand space. We anticipate aggregate vacancy rates to remain static through This position is supported by a sluggish development response. Banks have almost ceased lending activities with access limited to equity-driven investors and developers as well as relationship lending. In the majority of cases any development activity relies heavily on pre-lets. Completion volumes did recover q-on-q but remain low. Although total completions for 2012 are likely to exceed 2011 volumes by c10%, this would be 30% below the 10 year average. Prime rents continued to soften on aggregate. Our European Office Index showed a Q3 of negative quarterly movement (- 0.4% and -0.5% y-on-y). Nevertheless rents increased in Stockholm (+2.3%) and Munich (+1.7%) based on robust economic performance and the decreasing availability of high quality space. Rents decreased in Madrid (-2.0%) and Milan (- 1.9%) as well as in The Hague (-2.4%) and Utrecht (-2.3%). Prime rents also decreased in Paris (-1.9%) although this masks rental increases specifically in the CBD, where quality supply remains scarce. The latest Western European Office Occupier Clock shows the further polarisation with markets moving further towards 12 o clock and 6 o clock. Milan and Zurich have however both now passed 12 o clock. For the remainder of 2012 rental growth on aggregate is expected to be flat at best with growth in many relatively healthy markets, such as Germany, the Nordics and London, likely to lose some momentum. Markets in the midst of the Eurozone debt crisis could also see further rental decline. Exhibit 11: Western Europe Office Occupier Clock Amsterdam, Eindhoven, Geneva, Rotterdam Paris CBD, London West End Helsinki, London City Oslo, Stuttgart Zurich Milan Berlin, Cologne, Lyon Stockholm, Düsseldorf Hamburg Copenhagen Rental Growth Slowing Rents Falling The Hague Munich Utrecht Gothenburg Rental Growth Accelerating Rents Bottoming Out Southampton, Liverpool Luxembourg Antwerp, Athens, Nottingham Lisbon, Newcastle, Rome Western Corridor Manchester Madrid Barcelona, Brussels, Dublin Birmingham, Bristol, Cardiff, Edinburgh, Frankfurt, Glasgow, Leeds, Malmo

3 On Point EMEA Corporate Occupier Conditions November Amsterdam Cost: 335 / sq m Competition: 40,800 sq m Choice: 15.6% The demand dynamic is moderate in the Amsterdam market with Q take-up 14,600 sq m down on the equivalent period a year ago. Year to date take-up is actually ahead of 2011 volumes but it remains to be seen whether the Q4 rally witnessed last year is repeated. What is clear is that structural demand will emerge in the market given the volume of deals signed back in 2007/8 coming to break or expiry. Current market dynamics suggest this will be challenging with activity reducing particularly in the Zuidas. In terms of supply there is one new development under construction namely the new Deloitte office in Zuidas area, but development in the municipality is scarce with just one speculative development underway. Vacancy rates stand at 15.6% and have held reasonably steady largely due to the removal of stock and reclassification into other uses. Prime rents remained stable for the seventeenth consecutive quarter at 335 / per sq m / pa but are underpinned by a rent free period of 9 months for a standard lease. Lower face rents are evident for some buildings in the Zuidas. One emerging trend, exemplified particularly by major banks (i.e. ING, Deutsche Bank), has been relocation to the South East submarket where rents are significantly lower at 195 / per sq m / pa. Antwerp Cost: 145 / sq m Competition: 26,200 sq m Choice: 11.4% Whilst competition increased for the second consecutive quarter, leasing volumes for the first nine months of year are still 30% below the 5-year average. Increased competition for space was particularly noticeable in the City Centre and Ring districts. The former was most popular with occupiers and accounted for around 72% of all activity. Corporate occupiers accounted for 100% of total competition in Q3, with the majority focused on new buildings and development pre-lets. Costs remained stable with prime rents recorded at 145 / per sq m / pa. Incentives continue to be important and usually include rent free periods as well as contributions towards the fit-out. At present, incentives equate to around 3-6 months free, dependent upon the total lease length. Choice will remain stable in the near future due to the limited development pipeline. Requirements for new, large floor plates will remain very hard to fulfill, with speculative development for the next 24 months limited to just 12,000 sq m. Large new projects such as Antwerpen X and Nieuw Zuid with a total office area of around 188,000 sq m might come to the market from mid-2015 onwards. However, so far just 25,000 sq m of this has been granted building permits. Athens Cost: 214 / sq m Competition: n/a Choice: 18.5% Competition for office space in Athens continues to be very limited with most occupier activity being on the back of downsizing, consolidation and relocation all triggered by cost-cutting objectives. Stock increased somewhat a result of the redevelopment of an old department store into office space. Choice is expected to increase in the short term following recent bank mergers as well as the public sector s rationalization strategy. Headline rents remained unchanged at 214 / per sq m / pa. On Kifissias ave prime rents have slipped marginally to 162 / per sq m / pa as an increasing number of occupiers are seriously considering taking space along the notably cheaper Athens-Lamia Motorway and the broader Athens West area. Furthermore, occupiers are also increasingly successful in renegotiating service charge levels. Barcelona Cost: 216 / sq m Competition: 62,000 sq m Choice:13.9% Competition increased considerably in Q3, reaching 62,000 sq m, up 45% on the previous quarter. Volumes for the year to date stand at almost 160,000 sq m. Take-up in the city centre was almost twice the level achieved in Q and Q3 2011, boosted by deals to occupiers such as Endesa and Incasol. Elsewhere in Barcelona, the New Business Areas saw the lowest level of quarterly competition since Q2 2003: just 9,300 sq m. Occupier activity picked up in the periphery, registering an increase of 200% quarter on quarter (from 2,800 sq m in Q2 to 8,500 sq m in Q3). The level of choice in Barcelona has increased very slightly, reaching 13.9%. No new supply has been completed this quarter. However, in 2013, 66,000 sq m of new speculative supply is expected, divided across 5 projects (including Iberdrola s Porta Firal and Bream s Cornerstone). Office costs in Barcelona remained stable in Q3 due to occasional, small-scale transactions in exceptional quality buildings in prime locations. Prime rental levels in Paseo de Gracia/Diagonal therefore remain at 18 / per sq m / pm. Berlin Cost: 264 / sq m Competition:128,600 sq m Choice: 8.4% Office take-up in Berlin reached 400,300 sq m in the first three quarters of 2012 and was almost in line with the volume achieved a year earlier. The figure exceeded the five year average by 15%. Six large deals by Zalando were mainly responsible for this good result: the online retailer leased more than 65,000 sq m (Q3: 55,000 sq m) in East Berlin in the first nine months of the year. Aside from a

