Office occupancy in Europe rose 3 percent year on year between the first and third quarters of 2025, while prime rents saw an average increase of 4.9 percent during the same period, according to Savills’ European Office Occupational Q3 2025 report.

Frankfurt (plus 76 percent), Dublin (plus 46 percent), Barcelona (plus 41 percent), Prague (plus 36 percent) and the City of London (plus 18 percent) recorded office absorption volumes between January and September well above the five-year average for that period, reflecting a gradual recovery in demand from the tech sector as well as the resilience of financial services.

Leasing activity in Germany and France is taking longer to materialise due to political uncertainty affecting the pace of economic growth in these countries, resulting in lower space absorption.

The average office vacancy rate in Europe remained at 9.3 percent in the third quarter of 2025, with prime vacancy rates below 3 percent in several markets, which continues to place upward pressure on rents.

In Lisbon, the average office vacancy rate saw a slight increase, rising from 7.7 percent in 2024 to 7.8 percent in 2025, reflecting the stability and balance of the local market amid limited availability of quality space. This shortage continues to drive rents upward, with the capital recording a 7.1 percent year-on-year increase.

Prime rental growth was led by core markets: London’s West End (plus 17 percent year on year), Paris CBD (plus 13 percent) and Frankfurt (plus 13 percent).

Christina Sigliano, EMEA Head of Global Occupier Services at Savills, comments: “We expect a gradual rise in occupancy in 2026 as occupiers resume activity despite geopolitical uncertainty. The limited availability of prime product in key central business districts should continue to support rental growth and gradually reignite developer interest throughout 2026.”

According to Savills, the average office occupancy rate across Europe increased slightly from 60 percent to 61 percent over the past year, still below the pre-pandemic benchmark of 70 percent.

This modest increase coincides with a growing number of companies strengthening their in-office working policies. Consultancies, banks and fund management firms are increasingly requiring employees to be in the office at least four days a week.

Mike Barnes, EMEA Head of Global Occupier Services at Savills, concludes: “Madrid continues to lead European office markets, with an average occupancy rate of 68 percent, driven by the high concentration of residents in the city centre, short commuting times and a business culture that values in-person work, especially on peak days.”

Considering Oxford Economics’ forecast of a net increase of more than 600,000 office-based jobs in the European Union over the next five years, higher workplace attendance combined with employment growth will continue to support office demand in 2026, according to Savills.

European Economic Context

The eurozone economy continues to show weak but positive growth, with GDP up 0.2 percent in the third quarter of 2025, according to Savills’ latest report.
As uncertainty around global trade begins to ease, the EU Economic Sentiment Indicator (ESI) reached its highest level since February 2025.

Oxford Economics has revised its eurozone GDP growth forecast for 2025 upward to 1.3 percent, and anticipates a slowdown to 0.8 percent in 2026 given the current moderate pace. Growth rates are expected to show fewer regional disparities in 2026 due to the recovery of Germany and France and the normalisation of the above-average performance seen in Southern Europe.

Nordic countries are expected to continue outperforming the European average, supported by expansionary fiscal policies and rising private consumption, sustaining strong domestic demand.