Casa Ferrero, Ferrero’s new international HQ in Findel, was one of the largest commercial real estate moves in 2019, said CBRE, a property consultancy. Photo credit: Utku Pekli
Demand for commercial property remained near record-high levels last year, while the vacancy rate scraped historic lows, according to a report released this week by CBRE, a commercial real estate brokerage.
A total of 267,000m2 in office space was newly occupied in 2019, with nearly 40% (101,800m2) of that activity taking place in the fourth quarter, said CBRE. “This is the second best year ever on record and the 6th consecutive year of [more than] 200,000m2 take-up,” the report stated.
Major moves included Casa Ferrero (29,500m2) and the expanded police headquarters (14,000m2) near the airport, Silver Holding moving into the Royal Hamilius complex (10,413m2), which “was the largest CBD transaction in more than a decade,” and 10,000m2 of new European Parliament space in Kirchberg.
The vacancy for Luxembourg commercial properties hit a record low 3.4%, CBRE reported. The tight market was “limiting potential movements.”
Prime rents held steady, the CBRE study said. In the central business district, it was an estimated €50 per square metre per month, excluding VAT. In Kirchberg, the figure was €39/m2/month, while it was €38 in the Gare district and €30 in Cloche d’Or. The firm forecast that: “Activity in early 2020 should see a slight increase in prime rent in central markets.”
Commercial real estate worth €2.24bn changed hands in 2019, including €837m in the fourth quarter. “This is the highest annual figure in the post-crisis era,” the firm commented.
“Large volume deals of €200m have now become commonplace in the Luxembourg market,” CBRE observed. Notable transactions included “Kildare Partners’ €390m acquisition of Helios (70,000m2) in Q4”, “the sale of an office and hotel portfolio to Batipart for an estimated €400m+”, “UFG Wealth Management backed by Russian capital acquired the ENOP (21,700m2) in Munsbach for €92m” and “German investors Catella acquired Edison 7 in Strassen for €41m”.
Indeed, foreign investors were behind 89% of capital placed in Luxembourg’s commercial property market in 2019.
“The pipeline for 2020 is estimated at 328,000m2, of which just one-quarter is available,” CBRE stated. That includes another 148,000m2 or so that is expected to be completed for European institutions in 2020. In addition, Zenit Royal (17,000m2) and Connection (23,000m2) are expected to be delivered this year.
The property outfit said: “The pipeline for 2021 is estimated at 188,000m2, of which just under half remains available.”