4 4 On Point EMEA Corporate Occupier Conditions November 2012 handful of additional large transactions, small lettings dominate the market, with more than 60% of the lease contracts for spaces smaller than 1,000 sqm. Total space take-up for 2012 is forecast to reach almost 530,000 sqm and would therefore be only slightly below the 2011 result. After an increase in the first half of the year occupier choice has stabilised with a vacancy rate of 8.4%, around 0.4 percentage points lower than a year ago. Of the 1.43 million sqm of vacant space, 20% is located in each of Innercity East and Innercity West. Choice is expected to remain stable for the remainder of the year. Strong demand and the ongoing low number of completions are keeping costs relatively stable. The prime rent has remained unchanged at / per sq m / pm, but the weighted average rent has increased by 3.5% to around / per sq m / per month. Birmingham Cost: 385 / sq m Competition: 15,900 sq m Choice:17.1% Occupier take-up totalled 15,933 sq m in Q3, a significant improvement compared to H when leasing volumes totalled 13,750 sq m. The largest deal was to training company BPP who acquired 1,950 sq m at 2 Colmore Square. Activity was driven by a broad range of sectors, although the services sectors continued to dominate, accounting for 42% of take-up. Despite the improvement in Q3, take-up for the first three quarters of 2012 fell by 34% compared to the same period in 2011 and by 43% compared to the five year average for Q1-Q3. Looking ahead take-up is expected to be broadly stable, with the result that year end volumes are likely to remain below average levels. Overall supply fell slightly in Q3, with around 297,000 sq m currently available. The majority of space is of Grade B quality with just 50,000 sq m of Grade A space currently available. The development pipeline was unchanged with no new starts. Snow Hill (phase II) remains the only scheme currently under construction. Any new development starts are likely to be underpinned by pre-lets. Prime rents remained stable at 385 per sq m / per month. The market remains broadly tenant favourable with tenants able to achieve up to 36 months rent free based on a 10 year term. Bristol Cost: 372 / sq m Competition: 10,500 sq m Choice: 11.3% The level of occupier activity in Bristol s city centre during Q3 was up 61% on the same period last year. The only Grade A space acquired was Simmons & Simmons taking 726 sq m at Temple Quay, demonstrating the growing trend of London-based lawyers outsourcing work to Bristol. Competition for the year-to-date stands at 27,871 sq m and the year-end figure should top the level achieved last year (39,483 sq m). The outlook for 2013 is reasonably positive but economic uncertainty continues to delay the decision-making process for the large corporates. That said, Bristol City Council s requirement for up to 18,580 sq m will increase competition in the city. The level of choice reduced marginally during Q3. However, only 20% of choice is Grade A and the equivalent vacancy rate has slipped to 2.3%. Speculative activity is returning to the Bristol market with Prupim/Cubex starting on site at 1 Victoria Street (4,181 sq m) and Skanska s purchase of 66 Queen Square is likely to open up a development opportunity. The cost of office space remains stable at 371 / per sq m / pa in the city centre and incentives remain generous at up to 36 months on a 10 year term. However, the shortage of Grade A supply in the city could lead to incentives moving in over the next 6 months. Brussels Cost: 285 / sq m Competition: 76,000 sq m Choice: 10.7% Corporate occupiers have been particularly active in Q3, with several large deals in the Periphery. Competition totalled at 76,000 sq m, of which 48% was located in the Periphery. European institutions have been very active in the first nine months of the year, accounting for a record 29% of occupier activity. Overall choice declined further by 40bps over the quarter to 10.7%. Choice for CBD space also declined from 6.6% to 6.3%. Any increase in choice on the back of construction activity will be limited as most of the large office developments due for completion in 2012 and 2013 are largely pre-let. Consequently, choice for new, large, high-quality buildings in the CBD is not expected to improve before mid-2013 at best. Costs for prime CBD space stabilised around mid-year and also remained unchanged in Q Whilst on average incentives offer a 10% discount on the prime headline rents in the CBD, they are more generous in the decentralised office district and periphery where choice is abundant and competition among landlords fierce.

5 On Point EMEA Corporate Occupier Conditions November Cardiff Cost: 297 / sq m Competition: 8,900 sq m Choice: 9.0% The level of competition in the Cardiff city centre market stands at 22,603 sq m for the year to date and it is likely that the year-end figure will edge above the 5-year annual average of 26,106 sq m. One transaction accounted for 50% of competition during Q3, namely the 4,181 sq m leased at Ocean Park House (Grade C space). There were no Grade A transactions in the city centre during Q3. A number of substantial enquiries continue to circulate in the market, including a new requirement from Geldards (solicitors) for 3,250 3,715 sq m, but economic uncertainty continues to delay decision making. The volume of choice continues to be eroded with total choice falling by 4.8% q-on-q as some space has been lost to other uses. The short-term sees Cardiff continuing to face a limited supply of immediately available Grade A choice with 12,793 sq m currently available in both new and second-hand buildings. Capital Quarter (7,060 sq m) remains under construction in the city centre but is not due to complete until Q Therefore the market for new Grade A space will be predominantly pre-let driven. Prime city centre rents remained at 22 / per sq ft / pa during Q3. Typical rent free periods remain at 12 months for a five-year term and 24 months for 10 years, although the lack of Grade A choice should lead to the tightening of incentives. Cologne Cost: 264 / sq m Competition: 46,800 sq m Choice:8.0% In the first three quarters of the year, occupier activity in the Cologne fell by 24% to a total of 193,000 sqm compared to the same period in Smaller transactions dominated activity, with almost 90% of users leasing spaces smaller than 1,000 sq m. City remained the most sought-after sub market, accounting for 28% of the volume and 40% of the deals. Our forecast for 2012 take-up volumes is c.245,000 sq m. Occupier choice is increasingly constrained, with the Cologne market facing a shortage of modern, high-quality space, and occupier demand cannot be sufficiently served in this segment. Little relief is expected here from new buildings: office completions in the first three quarters reached around 21,000 sq m and a further 56,000 sq m is expected to be completed by the end of the year, but almost 90% of the space has already been let. Vacancy declined slightly in Q3 with the vacancy rate standing at 8.0% at the end of September. Vacancy is set to decline further in the coming months. Following an increase in the first half of the year, costs remained remained stable with the prime rent at / per sq m / pm in