Hines sees "strong buy" for prime European offices

Hines believes now is a "strong buy" period for prime European office properties due to a clear split in the market.

Hines offices

The global real estate investment manager identified a unique buying opportunity because the supply of top-tier offices is shrinking, rents are increasing, and demand is focused solely on the best assets.

According to a new report, Hines sees prime European offices as outperforming all other property types, creating an "exceptional" opportunity. New office buildings less than five years old make up less than 3% of the total inventory in key areas like London's West End, Düsseldorf CBD, and Amsterdam Zuidas.

This divergence means that while overall demand for office space might be down due to hybrid work, tenants are specifically seeking out high-quality, centrally located buildings. With new office development starts down 80% from their peak, the limited supply of prime stock is driving significant rent growth, with prime rents across Europe up 35.6% since late 2019. This strong market activity indicates a return of investor confidence.

Hines has already acted on this belief, investing in high-profile properties such as Goldman Sachs' new Paris headquarters and the redeveloped Diagonal Vertical tower in Barcelona. They are also developing B'Ella Berlin, a large mixed-use project aiming for fossil-fuel-free operations. These moves highlight Hines' strategy to acquire and develop premium, supply-constrained assets that promise strong rental growth and long-term value.

Alfonso Munk, co-head of investment management at Hines, commented: “The biggest risk right now is treating office as a single asset class. The dispersion between assets is wide and still widening. In parts of the market, fundamentals have already turned; capital just hasn’t fully caught up yet. That gap is where we see opportunity.”