The vacancy rate for Luxembourg offices increased last year to 4.2%, still well below the European average of 7.7%, while outside the capital and in Esch/Belval empty spaces doubled to over 8%, commercial real estate firm JLL said on Thursday.
One of the drivers was a “significant decline in the activities of the Luxembourg state” last year, which accounted for 10% of transactions on the office property market, half as much as in 2022, the company said in an annual report.
Business services companies made up 30% of the demand, financial institutions were 23% of the space shoppers and European institutions accounted for 17% of the total volume, JLL said.
Rising construction costs have pushed up lease prices, as has the shortage of available new properties.
“One of the key findings of 2023 – but this has been true for a long time and will continue to be true in the future – is that new properties less than five years old and ongoing projects are seeing the greatest success,” JLL Luxembourg Office Agency Director Jonathan Morand said.
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The increase was most noticeable in the district around the capital’s main train station, where new properties rented for €40 per square meter per month, 5.3% more expensive than in 2022, JLL said.
The largest increase for office space around Findel airport, where prices increased by 6.7% to €32 euros per square meter per month.
In Luxembourg’s outskirts and in Esch/Belval, rent remained unchanged at €24 per square meter per month.
JLL estimates that rents will rise slightly in 2024, mainly in downtown neighbourhoods.
(This article was first published in the Luxemburger Wort. It was translated and edited by Emery Dalesio.)