Q3, for space in the Rheinufer- West sub market. The majority of deals agreed on rental prices of between 10 and 15 / per sq m / per month. Copenhagen Cost: 241 / sq m Competition: n/a Choice:10.1% Outside the CBD, competition for space has slowed considerably in recent quarters as the subdued economic forecast keeps occupiers from executing most expansion plans. Overall choice increased again in Q and this is not likely to change in the short term. However, competition for space in the best CBD locations has remained strong and choice has decreased in this submarket. Availability in the prime segment remains tight, with the majority of vacant premises being Grade B and C. Completion levels are likely to remain subdued for the foreseeable future, although there are a few projects in the pipeline such as the 9,000 sq m Teglholm Company House in the Copenhagen SV district and the new UN-city which will add over 45,000 sq m to the market in Costs for prime and secondary CBD space remained stable at DKK 1,700-1,800 / per sq m / pa and DKK 1,000-1,125 / per sq m / pa respectively. Incentives are still widely used in order to attract new tenants and have been a strong driver of activity. Some marginal increase in costs is not unlikely in the short term considering the limited availability of prime space. Dublin Cost: 323 / sq m Competition: 29,580 sq m Choice:19.4% Overall choice remained constant during Q3 at 19.4%. However, the level of choice in Dublin 2 (city centre) continues to decrease from a high of 17.8% in Q to currently stand at 13.1%. A large proportion of available space is over 20 years old and in some cases may be un-lettable unless refurbishment takes place. Only four Grade A buildings offer over 5,000 sq m in Dublin 2. Despite this there are no plans for speculative development. The release of large chunks of space back onto the market as a by-product of consolidation by some financial institutions will impact on overall choice. Leasing volumes were down 15% on the previous quarter and the year-to-date total of 90,920 sq m is down 28% on the same period last year. The majority of demand is below 1,000 sq m, with average take-up now at 565 sq m. Deals are driven by foreign direct investment that is looking to establish a presence in Ireland with short-term flexible space. There is up to 14,000 sq m of unsatisfied occupier requirements in the market that will compete for space going into Costs stabilised at 323 / per sq m / pa in Q3 and rent free periods remain at 9-12 months on a five-year term, although this is starting to tighten depending on the level of fit out.

6 6 On Point EMEA Corporate Occupier Conditions November 2012 Dusseldorf Cost: 300 / sq m Competition: 68,200 sq m Choice:11.3% Occupier take-up in Düsseldorf reached around 236,000 sqm in the first three quarters of the year and was around 21% below both the level of a year ago and the five-year average. The number of deals also declined. It is also apparent in the large-space segment that some companies have postponed plans to move or have renegotiated their existing contracts due to the possibility of a declining or stagnating economy. Many landlords are prepared to make extremely good contract renewal offers to their tenants in view of the high volume of vacancy and the high quality of new buildings that are currently under construction. Nevertheless, some large new deals are still pending for Q4, so that total take-up in 2012 could reach around 340,000 sqm. Occupier choice remained stable in Q3, but is expected to increase slightly in Q4. Choice is more constrained in central areas, in the city area alone, the vacancy rate is 10.3%, and in the central business district (CBD) it is only 7.3%. The completions volume for the first three quarters is comparatively low, but is expected to increase by 120,000 sqm by the end of the year. Prime rents are expected to increase to / per sq m / pm in Q4 due to the strong demand in the high-price segment. Edinburgh Cost: 365 / sq m Competition: 14,600 sq m Choice: 7.3% Occupier choice increased over Q3, driven by the release of second hand space back onto the market. Quality supply however remains constrained with very limited new grade A space currently available. This is likely to exert upward pressure on rents for this segment of the market. Elsewhere prime rents remained stable at 365 / per sq m / pa. The development pipeline was unchanged in Q3 with just 19,900 sq m currently under construction speculatively across three schemes. Occupiers faced with dwindling choice in the city centre may begin to seek good quality alternatives out of town. In particular Edinburgh Park could become more compelling as a location for occupiers given the tram extension scheduled to complete in Despite a strong start to the year occupier activity tailed off slightly in Q3. Leasing volumes were down 9% compared with the five year quarterly average. Despite this, take-up for the first three quarters of 2012 totalled 56,400 sq m, up 36% compared with the five year average for Q1-Q3. Nevertheless, the market continues to suffer from a lack of larger deals with the majority of transactions, around 91%, involving units of less than 1,000 sq m. Eindhoven Cost: 185 / sq m Competition: 2,100 sq m Choice:13.6% The Municipality of Eindhoven is in the process of relocating into owned premises, releasing 10,000 sq m of space in the Kennedy Tower back into the market. In addition Philips are vacating 40,000 sq m of Grade C space, with Rabobank all actively releasing space back to the market through a combination of portfolio consolidation and the adoption of new ways of working. This space release is mainly concentrated in the city centre market. Given this looming dynamic, there has been a clear shift in occupier demand away from the periphery and back to the city centre. In terms of completions, two new developments could be released to the market by 2017 including a 45,000 sq m building adjacent to the Central Station and soccer stadium. The prime building in the market Kennedy Tower commands a rent of 185 / per sq m / pa with lower prime rents standing at circa 160 / per sq m / pa. In the peripheral sub-markets rents are in the range of / per sq m / pa but are heavily underpinned by incentives. Frankfurt Cost: 396 / sq m Competition: 85,800 sq m Choice:13.1% The office property market in Frankfurt experienced a limited volume of take-up in the third quarter. Smaller transactions are clearly more prevalent in the current market: three quarters of the contracts were for units smaller than 1,000 sqm, and there were only two deals for spaces larger than 5,000 sq m. One reason for the reduced momentum in Q3 could have been the continuing lack of demand from the banking/financial services sector, a traditional stalwart of the Frankfurt market. Despite this weak demand, occupier choice decreased in Q3, although at 13.1% the vacancy rate remains high. Completions were again very low with most new space pre-let before completion. In the first three quarters as a whole, less than

