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The Europe Commercial Real Estate Market size is forecast to increase by USD 94.59 billion, at a CAGR of 6.08% between 2023 and 2028. The market's expansion hinges on various factors, notably the escalating aggregate private investment, a surge in e-commerce expenditure, and the burgeoning commercial sector across Europe. These elements collectively contribute to driving market growth, fostering innovation, and encouraging market players to invest in advanced technologies. The increased private investment reflects growing confidence in economic prospects, driving businesses to expand their operations and explore new opportunities. Furthermore, the rising e-commerce spending signifies a shift in consumer behavior towards online shopping, prompting businesses to enhance their digital presence and adopt robust e-commerce strategies. These trends align with the evolving commercial landscape in Europe, highlighting the region's potential for continued economic growth and market development.
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The market is experiencing a shift towards commercial sector digitalization, impacting warehouses and managed office facilities. There's a growing focus on Environmental, Social, and Governance (ESG) sustainability, leading to collaboration between architects and engineers. Factors such as absorption rates and cap rates are influencing decisions amidst hybrid work patterns. As demand evolves, stakeholders are adapting to provide flexible solutions that align with changing market dynamics. Further, the report includes a comprehensive outlook on the market offering forecasts for the industry segmented by Type, which comprises rental, lease, and sales. Additionally, it categorizes End-users into offices, retail, leisure, industrial, and others. The report provides market size, historical data spanning from 2018 to 2022, and future projections, all presented in terms of value in USD billion for each of the mentioned segments.
The rental segment is estimated to witness significant growth during the forecast period. The rental segment holds the largest share of the market in 2023. In Europe's commercial real estate market of 2023, the rental segment dominates, with growth in office rentals reaching 1.8% quarter-on-quarter in Q3 2022, resulting in over 5% annual growth. The UK, Benelux markets, and peripheral Europe experienced the most significant growth. However, investment markets are hesitant, with buyers wary of earlier price levels due to economic uncertainties, inflation, and finance rates.
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The rental segment was the largest and was valued at USD 104.85 billion in 2018. Travel restrictions and social distancing have accelerated urbanization and commercial sector digitalization. Foreign investments continue to flow, with brokers and managers facilitating deals on media portals. The hybrid work model and e-commerce spending have led to increased demand for warehouses and fulfillment centers. Metro cities cater to middle-class consumers and a growing working-age population, driving digitization of work and the e-commerce sector. Changing customer behavior necessitates omnichannel strategies, including click-and-collect, curbside pickup, ship-from-store, and retail sales. Grocery stores, apparel, departmental stores, restaurants, and bars continue to occupy office buildings, industrial facilities, specialty properties, healthcare centers, and residential real estate. Investors, lenders, appraisers, property managers, attorneys, and architects play crucial roles in the evolving European commercial real estate landscape. These factors are expected to drive the growth of the market during the forecast period.
In Europe, the market is undergoing significant transformations due to various factors. Travel restrictions and social distancing norms have accelerated the urbanization process, leading to a surge in demand for adaptable office spaces. The commercial sector is rapidly digitalizing, attracting foreign investments, and creating opportunities for brokers and managers. Media portals are playing a crucial role in disseminating information about hybrid work models, e-commerce spending, and the need for warehouses and fulfillment centers. The middle-class consumers and working-age population are driving the demand for sustainable designs and technology-driven solutions. Office occupancy rates in metro cities are showing signs of recovery, with vacancy rates, rental rates, absorption rates, and cap rates being closely monitored by landlords. Architects and engineers are incorporating flexible work patterns and managed office facilities into their designs to cater to the evolving needs of businesses. The CRE market in Europe is poised for growth, with a focus on sustainability, digitalization, and adaptability. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Growing aggregate private investment is notably driving the market growth. The European commercial real estate market encompasses investments in physical assets like land, offices, and buildings by individuals, businesses, and foreign investors. Urbanization and the digitalization of the commercial sector, including the rise of e-commerce, are significant trends. The COVID-19 pandemic has introduced travel restrictions, social distancing, and a hybrid work model, leading to increased demand for consulting services. Key players include brokers, managers, media portals, and professionals such as appraisers, attorneys, architects, and lenders.
Moreover, urban metro cities cater to middle-class consumers and a working-age population, driving demand for office buildings, industrial facilities, specialty properties, healthcare centers, and residential real estate. E-commerce spending on warehouses and fulfillment centers, as well as changing customer behavior and omnichannel strategies, are shaping the market. Retail sectors, including grocery stores, apparel, departmental stores, restaurants, and bars, are also undergoing transformation with click-and-collect, curbside pickup, ship-from-store, and retail sales. Thus, with growing industrialization, the aggregate private investment in the commercial sector is expected to grow significantly, which is expected to drive the growth of the market during the forecast period.
