Lisbon Offices Market 2 nd Quarter 2007 Take-up rises to 65,896 m2 Western Corridor, New Offices Zone and Parque das Nações were the best performing zones in the quarter
Lisbon Offices Market 2nd Quarter 2007 Portugal Economy According to information from INE (National Statistical Institute), there may have been a slowing of economic activity in Portugal during the second quarter. However, this did not have a negative effect on the economic climate, which showed an improvement on the first quarter. The indications of growth in the labour market are moderately positive, based on employers expectations up to June and information on the quarter from Short Term Indicators and Job Centres. The Portuguese economy grew faster in the 1 st quarter with a year-on-year increase in GDP of 2.1%, according to estimates published by INE. Inflation as measured by the Consumer Prices Index (CPI), increased during the 2 nd quarter, reversing the trend of the previous three quarters. Offices Market in Europe The 2 nd quarter of 2007 saw a rise in prime rents in the leading European capitals, prompted by the combination of strong demand and a limited supply of office space. The European Office Rental Index increased overall by around 4.6% during the quarter. This was the largest increase since the final quarter of 2000 and was prompted by strong growth in the major European markets. Prime Rents European Cities Index ( / m 2 / year) 2nd Quarter 2007 Varsóvia Viena São Peterburgo Estocolmo Roma Praga Paris Oslo Munique Moscovo Milão Madrid Lion Luxemburgo Londres West End Londres City Lisboa Kiev Helsínquia Hamburgo Frankfurt Edimburgo Dusseldorf Dublim Copenhaga Budapeste Bruxelas Berlim Barcelona Atenas Amesterdão Source: JLL European Research 324 246 626 443 430 240 825 539 348 1111 560 456 240 420 246 578 301 264 420 456 264 646 255 264 300 246 306 372 330 1039 1759 European Office Property Clock 2 nd Quarter 2007 Prime rents in the 24 European cities that make up the index are now 11% higher compared with rents in the same period a year ago. The strong growth in the labour market in Europe has driven demand for office space. In the 1 st half of 2007, we saw take-up of 6.7 million m2, an increase of 9% compared with the 1 st half of 2006. Average vacancy rates in Europe are around 7.7%. The cities that have seen the largest falls are Lisbon (-170 bp), Stockholm (-160 bp), Edinburgh (100 bp) and Oslo (-100bp). Source: JLL European Research COPYRIGHT JONES LANG LASALLE IP, INC. 2007. 2
Offices Market in M Lisbon Take-up: The modest but steady recovery of company finances allied to the recovery in investment levels during the past 12 months has had a very positive effect on take-up levels in the Lisbon offices market. Compared with the take-up during the same period in 2006, there has been an increase in area transacted of the order of 22,919 m2 (+ 34.5%). Nearly half the area occupied during the 2 nd quarter is in used offices as opposed to new offices, which have proved to be less attractive. The highlight of the quarter was 3 leasing operations totalling 31,641 m2 (48% of the total take-up): total occupation of the Mar Mediterranean building by the Sonaecom, total occupation of the Edifício Caribean at Parque das Nações by Novabase, and the occupation of 14,861 m2 of Torres de Lisboa by Petrogal. Vacancy rate: The declining trend in the vacancy rate continued, a situation that is especially true in the Prime CBD Zone (Zone 1) where we are starting to see a shortage of products to meet demand. To illustrate this situation, the Prime CBD Zone has a future supply of 5,241 m2 which is already pre-let to Barclays Bank, with the result that there