7 On Point EMEA Corporate Occupier Conditions November ,000 sq m of available space came onto the market. This situation is not expected to change in the final quarter of the year. Highquality products are currently enjoying the strongest demand. These often offer companies the high level of flexibility for possible future changes; which is particularly useful given the current operating climate for many. Demand for really top-class products in prime locations is still restrained, however, and the prime rent therefore remained unchanged at / per sq m / pm. Geneva Cost: 868 / sq m Competition: n/a Choice: 4.7% In the Geneva office market, demand for prime office space is still characterized by consolidation activities of the financial industry sector and demand is mainly driven by luxury retail groups and or trading companies. Financial institutions, wealth managers and associated service providers are continuing to reduce and/or optimize their space requirements. Availability has increased therefore even in the CBD after many years of extreme shortage. Whilst costs remain stable for the time being, overall rental levels will start to fall as supply now exceeds demand. Costs in class B buildings are under pressure particularly, as occupiers continue to search for options to upgrade to higher quality space. Office availability in Geneva is increasing but the limited availability of land plots for new construction will not allow for a significant increase in supply. A new office and retail development project on Rue du Rhone which has now been completed continues to set the benchmark for prime rents of up to CHF1,200 / per sq m / pa, though take up is slow and it should be treated as an exception. Limited amounts of new office space have become available in Lancy and Champel and additional supply is being provided in La Praille and Eaux Vives. Competition for space remains high and finding suitable space solutions, especially for larger unit sizes of more than 1,500 sq m, can still be challenging. Costs agreed in the CBD of the left bank remain at CHF1,050 / per sq m / pa and space in the CBD area on the right bank (i.e. between the central station and the lake) trades at a 25% discount to this. Office space outside the CBD is more widely available and trading at further discounts (e.g. CHF400 to 550 / per sq m / pa in the airport area). Glasgow Cost: 372 / sq m Competition: 6,000 sq m Choice: 11.8% Occupier activity slowed in Q3 with just 6,000 sq m let, 47% below the 10 year quarterly average. There continued to be a lack of larger deals. The most significant deal in Q3 involved the acquisition of 934 sq m at 1 Cadogan Square by Teleperformance. Occupiers continued to focus primarily on the Grade B market, with no Grade A lettings recorded in the third quarter. Take-up for the year to end Q3 totalled 26,800 sq m, up slightly compared to the equivalent period in 2011 but well below average levels. Looking ahead it is therefore unlikely that take-up for 2012 will surpass the 10 year average of 46,000 sq m. Overall supply increased 7% in Q3, with Grade A supply increasing by around 12% as a result of 6,700 sq m of space becoming available at 151/155 St Vincent Street in the CBD. Despite this, Grade A vacancy rates remain relatively low at just 3.5%. The development pipeline remains switched off with nothing currently under construction. There has however been greater interest in the market amongst potential developers. Gothenburg Cost: 285 / sq m Competition: 19,900 sq m Choice: 6.6% Occupier activity in the Gothenburg slowed somewhat during Q3. However, competition for prime space remains fierce in Gothenburg and occupiers are finding it increasingly hard to secure suitable office space, particularly larger floor plates. The Rest of Inner City district, with its new development projects and relative central location, has continued to prove very popular with occupiers, driving choice down to just 3.4% in this area. Overall choice in Gothenburg decreased by 60 basis points to 6.6%, the lowest in nine years. No new office space was completed in Q3. Around 21,300 sq m is expected to be completed during 2012 as a whole, of which just 10% is speculative. Choice is therefore likely to remain stable in the final quarter. Costs for prime office space remained unchanged across all submarkets, with the exception of the Rest of Inner city district, which saw a 2.5% increase in rents to SEK2,050 / per sq m / pa. Hamburg Cost: 288 / sq m Competition: 77,900 sq m Choice: 8.1% The Hamburg office market saw subdued occupier activity inq3. The take-up volume over the year to date stands at 305,200 sq m and is around 20% below the five-year average. The uncertain economic situation and outlook are forcing occupiers to review and sometimes postpone their decisions to move. If a move is not able to realise efficiency and cost benefits, contracts are extended for existing spaces. As a result, there has been a distinct lack of large transactions above 10,000 sq m. Occupier choice declined slightly, as the vacancy rate fell to 8.1%. Some new completions have been seen with around 175,000 sq m of office space completed to date, of which around 44,000 sq m was still available by the time of completion. In Q3, completed development projects included the Opern Plaza project on Dammtorstraße. By the end of the year,

8 8 On Point EMEA Corporate Occupier Conditions November ,000 sq m of new office space will come onto the market. The prime rent remained stable compared to the previous quarter at 24 / per sq m / pm. In spite of the limited activity on the overall market, occupier interest in prime locations is very high and is the reason why prime rents have risen by 50 cents over the year. Helsinki Cost: 300 / sq m Competition: n/a Choice: 9.5% Competition for space remained stable in Q3, with the majority of requirement being for prime space in the CBD and office hubs next to ring roads. On the supply side, a few medium sized office completions were recorded in Q3. However, overall choice decreased marginally as the majority of new space has been pre-let. The CBD market remains much tighter, with choice recorded at around 5.5%. Whilst a number of large occupiers have finalised their relocation plans away from the CBD, competition for the quality space they leave behind is strong. These relocations, mainly by large international consultancy firms and domestic public listed companies which have secured space in the new developments in Töölönlahti, are planned for Occupiers are increasingly looking for office locations located close to public transport hubs. Some of the well-connected peripheral office districts will become increasingly important as they provide large floor plates at a significant discount to CBD space. Costs for prime CBD space remained stable in Q3 at 300 / per sq m / pa and are not expected to change in the short term as landlords become less aggressive in the light of the subdued economic environment. Incentives also remained unchanged, although anchor tenants that are willing to commit to at least 5-7 years leases are increasingly able to get an additional few months rent free as large pre-lets are usually the only way to get developments of the ground. Leeds Cost: 351 / sq m Competition:11,500 sq m Choice:10.1% Leeds witnessed a healthy volume of occupier activity in Q3, with leasing volumes up 11.1% compared to the 10 year quarterly average. A number of significant Grade A lettings at No. 1 Leeds helped to boost the market in Q3. Johnston Press acquired 3,140 sq m and a further 2,900 sq m was let to energy company GDF Suez. Despite a sluggish performance in Q2, occupier activity for the year to end Q3, totalled 31,178 sq m, up 7.2% compared to the five year average. In line with previous quarters, the services sector continued to dominate, accounting for 42% of take-up in the first three quarters of the year. The majority of deals (88%), continue to be driven by the sub 1,000 sq m market with just seven deals over 1,000 sq m recorded in Overall choice fell -4.4% q-on-q as increased activity in the letting market resulted in marginally positive net absorption both year-on-year and quarter-on-quarter. Grade A supply fell more rapidly, down by 8% as a result of a number of Grade A lettings. There was little change to the development pipeline with no new starts in Q3. 