75% of European office leasing concentrated in CBDs

In its latest analysis, "Return to the Core," Cushman & Wakefield indicates that 75% of European office leasing is now concentrated in prime CBD locations, as businesses prioritize location over sheer quality. 

Nigel Almond

This shift is driven by companies seeking to attract talent by offering offices close to transport, efficient operations, and abundant amenities.
Over the last year (up to Q2 2025), leasing activity in core European locations surged by 10% (totaling 12.4 mln m2), while leasing outside these areas dropped by 4% (4.9 mln m2). Cities like Frankfurt, Milan, Amsterdam, Madrid, and London saw significantly more core leasing activity. Exceptions, such as Barcelona's 22@ district, demonstrate that new, high-quality developments with strong amenities can still attract tenants even outside the city center.
This strong demand in core areas has led to a falling vacancy rate, dropping to 7.1% in Q2 2025 across 18 major European cities, down from 7.3% in Q1. Conversely, non-core areas saw vacancy rise to 12.9%. The vacancy gap between core and non-core areas is now at its widest since Q1 2016 (585 basis points).
Consequently, rental growth is much stronger in core locations. Prime rents in CBDs are increasing at an average of 3.7% annually, almost double the 2.3% growth seen outside the core. Over the past three years, core rents grew by 13.2%, while non-core rents increased by 7%.
Investors are also flocking to core assets. Prime yields in these areas have stabilized in 2024 and are now showing signs of compression, moving inward by 8 basis points to 5.2% in Q2 2025 from a peak of 5.3% in Q3 2024. In contrast, prime yields outside the core continued to move outward, reaching 6.8%.
This investor preference has translated into core property values rising by 5% over the past year, marking four consecutive quarters of growth. Meanwhile, values for properties outside the core saw a slight decline of 0.2% in the same period.
Nigel Almond, senior director at Cushman & Wakefield, said: “In the twelve months to June 2025, close to three-quarters of leasing in key cities across Europe was in core central areas, up from around 60% pre-pandemic. This sharp rise highlights how location has become a decisive factor in occupier strategy, even as prime rents continue to rise.”
He added: “Looking forward, we believe the shift towards core locations will remain a key focus for occupiers. Accessibility, amenities, and high-quality office environments that support flexibility, creativity, and collaboration will remain critical as companies encourage employees back to the office. Despite the availability of grade A space outside the core, occupiers are still prioritising location over quality to realise hybrid working and greater in-office collaboration.”