European office tower submarkets defy expectations

Contrary to earlier predictions of decline due to hybrid working, office tower submarkets across Europe are experiencing a strong resurgence.

Offices - Colliers

New research from Colliers EMEA, "Back from the brink: the comeback of office tower submarkets," which analysed eleven major European tower locations, reveals a clear rebound in demand, evidenced by robust leasing activity and favourable vacancy rates compared to broader city markets.

A key factor in this revival is the transformation of many office tower districts from solely office-focused areas into dynamic, mixed-use urban environments. These areas now integrate workspaces with residential, leisure, cultural, and public amenities. Examples like Zuidas in Amsterdam, Canary Wharf in London, and Porta Nuova in Milan demonstrate how this mixed-use approach is enhancing their long-term relevance and appeal to occupiers.

Despite ongoing economic uncertainty, European office tower markets are exhibiting resilient leasing performance. Eight of the eleven submarkets analysed show vacancy rates below their respective citywide averages, with particularly strong fundamentals in City Centre West Warsaw, CTBA Madrid, Zuidas Amsterdam, and Porta Nuova Milan. Central, well-connected tower districts continue to attract consistent tenant demand.

A significant "flight-to-quality" trend is reshaping demand. Modern, sustainable, and highly specified buildings are commanding rents at or above traditional CBD levels in several markets, including Frankfurt and Warsaw. Conversely, older properties are facing pressure, leading to increased refurbishment, repurposing, or demolition. Approximately 20% of recent European office acquisitions are now focused on renovation or conversion rather than passive investment.

Tower districts, whether within or outside traditional CBDs, continue to benefit from competitive pricing, but success increasingly hinges on accessibility and amenity provision. Excellent public transport, walkability, and active ground-floor uses are crucial. Major infrastructure projects like London's Elizabeth Line, alongside urban regeneration initiatives in cities such as Madrid, Warsaw, and Paris, are bolstering the competitiveness of well-situated tower markets.

The outlook for EMEA office tower submarkets is cautiously positive. While hybrid working is a permanent shift, demand is consolidating around flexible, high-quality, and sustainable spaces within vibrant, mixed-use urban settings. Tower districts that continue to diversify uses, upgrade assets, and integrate with their wider cities are well-positioned for success in the evolving European office market.

Commenting on the findings, Karin Witalis, associate director - Commercial Real Estate, EMEA Research, said: “Office tower markets across Europe are not in decline; they are being reinvented. Occupier demand is consolidating around high-quality, well-connected and amenity-rich locations, with mixed-use environments and sustainable design playing a central role in restoring confidence and driving long-term relevance.”