21 Queen Street which is expected to deliver 3,500 sq m speculatively in 2013, remains the only scheme under construction. Costs remained stable in Q3 at 351 / per sq m / pa for the best space, however Grade A rents in the city centre range from / per sq m / pa. Rents for Grade B space in the in-town market range from / per sq m / pa. Lisbon Cost: 222 / sq m Competition: 27,100 sq m Choice:12.0% Leasing volumes totalled 27,052 sq m in Q3, with the majority of activity concentrated in the final month of the quarter (59%). Activity increased 17% over the quarter, and was up by 92% compared to the equivalent period in Volumes for the year to end Q3 totalled 63,000 sq m, up 45% compared to the equivalent period in The majority of activity was focused in the New Office Location submarket, with seven transactions recorded accounting for around 49% of the total floor space in Q3. There was increased activity from the public sector in Q3, which accounted for 32% of deals done. The majority of activity, around 88%, involved the relocation of occupiers. We are therefore continuing to see occupiers take advantage of the favourable market conditions by moving and benefitting from an adjustment in costs. There were two new completions in Q3, and the addition of two other buildings that were not previously included, resulting in a slight upward revision to

9 On Point EMEA Corporate Occupier Conditions November the office stock. Overall supply remained relatively stable in Q3, reflecting an overall vacancy rate of 12.0%. Despite this supply remains inflated compared to average levels with the average vacancy rates of around 9.8% over the last five years. Prime rents have been stable since the end of 2011 at 222 / per sq m / pa. London City Cost: 743 / sq m Competition: 80,600 sq m Choice: 7.9% Occupier activity decreased with quarterly leasing volumes well below the long term average. However, year to date volumes are 21% ahead of the equivalent period last year. Strong activity continued to be seen from the TMT subsector, accounting for 24% of the total. Active demand volumes increased 28% and are now at their highest level since 2001, driven by four large requirements activating their search (previously potential). However, overall requirement volumes remained stable, at 941,000 sqm for the fifth consecutive quarter. Choice increased 20% over the quarter driven by new completions and tenant space coming online. As a result, overall vacancy rates increased to 7.9% and Grade A vacancy increased to 5.7%. Prime rents continued to remain stable, while rent free periods assuming a 10 year term at 24 months. Prime rents are likely to remain stable over much of 2012 although we may see some uplift towards the end of the year driven by improved sentiment supported by further evidence of pre-letting activity. London West End Cost: 1283 sq m Competition: 55,400 sq m Choice: 4.1% There was 55,400 sq m let across 40 deals during the third quarter of 2012, which is 26% below the 10 year quarterly average and the lowest third quarter total since September This brings the total for the year-to-date to 176,500 sq m, 11% behind the equivalent period last year. The TMT subsector again dominated take-up accounting for 30% of the quarterly total, with deals to Publicis, UPC/ Chello Media, Emap and TAG all taking space. In the year-todate, TMTs have accounted for 26% of all take-up. Overall demand rose by 17% to the quarter-end to 500,200 sq m, which is in-line with the long term average. Active demand increased by 25% while potential demand fell by 8% as some key requirements placed their searches on hold. 65% of demand seeking in excess of 5,000 sq m is being driven by a lease event or consolidation, with 20% being driven by expansion. Reflecting letting activity, TMTs continue to drive demand accounting for 60% of overall demand, with key requirements from Omnicom, Havas, Sony and Time Warner. Overall supply q-on-q was up 3% to 346,000 sq. Increases were driven by Grade A supply (up 25% q-o-q) as three units in excess came to the market, the largest being 123 Victoria St, SW1 totalling 15,100 sq m. This equates to an overall vacancy rate of 4.1% and a Grade A vacancy rate of 3.2%, compared to the long term overall average of 5.7% and Grade A of 3.0%. Speculative development remained stable at 199,400 sq m with only one scheme commencing over the quarter the refurbishment of 10 Bloomsbury Way, WC1 totalling 17,100 sq m as the levels of completions and commencements offset each other. Prime rents remained stable at 1,283 / per sq m / pa for the sixth consecutive quarter, as did rent free periods (16 months). Core Grade A rents rose minimally to 1,023 / per sq m / pa though the rate of growth has slowed. Prime rents are expected to remain flat during the last quarter of the year, however growth is expected in 2013/14, mainly as a result of Grade A shortage. Luxembourg Cost: 480 / sq m Competition: 27,600 sq m Choice: 6.0% Competition eased somewhat in Q The Decentralised and Periphery office districts were most active, accounting for 31% and 21% of activity respectively. This included the likes of KPMG who took 2,760 sq m in Bertrange and Alter Domus taking 1,070 sq m in La Cloche d Or. In-line with most other European countries, Luxembourg has been affected by the Eurozone debt crisis, and the fact that skilled labour is comparably expensive is starting to have an impact on corporate letting activity. Overall choice declined, mainly due to a number of relatively large deals in the non-central office districts. This was partly offset by the increase in choice in the CBD and Station districts where several corporates, hit by the economic crisis, vacated modern, high quality space in order to reduce their cost base. Nevertheless, choice in central office districts remains low compared to most European office markets. Going forward, speculative development activity remains limited, with several projects scheduled in Decentralised and Periphery currently on hold. Whilst availability increased in the CBD, costs did move up marginally in Q3. Prime headline rents remained unchanged at 480 / per sq m / pa in the CBD, but a further reduction in incentives was noticeable in the central districts, with 1-2 months rent free achievable for a 6-9 years lease. In Decentralised and the Periphery, 4.5 months rent-free on average is achievable, plus 1-2 months rent free in additional cutbacks.