is no supply available for the market. The zones that have shown the largest falls in the vacancy rate were the Prime CBD Zone, the New Offices Zone and the Parque Market Summary Table Available Total Take Zones Stock m2 Vacancy Rate supply (m2) Up (m2) Zone1 570,505 52,588 3,428 9.22% Zone 2 1.035,009 80,399 5,348 7.77% Zone 3 405,704 30,834 19,887 7.60% Zone 4 444,664 27,580 1,640 6.20% Zone 5 218,805 35,764 19,216 16.35% Zone 6 810,611 143,635 13,289 17.72% Zone 7 658,765 15,350 3,088 - Total 4,144,063 386,150 65,896 9.32% das Nações zone. The leasing operations mentioned above contributed significantly to this situation. Occupation: The preference of companies in Lisbon continues to be focused on recently built and well equipped buildings offering efficient and flexible use of space. In 2007, companies will continue to opt for spaces that enable them to respond to new market demands, and open space properties will certainly be the most attractive product. Future supply: Although future supply will be scarce in some office zones in Lisbon, the market as a whole is going through an attractive expansion phase. Future supply is estimated at 81,162 m2 in 2007 and 111,000 m2 in 2008. Based on forecast GDP growth in Portugal for the next 2-3 years, we can forecast take-up of the order of 160,000 170,000 m2 /year, corresponding to a take-up 70% higher than supply. During the 2 nd quarter, we saw 4 new buildings come on to the market: Parque das Nações Zone (Edifício Mar Mediterrâneo), Zone 7 (EUA Business Center), the Western Corridor (Alfraparque Edifício C) and the Central Business District (Edifício Republica), totalling 25,140 m2. With the 2nd quarter now over, we can claim that the first half of 2007 has shown a remarkable level of dynamism. During the first half of the year, we have seen a level of take-up of the order of 109,734 m2, equivalent to 28% of the available stock. The vacancy rate fell from 11.4% in the final quarter of 2006 to 9.32% in this quarter. On the supply side, 45,701 m2 of new space was completed in the first half of 2007. The current stock of offices in Lisbon totals 4,144,063 m2. Three Most Active Business Sectors % share in the total Volume of deals % Share in the total number of deals Business Sector Other services 41,7% 43,9% TMT s & Utilities 31,3% 12% Pharmaceuticals 7,2% 6,6% COPYRIGHT JONES LANG LASALLE IP, INC. 2007. 3
Analysis of rents No. of transactions per rent interval < 14 /m2 49 14-16 /m2 10 16-18 /m2 6 18-20 /m2 4 >20 /m2 10 Average Rents Zones New Used Zone 1-17.75 Zone 2-13.40 Zone 3-16.12 Zone 4-11.20 Zone 5 15.80 - Zone 6 12.23 11.38 Zone 7-10.57 Market Summary Zones Average rent Prime rent Zone 1 17.98 20.00 Zone 2 14.78 19.00 Zone 3 16.12 18.50 Zone 4 9.35 11.00 Zone 5 15.80 18.00 Zone 6 11.80 13,50 Trend in prime rents by zone Zones Year 2006 1st Q. 2007 2nd Q. 2007 Zone 1 18.50 20.00 20.00 Zone 2 18.50 18.00 19.00 Zone 3 18.00 17.00 18.50 Zone 4 10.50 11.00 11.00 Zone 5 19.00 17.00 18.00 Zone 6 13.60 13.50 13.50 The 10 largest transactions 2nd Quarter 2007 Company (Tenant) Sector Leased Space (m2) Location Petrogal Other services 14.861 Torres de Lisboa Sonaecom TMT s & Utilities 10.040 Mar Mediterrâneo Novabase TMT s & Utilities 6.740 Ed. Caribean Malo Clinics Pharmaceuticals 2.336 Green Park Compal Consumer Products 2.100 Arquiparque I Desejo sem Limites Other services 1.500 Palácio Condes do Restelo NAER Business Services 1.357 Palácio Sotto Mayor Prosegur Activa Other Services 1.151 Espaço Berna Johnson Controls Consumer Produtcs 1.100 Tetrapark Portugal Telecom TMT s & Utilities 1.065 Av. Almirante Reis, 65 Source: LPI / JLL The 3 best performing buildings 2nd Quarter 2007 