The European Prime Office Rebound

A com­pelling oppor­tu­ni­ty in sup­ply-con­strained markets

Hybrid work and struc­tur­al decline have dom­i­nat­ed the Euro­pean office nar­ra­tive, but the fun­da­men­tals reveal a more nuanced pic­ture. Prime assets in sup­ply-con­strained mar­kets have been see­ing some of the strongest rent growth of any real estate sec­tor in the region. As AI reshapes the work­place, the flight to qual­i­ty is expect­ed to accel­er­ate: The best spaces will mat­ter more, not less.

Three Forces Driving the Opportunity

1. The Flight to Quality Has Been Accelerating

Occu­pi­er pref­er­ences have sharp­ened sig­nif­i­cant­ly, dri­ving more intense com­pe­ti­tion for Grade A space while a great deal of sec­ondary stock sits empty.

Office Shows the Largest Prime-Sec­ondary Val­ue Gap Across Sec­tors
(Cumu­la­tive dif­fer­ence between aver­age and Prime CPPI since Q4 2019)

Result: Strong com­pe­ti­tion for the best stock, his­tor­i­cal­ly tight prime vacan­cy, and a widen­ing gap between win­ners and lag­gards.
Key fig­ure: Prime office CPPI has diverged from aver­age office val­ues by 33.7% since Q4 2019, the widest bifur­ca­tion of any Euro­pean real estate sec­tor.¹ 
Take­away: The gap between prime and aver­age has con­tin­ued to widen.

2. Supply Has Been Critically Constrained

Ris­ing con­struc­tion costs, tight financ­ing, and plan­ning restric­tions have com­bined to impede new office devel­op­ment across Euro­pean cen­tral busi­ness dis­tricts (CBDs).

Rents Up Where Sup­ply is Thin: CBD Stock <5y Old & Rent Growth %²

Result: Mar­kets with the least Grade A vacan­cy have seen the strongest rent growth; the inverse rela­tion­ship has been clear and con­sis­tent across Euro­pean sub­mar­kets.²
Key fig­ure: In London’s West End, Dusseldorf’s CBD, and Amsterdam’s Zuidas, new stock under five years old has fall­en below 3% of total inven­to­ry.²
Take­away: Qual­i­ty and loca­tion have become imperatives.

3. Rents Have Significant Room to Run

Con­strained sup­ply and inten­si­fy­ing occu­pi­er demand have dri­ven prime rents sharply high­er. Across the EU-15, growth has totaled 35.6% since Q4 2019.²

Ris­ing Rents, Ris­ing Earn­ings: Prime Rent to Cor­po­rate Earn­ings Per­centile Score³

Result: Rents in most mar­kets have remained below their his­tor­i­cal earn­ings medi­an, which sug­gests there may be mean­ing­ful room for growth.
Key fig­ure: In Paris, rents moved from very afford­able lev­els in Q4 2022 to only slight­ly above medi­an at the end of 2025, sug­gest­ing sig­nif­i­cant capac­i­ty for occu­piers to absorb fur­ther increas­es.³
Take­away: Entry today could posi­tion investors to cap­ture growth ahead.

Supply-Demand Gap: Starts Down, Rents Trend Up

Hines View

Con­cen­trat­ed demand and min­i­mal new stock appear to be dri­ving the Euro­pean prime office rebound, con­tin­u­ing to place upward rent pres­sure on the sec­tor. Hines research indi­cates this the­sis should hold even as AI reshapes how peo­ple work, accel­er­at­ing the divide between spaces that com­mand pre­mi­um rents and those left behind. Our analy­sis gives us the con­vic­tion to move into the Buy phase. 
– James Purvis, Head of Euro­pean Research

Where Hines Sees Opportunity

• Not lim­it­ed to the core CBD
• Well-con­nect­ed trans­port hub submarkets:
  • May offer mean­ing­ful dis­counts to adja­cent prime markets
  • Could present com­pelling entry points as demand spills outward
• Frank­furt Hauptbahnhof:
  • Trades at a 23% dis­count to the CBD²
• Areas near Lon­don’s King’s Cross:
  • Trade at a 37% dis­count to the West End.²

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