10 10 On Point EMEA Corporate Occupier Conditions November 2012 Lyon Cost: 270 / sq m Competition: 37,000 sq m Choice: 4.9% The availability of office space in the Lyon office market continues to decline. Over the quarter, the office vacancy rate dropped by 90bps to stand at 4.9%. In the prime inner-city location Part-Dieu, vacancy stands as low as 2.2%. But also in other central submarkets vacancy remains very low. Exceptions in the market are only Villeurbanne La Soie with 12.4% or the North West and East with 7.9% and 8.7% respectively. Especially larger floor plates are very hard to find and the lack of options has impacted take-up, which for the first three quarters of the year is 20% lower than in the same period a year ago due to the absence of larger transactions. There is however a clear occupier preference for modern, quality space and 47% of take-up recorded was for new space. Supply is expected to remain low for the remainder of the year with more space to be delivered over For the moment, costs in Part-Dieu remain unchanged at 270 / per sq m / pa, but could increase in the short to medium term. For prime space in the towers developments costs remain at 285 / per sq m / pa. Rents for second-hand space are at 139 / per sq m / pa on average. Madrid Cost: 291 / sq m Competition: 58,700 sq m Choice:11.4% Madrid s vacancy rate increased by 20 basis points during Q3 to stand at 11.4%. The level of office choice (excluding high-tech) currently stands at 1.7 million sq m. In general the supply of offices and high-tech buildings has remained relatively stable across all sub-markets and this trend is likely to continue in the short term. Overall choice is likely to increase in the medium-term as secondhand space is freed up by a new headquarters under construction and public bodies vacating premises. Competition was much in line with last quarter, totalling 58,670 sq m. Only two transactions over 5,000 sq m took place: one at Alcalá 65 and the other at Almagro 40, both in the CBD. The number of transactions over 1,000 sq m remains low and the average size of space taken has continued to fall, to slightly under 800 sq m. Prime rents fell by 2% q-on-q, driven by the lack of transactions and the high level of supply. However occasional transactions are signing at higher costs due to the specific requirements of the tenant. As in previous quarters, costs in the secondary and satellite sub-markets remain stable but fell by 4.2% in the periphery. Malmö Cost: 243 / sq m Competition: 21,900 sq m Choice: 7.5% Q saw a further decline in competition, with leasing volumes totalling around 21,900 sq m, a 10% decrease on the previous quarter. Around 21,300 sq m was added to the market. Nevertheless, choice remained fairly stable at 7.5% with only minor changes recorded over the quarter in most submarkets. The exception was the Västra Hamnen district, where a number of large completions, pushed up choice considerably. At year end around 55,300 sq m is expected to have been added to the market, of which 35% is speculative. With completion levels not expected to decline, choice is likely to increase towards the end of the year and into Costs remained stable across the market, ranging from SEK 1,700-2,300 / per sq m / pa in central locations, to SEK1,000-1,500 / per sq m / pa in the periphery. New supply is concentrated mainly in Hyllie (Malmö Suburbs) and Västra Hamnen. This could make these locations more affordable as supply is likely to outstrip demand. Manchester Cost: 405 / sq m Competition: 16,000 sq m Choice: 10.7% After a solid start to the year, occupier activity was steady in Q3, although there remained a lack of larger deals with just two deals over 1,000 sq m. Occupier activity continues to be largely lease event driven. The largest deal in Q3 involved the acquisition of 2,200 sq m at Aldine House by Futureworks. Occupiers continued to focus on refurbished space which accounted for around 88% of deals in Q3. Looking ahead there are a number of active requirements in the market including Costain (5,500 sq m) and Egencia (1,300 sq m), however take-up for 2012 is likely to remain below average levels. Costs remained stable at 405 / per sq m / pa. In town Grade A rents were also stable, in the region of / per sq m / pa. Incentives remain tenant favourable with around months achievable on a 10 year term dependent upon grade, type, characteristics and location of the building. It is however anticipated that incentives will reduce shortly particularly for the more attractive stock. There was little change to the development pipeline in Q3. Development activity remains constrained with anticipated start dates for a number of schemes being further postponed. There is currently 49,200 sq m of space under construction, of which just 13,600 sq m is due to be delivered speculatively. Given the lack of development finance we are likely to see few new wholly speculative starts, although we can expect refurbishment of existing stock.

11 On Point EMEA Corporate Occupier Conditions November Milan Cost: 520 / sq m Competition: 67,200 sq m Choice:10.7% Take up totalled just under 67,200 sq m in Q3 2012, and totals 193,000 sq m since the beginning of the year confirming expectations for a year-end take-up of around 250,000 sq m. The quarterly result was driven by two large deals in the Hinterland and Semi Centre areas, totalling approximately 52% of the overall quarterly take-up. Such deals reflect opportunities for specific companies rather than wider market trends, with deals below 5,000 sq m accounting for 78% of the total number of deals. Q3 has seen an increase in activity for Grade B properties, accounting for 83% of the quarterly take-up by floorspace. Alongside a prevalence of transactions at mid to low price points and of activity in non-central submarkets, this seems to suggest that the current market conditions are not only influencing volumes, but also leasing conditions. This element is therefore worth monitoring throughout Q4 and the beginning of 2013 to see whether it reflects a temporary feature or a more meaningful trend. Costs have started to decline, with prime rents in the Historic Centre down from 530 / per sq m / pa to 520 / per sq m / pa and negotiations are generally tenant favourable. Munich Cost: 366 / sq m Competition: 204,300 sq m Choice: 8.6% Munich continues to see strong interest from corporate occupiers, with a take-up volume in Q3 of over 200,000 sq m. The strongest quarter of the year was mainly fuelled by six deals between 5,000 sq m and 10,000 sq m in size. Due to this continued demand, the annual take up forecast has been raised to 700,000 sq m. However, this should not conceal the fact that the economic situation is generally difficult. Occupier activity is expected to decline in Some large property searches have already been postponed and users are extending their existing contracts. Decision-making processes are taking much longer and users are intensively reviewing the extent to which a move would be feasible. The strong take up activity evident since 2011 has led to a considerable reduction in occupier choice. In the prime central business district (CBD) within the Altstadtring, only few opportunities remain to lease continuous spaces larger than 2,000 sq m. In Q3 projects with a volume of 25,000 sq m were completed, including the Welfen Höfe in the East sub market and the redevelopment of the Hirschgarten health centre in the West sub market. In the coming year, a total of only 120,000 sq m will come onto the market the lowest level since Costs have increased as a result of the reduced choice and strong competition for space. The prime rent increased over the quarter, and a further increase is expected by the end of the year. At / per sq m / month, the average rent has reached a 10-year high. Oslo Cost: 543/ sq m Competition: n/a Choice: 7.0% Competition for prime space remained at record high levels in Q3. Around 300 different occupier requirements have been identified with an estimated total size of around 680,000 sq m, a firm indicator that Oslo remains a landlord favored market. A number of significant prime leasing deals were concluded in the CBD area over the quarter. The Norwegian Parliament and Aon Grieg both signed lease contracts at Stortingsgata at levels above NOK3,500 / per sq m / pa. L Oréal and Uno-X Energi have both signed lease contracts at Lysaker Torg 35. Skadeforsikring currently occupies the space and will vacate it in spring The new occupiers have signed leases of around NOK 2,100 / per sq m/ pa. Demand for new developments also remains strong with Accenture signing a 5,300 sq m lease at Fornebu, while the Climate and Pollution Agency will take 12,000 sq m at Grensesvingen 7, Helsfyr. The building is being completely refurbished and classified as BREEAM Excellent. Overall, choice has remained virtually unchanged at 7.0% since January Choice in the CBD has recorded a 100 basis points drop over the year to stand at around 4.4%. Costs for prime CBD space remained unchanged at NOK4,000 / per sq m / pa. Paris CBD Cost: 795 / sq m Competition: 76,800 sq m Choice: 5.0% The overall occupational market has not experienced any major changes compared to the first half of the year, registering a drop in competition for space compared to The CBD remained precisely in the Paris average range with a 26% fall in occupier activity compared to Q In total, since the start of the year three transactions of over 5,000 sq m were completed (compared to five last year), including the signature of Roland Berger (7,800 sq m) in Q3 in "Le Magistère", rue de Lisbonne, Paris 8th district. The CBD resumed its position as the most expensive market in the French capital in Q3, surpassing the left bank sector (5/6/7th districts), which had deposed it last year following a series of transactions around 830 / per sq m / pa. Costs for prime CBD space even increased marginally with headline rents up 3.3% over the quarter to 795 / per sq m / pa. Prime rents even reached 805 / per sq m / pa for space in the Golden Triangle. Headline rents and effective rents will remain under downwards pressure but in inner Paris, and particularly the CBD, the lack of supply should keep the prime values and the second-hand rent of the best products high.

