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News Release

London - Moscow

Significant Rental and Take-Up Declines across Europe’s Office Markets

According to Jones Lang LaSalle’s Q1 European Office Clock


London - Moscow, 4 May 2009 – According to Jones Lang LaSalle’s Q1 2009 European Office Rental Clock, European prime office market rents decreased by 8.0% over the quarter, a fall not witnessed in the Index before. The Index is based on the performance of 24 markets, and highlights that prime rents decreased in the majority of the markets, led by Moscow and London (down -28.6% and -21.1 respectively), though Madrid (-12.5%) and Warsaw (-10.7%) also showed double-digit rental falls over the quarter, whilst the major German cities saw rental corrections of between 2% and 5%, marking their first falls in this cycle.

As office occupiers have increasingly downsized and made more efficient use of existing space, office take-up has slowed throughout 2008 and resulted in further declines in take-up volumes in the first three months of 2009. Overall European office leasing volumes reached 1.9 million sq m (20.5 million sq ft), a fall of 37% over the quarter (-40% to Q1 2008) and 31% below the five-year average. The Central and Eastern European (CEE) markets in particular have been affected by the deteriorating economic conditions and outlook: leasing volumes decreased over the quarter by -41%. In western Europe, substantial falls in take-up have been recorded in Utrecht (-82%) and Dublin (-71%), but large markets like London (-65%), Madrid (-56%), Munich (-44%), and Paris (-23%) also saw significantly lower activity in Q1 2009 compared to the first three months in 2008.

Weak demand and completions of more than 2 million sq m (21 million sq ft) in Q1 caused the overall European vacancy rate to increase from 7.7% in Q4 2008 to 8.5% over the quarter. Driven by high completion levels in Moscow the aggregated CEE vacancy rate jumped to 13.6% in Q1 09 from 4.9% a year ago.  Vacancy rates in Europe vary now between 2.4% in Luxembourg and 18.5% in Dublin.  

Commenting on the Q1 Clock, Chris Staveley, Head of Jones Lang LaSalle’s Cross Border team commented: “Many office projects have been cancelled or postponed in recent months; however the dramatic slowdown in office take-up is putting increased pressure on prime rental levels. These market indicators demonstrate that widescale recessionary conditions have arrived to strongly impact the region’s occupational markets.”
 
 
 
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specialising in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2008 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.3 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $41 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008 and 2009 at the Commercial Real Estate Awards (Russia). For further information, please visit our Web site, http://www.joneslanglasalle.ru