Increasing investments in the European commercial real estate market is an emerging trend shaping the market growth. The European commercial real estate market is experiencing a significant shift due to travel restrictions, social distancing measures, and urbanization. In 2020, real estate transactions became more expensive, complex, and time-consuming, with an average length increase of 33%. Despite these challenges, 23% of German companies plan to increase their investment activities, while 58% aim to maintain the same level. In contrast, nearly 20% of German firms plan to scale back. Foreign investments are on the rise, with 82% of UK investors and the majority of French real estate experts expressing a desire to expand internationally.
The commercial sector is undergoing digitalization, with brokers, managers, and media portals adapting to the hybrid work model and e-commerce spending. Warehouses and fulfillment centers are in high demand due to the digitization of work and changing customer behavior, which is driving the growth of the e-commerce sector. Office occupancy in metro cities is evolving, with middle-class consumers and the working-age population adopting omnichannel strategies, such as click-and-collect, curbside pickup, ship-from-store, and retail sales. The retail landscape is transforming, with grocery stores, apparel, departmental stores, restaurants, and bars adapting to the new normal. Office buildings, industrial facilities, specialty properties, healthcare centers, and residential real estate continue to attract investors, lenders, appraisers, property managers, attorneys, and architects. Therefore, the increase in the construction of green commercial spaces will drive the growth of the market during the forecast period.
Increasing interest rates is a significant challenge hindering market growth. In Europe, the commercial real estate market is experiencing challenges due to travel restrictions, social distancing, and urbanization. The commercial sector is undergoing digitalization, leading to increased demand for warehouses and fulfillment centers to support e-commerce spending. Foreign investments in European real estate are waning due to higher interest rates, which are also impacting property valuations. This could potentially violate debt covenants for landlords, leading lenders to seize troubled properties.
Furthermore, the hybrid work model and changing customer behavior are shifting the focus towards office occupancy in metro cities. Middle-class consumers and the working-age population are driving demand for digitization of work and e-commerce sector growth. Omnichannel strategies, including click-and-collect, curbside pickup, ship-from-store, and retail sales, are transforming the retail landscape. Appraisers, property managers, attorneys, architects, and brokers are closely monitoring trends in office buildings, industrial facilities, specialty properties, healthcare centers, residential real estate, and other sectors. Thus, such factors are expected to impede the market growth during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Blackstone Inc. - The company offers commercial real estate through its subsidiary AG Real Estate which includes offices, industrial units, rentals, and retail.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments
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The market encompasses various sectors such as office, retail, industrial, and residential properties. Commercial real estate in Europe is a significant sector, driven by economic growth, urbanization, and population trends. Urban areas like London, Paris, Berlin, and Madrid are major hubs for commercial real estate investment. Several factors influence the market. These include economic conditions, government policies, demographic shifts, and technological advancements. For instance, the European Union's Digital Single Market strategy is expected to boost the demand for commercial real estate in tech hubs. Moreover, the European commercial real estate market is witnessing a shift towards sustainable and energy-efficient buildings. The European Green Deal aims to make Europe carbon neutral by 2050, driving the demand for green commercial real estate. The market also faces challenges such as regulatory changes, Brexit uncertainty, and the impact of the COVID-19 pandemic on the economy and real estate demand. Despite these challenges, the European Commercial Real Estate Market offers attractive investment opportunities for both local and international investors. In conclusion, the European Commercial Real Estate Market is a dynamic and complex sector, influenced by various factors. It presents both challenges and opportunities for investors, developers, and occupiers alike. Understanding the trends, drivers, and challenges in this market is crucial for making informed investment decisions.
Market Scope |
|
Report Coverage |
Details |
Page number |
153 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.08% |
Market Growth 2024-2028 |
USD 94.59 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
5.55 |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Blackstone Inc., BNP Paribas SA, Covivio, CPI Property Group, Cushman and Wakefield Plc, Fastighets AB Balder, Futureal Management Szolgaltato Kft, HB Reavis Group, Hines, Jones Lang LaSalle Inc., LEG Immobilien SE, Mitsubishi Estate Co. Ltd., Savills, Segro Plc, Skanska AB, STRABAG SE, Vonovia SE, Aroundtown SA, Tishman Speyer, and Ageas SA |
Market dynamics |
Parent market analysis, market forecasting, market growth analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the market forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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