Zone Building Leased Space (m2) Number of deals Zone 3 Torres de Lisboa 15,095 2 Zone 5 Edifício Mar Mediterrâneo 10.040 1 Zone 5 Edifício Caribean 6,740 1 Source: LPI / JLL The 3 Major Office Developments Office Parque Expo Area 65,000 m2 Project located in zone 5, Parque das Nações. Negotiations are currently in hand with the Justice Ministry for the entire complex. Torres Colombo Area 24,000 m2 (each tower) One of the main Office developments promoted in Lisbon. To be developed over the Colombo Shopping Centre, each tower will have 24,000 m2, offering openspace areas with 2,000 m2 per floor. It provides an excellent opportunity for the big companies to consolidate their offices in one building. European Maritime Agency Building (EMSA) Area 15,000 m2 Located in Ribeira das Naus, Cais do Sodré, the building will house the headquarters of the European Maritime Safety Agency, currently installed in Parque das Nações. Rent Analysis Source: LPI / JLL COPYRIGHT JONES LANG LASALLE IP, INC. 2007. 4
Map of Zones Lisbon Offices Market Prime CBD (Zone 1): Av. Liberdade as far as Saldanha; Praça do Saldanha; Rotunda do Marquês Pombal; Rua Castilho; Barata Salgueiro; Rosa Araújo; Mouzinho da Silveira; Duque de Palmela; Rua Braamcamp; Alexandre Herculano (from Av. Liberdade to Rato, excluding the part to the right of Av. Liberdade); Rua Rodrigo da Fonseca; Av.Joaquim António de Aguiar (as far as Rodrigo da Fonseca); Perpendicular roads between Rua Rodrigo da Fonseca and Rua Castilho; Rua Camilo Castelo Branco (as far as Duque de Loulé); Rua do Salitre (from Av. Liberdade to Rodrigo da Fonseca, corresponding to Rua do Salitre, number 119). CBD (Zone 2): North: Rotunda de Entrecampos; East: Av. Roma/Manuel da Maia (exclusive) to Rovisco Pais; South: Saldanha (excluded) plus perpendicular road to right of Av. Fontes Pereira de Melo as far as Av. Duque de Loulé; West: Praça de Espanha (excluded) to Av. António Augusto de Aguiar; Amoreiras Zone (included in Zone 2); South: from the junction of Av. Joaquim António Aguiar/ Rua Rodrigo Fonseca; North: to Rua Joshua Benoliel; as far as Av. Marquês da Fronteira; To Rato via Rua Filipe Nery and Artilharia Um. New Offices Zone (Zone 3): North: 2ª circular; South: Entrecampos to Av. Berna (exclusive); West: Eixo Norte-Sul/Av. José Malhoa; East: Av. Roma/Av. Brasil/ Campo Grande; including Praça de Espanha, Av. Dos Combatentes, Av. José Malhoa, Av. Columbano Bordalo Pinheiro, Sete Rios/Laranjeiras. Secondary Zone (Zone 4): South: River Tagus between Santa Apolónia and Alcântara, including all the Baixa as far as Restauradores and Lapa/Infante Santo; North: Praça do Areeiro; West: Almirante Reis and adjacent blocks as far as Estefânia (boundary with Zone 2); East: Almirante Reis and adjacent blocks as far as Afonso Costa/Rotunda das Olaias. Parque das Nações (Zone 5): Parque das Nações Western Corridor (Zone 6): Outside Lisbon boundary, Western Corridor as far as Porto Salvo; excluding Sintra municipality; including Carnaxide, Alfragide and perimeter of the Amadora area. Zone 7: Other Zones. COPYRIGHT JONES LANG LASALLE IP, INC. 2007. 5
Contacts Ann Charnock Head of Office Agency & Corporate Solutions Jones Lang LaSalle Lisboa Tel. +351 21 358 32 22 ann.charnock@eu.jll.com Alexandra Gomes Research Jones Lang LaSalle Lisboa +351 21 358 32 22 alexandra.gomes@eu.jll.com COPYRIGHT JONES LANG LASALLE IP, INC. 2007. This publication is the sole property of Jones Lang LaSalle, and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle.The Information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them.jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. COPYRIGHT JONES LANG LASALLE IP, INC. 2007. 6