European office markets see stable occupancy in 2025

The European office market in 2025 saw stable occupancy rates, an indication that the five-year average has become the new standard post-pandemic, according to research by BNP Paribas Real Estate.

Office take up in Europe 2025 - BNP Paribas Real Estate

High-quality assets in central locations continued to drive market activity, while a growing divide between prime and secondary properties intensified for both occupiers and investors. Notably, the investment market showed a clear rebound as interest rates stabilised, signalling a return of investor confidence.
Despite a slowdown in the second half of 2025, total office take-up across 18 major European markets surpassed 8 million m2. Frankfurt experienced a 54% surge year-on-year, reaching its highest level since 2019, driven by major deals in the financial sector. London also saw strong growth (+11%), particularly in submarkets like King's Cross and Southbank, with Luxembourg and Dublin showing notable increases.
The overall European office vacancy rate increased to 9.5% by the end of 2025, reflecting a mismatch between supply and demand. However, this trend varied significantly by location. CBDs maintained limited availability, especially for new constructions, while secondary markets and older assets saw sharply rising vacancy rates. The average CBD vacancy rate was 5.6%, compared to 11.1% in secondary markets, highlighting a widening gap in cities like Barcelona, Paris, and Brussels.
Prime office rents continued their upward trend in most European cities due to a persistent shortage of new, high-quality space. Southern European markets, including Milan (+11%), Barcelona (+10%), Madrid (+6%), and Rome (+4%), led this growth. The average increase in prime rents across approximately forty European markets was +4.4% in 2025.
The commercial real estate sector confirmed its recovery in 2025, with nearly €177 bn invested, a 9% increase from 2024. Major transactions included the sale of London's "Can of Ham" tower and a 40,000 m2 building in Paris for over €700 mln. France and Germany saw strong investment growth (+30% and +19% respectively), while the UK stabilised (+2%). Spain doubled its investment to €2 bn, and the Netherlands (+34%) and Italy (+12%) also showed significant upward trends.
Prime yields stabilised in the second half of 2025, attributed to increased investor clarity, with inflation under control. While the European Central Bank maintained its key rate, anticipated monetary easing by the Bank of England is expected to improve borrowing conditions. The market continues to exhibit polarisation, with capital values remaining stable in prime city locations while prices for secondary assets continue to adjust.
Etienne Prongue, head of International Investment Group (IIG) de BNP Paribas Real Estate, commented: “This result is broadly in line with the previous two years and close to the five-year average, which is now emerging as the new post-pandemic benchmark. Activity remains strong in central business districts, while secondary locations are facing mounting challenges. We expect a more pronounced recovery in transactions in the first half of 2026 in the UK, France and Germany. Strong demand for core assets should continue to exert downward pressure on prime yields.”