12 12 On Point EMEA Corporate Occupier Conditions November 2012 Paris La Defense Cost: 530 / sq m Competition: 18,500 Choice: 5.3% In line with the overall Paris market, activity in La Défense was low in Q3. Whilst La Défense performed slightly better compared to previous quarters, it again remained well below its usual level of activity. With 61,000 sq m taken up so far in 2012, it remained down by 32% compared to last year. After the high levels recorded between 2006 and 2008 (240,000 and 260,000 sq m taken up each year), the downward trend continued. Today, the number of occupiers taking new, large, floor plates is very limited and the market is more characterised by lease events driving extensions, rather than any additional requirements. In La Défense, for the moment supply remains contained, with around 200,000 sq m available equating to a vacancy rate of 5.3%. However, the many construction start-ups (over 260,000 sq m deliverable in 2 years) raise concerns for landlords. Indeed, the large amount of new supply in the pipeline is already putting occupancy costs under downward pressure. Prime rents decreased further over the quarter and are now recorded at 530 / per sq m / pa. As supply increases it is expected that landlords will be increasingly prepared to offer concessions. Conversely, successive rises in the French Construction Cost Index (+4.05% in Q and +6.85% in Q4 2011) could influence relocation decisions as cost containment remains the main driver for occupiers. This may well make La Défense more attractive to occupiers in the medium term. Rome Cost: 400 / sq m Competition: 6,400 sq m Choice: 6.3% to be felt on the Rome office market beyond transaction volumes. Public sector tenants are already looking to renegotiate contracts that are near to their expiry date, with reductions in rents by between 10 and 20% (the law requires a 15% reduction for Public administration tenants). New premises have also already been fitted to meet the newly introduced 15 sq m / full time equivalent occupant efficiency standards. Prime rents were stable in almost all submarkets but we expect further slight falls given continued economic uncertainty. Incentives were also stable in the city centre but increased at the wider city level. The limited activity in Q3 meant that the vacancy rate was broadly stable. Rotterdam Cost: 200 / sq m Competition: 11,900 sq m Choice:15.8% Occupier demand over the first three quarters of 2012 is down 50% y-on-y and is indicative of a subdued market dynamic. Big occupier requirements in the market are generally being delayed and are pending decisions at some point during Demand is concentrating heavily on the buildings around the central station. In terms of choice, vacancy rates were stable q-on-q but with a further 20,000 sq m to come to market and with construction of the First Tower and Calypso building vacancy rates are expected to increase over the next 12 months. Currently vacancy rates are highest in the city centre but mainly concern B and C quality office space. In terms of cost, prime rents were stable q-on-q at 200 / per sq m / pa. In contrast with other EMEA markets the rental profile for more peripheral submarkets is not significant, with such locations generally commanding rents of 180 / per sq m / pa. The occupier market remains subdued, with Q3 take-up at 6,400 sq m totalling just over 21,000 sq m since the beginning of the year. The majority of deals involved smaller units (on average just over 1,000 sq m) concentrated in the CBD (51% of all floorspace) and with the largest involving multinational companies (Willis and Warner Bros). The public sector has been so far absent from the market: the Ministry of Economy and Finance (MEF) has completed the move to the 30,000 sq m building in via dei Normanni, which was recorded in Q and is one of the last public sector deals. The impact of the public sector s new austerity approach is starting

13 On Point EMEA Corporate Occupier Conditions November Stockholm Cost: 522 / sq m Competition: 94,200 sq m Choice:10.7% Competition continued to ease in the third quarter. Whilst in recent quarters the most popular office district was Solna/Sundbyberg, Q3 recorded the highest competition for space in the Inner City Suburbs. Overall choice in Stockholm increased to 10.7%. Choice for prime CBD space remains very limited at 3.7%. Occupiers with large requirements continue to move to office districts outside the CBD, moving to the next best locations in order to be more cost efficient. Around 70,000 sq m office space was completed during Q3, with an additional 41,000 sq m expected to be added to the market during the remainder of the year. Besides the centrally located office locations, costs in all other districts remained stable. The Inner City Suburbs recorded an increase in prime rents to SEK2,400 / per sq m / pa, while prime CBD rents moved up to SEK 4,400 / per sq m / pa. No further rental growth is expected for the remainder of the year. Stuttgart Cost: 222 / sq m Competition: 44,200 sq m Choice: 5.7% Take-up in the Stuttgart office market reached 44,200 sq m in the third quarter, exactly in line with Q2. Large transactions remained limited with no transactions above 5,000 sq m. Compared to Q which was a record year - take-up fell by around 42%. Occupier activity was also much weaker in the first three quarters compared to last year, declining by 22% to 157,000 sq m. Decisionmaking processes are taking much longer and there is increasing demand for very cost-effective space. Smaller transactions continue to dominate. In terms of submarkets, the focus of activity in the first nine months was again on the City: every third deal was agreed here. Next in line are the City Centre Edge and Leinfelden- Echterdingen submarkets, each with 12% of total take-up. The unchanged completions volume of 33,500 sq m and more restrained demand for space led to only a slight reduction in vacancy, with 467,500 sq m available in the third quarter. However, the vacancy rate was unchanged at 5.7%. The prime rent was also unchanged over last quarter at / per sq m / pm. The Hague Cost: 205 / sq m Competition:16,400 sq m Choice: 11.0% Choice decreased q-on-q but remains at a relatively high level and further upward pressure on vacancy rates is anticipated over the next year. This will be an outcome of the Government bringing lots of office space back to the market as they consolidate into a new building during H In terms of the development pipeline 40,000 sq m has been delivered to the market in 2012, half of which is refurbished space in prime locations represents the last year of significant supply injection in the market, notably