European office occupiers are increasingly bringing forward their real estate decisions to secure space in the best buildings, as demand for high-quality offices continues to outstrip supply across many of the continent’s major markets, according to the latest European Office Update from Cushman & Wakefield.
Leasing activity in the first half of 2026 was 9% below the five-year average, but demand remained heavily concentrated on higher-quality assets. Grade A offices accounted for 51% of total take-up, while availability remained at a historic low of just 3.3%. At the same time, Europe’s development pipeline fell to its lowest level since 2014.
The supply shortage is continuing to support rental growth. In the 12 months to June 2026, prime rents increased by an average of 4.6%, with 94% of European markets recording either growth or stability.
Lisbon was among the strongest-performing markets, with prime rents rising 10.3%, ahead of Amsterdam at 10% and well above London, where prime rents increased by 7.7% in the City and 7.3% in the West End. Only Rotterdam (+16.7%), Birmingham (+14.3%) and Milan (+10.4%) recorded stronger growth, highlighting mounting demand pressure amid severely constrained supply.
“The office market continues to demonstrate remarkable resilience”, said Javier Bernades, Head of Offices EMEA at Cushman & Wakefield. “Companies remain strongly focused on the best buildings, located in the most attractive areas. With the development pipeline shrinking and Grade A office availability remaining extremely limited, occupiers will need to bring forward their real estate strategies much more than in previous cycles”.
The report warns that the shortage of high-quality office space could intensify in the coming years. Europe’s development pipeline fell 19% year-on-year to 8.4 million sqm, while speculative construction (projects without secured occupancy) reached its lowest level in a decade.
In several markets, Grade A availability is already at historic lows. In both Lisbon and Birmingham, it stands at just 0.7%, further limiting options for occupiers seeking high-quality space.
Meanwhile, investor interest in the office sector continues to recover. European office investment reached €22 billion in the first half of 2026, just 1% below the same period last year despite continued geopolitical uncertainty.
The market also recorded its third consecutive quarter with a transaction above €500 million, led by Barclays’ €866 million acquisition of 1 Churchill Place in London.
The return of lenders is also supporting the recovery. According to Cushman & Wakefield, a growing number of financial institutions are competing for office investment opportunities, contributing to more favourable financing conditions. Narrower spreads and the return of financing at up to 60% of asset value are helping to strengthen investor confidence.
“Lisbon continues to reinforce its position as a leading destination for international companies, supporting solid demand for high-quality office space”, said António Almeida Ribeiro, Head of Office Agency Portugal at Cushman & Wakefield. “With Grade A supply becoming increasingly scarce and a limited development pipeline, pressure on the best assets is expected to continue to be reflected in market performance”.
Looking ahead, Cushman & Wakefield expects resilient occupier demand, limited development activity and improving financing conditions to continue supporting the sector. As companies compete for an increasingly limited pool of high-quality space in sought-after locations, both occupiers and investors are expected to maintain their focus on the best assets, putting further upward pressure on prime rents.
