FEBRUARY 2019 European Monthly Research Report: the Impact of Tech

STRONG TECH SETS NEW RECORD OFFICE TAKE-UP AND PUSHES RENT UPWARDS

  • The growing importance of the tech sector in the European economy is undisputed and best captured in the outperformance of tech-stocks, especially since 2015. In fact, relative to the overall stock market index, European tech stocks have done better than their US counterparts.
  • On the back of this sector outperformance, job creation in the tech sector pushed its take-up of offices space to a record of 2 million square meters or 17.5% of total in 2018 across 21 European markets.
  • When testing the tech related office take-up impact on rents, we show that over the long term and on an aggregate level when the share of tech in total take-up increases, rental growth is in fact higher with a correlation of above 50%.
  • Also, we show a positive correlation between tech-take up and rental growth over the last 3 years for local markets, albeit some outliers including London distort the effect (mainly as rental growth is affected by Brexit uncertainty).
  • Finally, a granular deep-dive in the Paris office market shows that tech-take up concentrates in clusters among sub-markets in Paris. Although we use granular data, we find no clear relationship between tech-take up and rental growth over the last 5 years.

NEW RECORD TAKE-UP CONFIRMS TECH SECTOR AS LONG TERM DRIVER OF EUROPEAN OFFICE SECTOR

Sources: CBRE & AEW

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The information and opinions presented in this research piece have been prepared internally and/or obtained from sources which AEW believes to be reliable; however, AEW does not guarantee the accuracy, adequacy, or completeness of such information.


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Hans Vrensen
Head of Research, Europe

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