with the construction of the big Government towers, totalling 125,000 sq m. Occupiers are using current and future supply dynamics to drive stronger levels of incentive on leases. They have also been opportunistic given a flat rental profile. As such competition levels increased 30% y-on-y although were stable q-on-q. Take-up has been underpinned by a number of larger transactions such as Spaces taking 10,200 sq m during Q1, law firm Bird & Bird taking 4,000 sq m on a sub-lease during Q2 and APM Terminals taking 3,500 sq m in a newly completed building by the central station. Prime rents decreased by 5 / per sq m q-on-q and will be under further downward pressure. Utrecht Cost: 215 / sq m Competition: 15,200 sq m Choice:13.1% The market witnessed little activity over Q3 with just 15,200 sq m of take-up compared with 22,400 sq m in Q This has led to stability in market vacancy, with rates remaining at just over 13%. Much of the vacant stock is concentrated in more peripheral submarkets and is increasing as occupiers seek space solutions with stronger transport connectivity. Capgemini are the latest example of such movement in the market. In Papendorp vacancy is increasing due to the lack of non-car based connectivity and amenity. The future supply dynamic in the market is strong and city centre focused. The lack of Grade A supply and pent up occupier demand for such product has fuelled a developer response that will play through the market in 2013/14 at the earliest in areas with close proximity to Central Station. Indeed over the next five years the city centre is forecast to see a further 100,000 sq m of quality office supply. Given these dynamics, rents have been under downwards pressure. Prime rents declined by 5 / per sq m per annum over the quarter to stand at 215 / per sq m / pa. In contrast Papendorp rents are down 25 / per sq m over the last 8 quarters and now stand at 180 / per sq m / pa.

14 14 On Point EMEA Corporate Occupier Conditions November 2012 Western Corridor Cost: 382 / sq m Competition: 75,900 sq m Choice:14.8% Occupier activity in the Western Corridor continued to increase during Q3 with the year-to date total standing at 139,353 sq m. Competition in Q3 was boosted by two deals; IMG Worldwide at Stockley Park (10,591 sq m) and Huawei Technologies at Green Park (12,936 sq m). The Service Industries were the most active sector during Q3 (44% of space taken), followed by Manufacturing (35%). Annual competition is expected to be in line with the 5-year annual average of 204,385 sq m. The volume of named active demand from occupiers increased to 315,868 sq m during Q3, indicating strong competition in The level of choice continued to stabilise over the Western Corridor as a whole but the level of Grade A space continues to decline. The Grade A vacancy rate for the West London sub-market has fallen to just 2.6%, the lowest level for circa 10 years. The development pipeline remains constrained. During Q3 Aberdeen Asset Management started on site at Pine Trees, Staines (5,295 sq m) and SEGRO with E², IQ Winnersh (4,645 sq m) but there are otherwise limited speculative starts over the next 12 months. The average prime rent for West London stands at 382 / per sq m / pa up 12.3% y-on-y. Prime rents in the Thames Valley fell for the first time since Q2 2010, with a decline in Camberley seeing average rents fall by 0.6% to 331 / per sq m / pa. We expect rental growth to remain focussed on the West London market and town centres in the Thames Valley. Zurich Cost: 868 / sq m Competition: n/a Choice: 4.8% In the Zurich office market, construction activity remains high. Until 2015, an additional 250,000 sq m of new supply is expected to be delivered. One of the largest new developments is Europaallee adjacent to the Zurich Main Station and bordering the CBD. The first 84,000 sq m of office space in Europaallee will be completed within the next 12 months and are already pre-let to the Zurich Pedagogical University, UBS and Credit Suisse. Another 70,000 sq m of office space is expected to be provided in the medium to long term. The trend of domestic occupiers relocating from their CBD locations to new, modern and cost-efficient space outside the CBD continues. UBS and Credit Suisse, probably the two largest office occupiers within the Zurich CBD have now started to clear their inner city offices and are moving to new premises outside the CBD. In particular Credit Suisse is also actively disposing their formerly owner-occupied properties. With supply in the CBD increasing, costs for prime space decreased slightly over the quarter to CHF 1,050 / per sq m / pa. And with availability expected to further increase, the downward pressure on costs is expected to increase. Currently, landlords try to maintain rental levels, but are increasingly willing to grant incentives in order to hold or secure occupiers. The strength of the Swiss Franc also continues to be a burden for nondomestic occupiers. Costs in locations such as Zurich West and Zurich North show a significant discount to the prime areas with annual rates ranging from CHF180 to CHF350 / per sq m / pa.

15 On Point EMEA Corporate Occupier Conditions November Western European Corporate Occupier Markets at a glance Competition (Take-up, 000 sq m) Choice (% Vacancy Rate) Costs (Rents EUR / sq m / pa) Market Q month outlook Q month outlook Prime, Q month outlook WE Amsterdam Antwerp Athens n/a Barcelona Berlin Birmingham Bristol Brussels Cardiff Cologne Copenhagen n/a Dublin Dusseldorf Edinburgh Eindhoven Frankfurt Geneva n/a Glasgow Gothenburg Hamburg Helsinki n/a Leeds Lisbon London City London West End Luxembourg Lyon Madrid Malmö Manchester Milan Munich Oslo n/a Paris CBD Paris La Defense Rome Rotterdam Stockholm Stuttgart The Hague Utrecht Western Corridor Zurich n/a

16 Business Contact: Corporate Solutions Vincent Lottefier Chief Executive Officer EMEA Corporate Solutions Paris vincent.lottefier@eu.jll.com Report Contacts: Research Dr Lee Elliott Director EMEA Research London +44 (0) lee.elliott@eu.jll.com Tom Carroll Director EMEA Research London +44 (0) tom.carroll@eu.jll.com Acknowledgements: We gratefully acknowledge the help and assistance of the following Jones Lang LaSalle alliance partner firms in the preparation of some of this material: Akershus Eiendom AS, Athens Economics and Sadolin & Albæk. EMEA Corporate Occupier Conditions November 2012 OnPoint reports from Jones Lang LaSalle include quarterly and annual highlights of real estate activity, performance and specialised surveys and forecasts that uncover emerging trends. COPYRIGHT JONES LANG LASALLE IP, INC All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.