European commercial real estate transactions hit lowest levels since 2009

Commercial real estate transactions in Europe fell to their lowest levels since the 2009 financial crisis during the third quarter. According to data from MSCI, office space transaction values dropped by one third compared to the previous year, reaching 8.8 billion euros.

The decline is attributed to rising bond yields and a new cycle of interest rate hikes by central banks, which have dampened hopes for valuation recoveries. While demand for prime locations remains relatively strong, investors are adopting a risk-averse stance due to inflationary costs and concerns regarding contractor insolvencies.

Market reports indicate that expected office sales have been withdrawn from the market, and investors are seeking to renegotiate agreements across all sectors to manage increasing borrowing costs. MSCI data shows a decrease in activity across nearly all commercial property categories, with total transaction volume reaching 43 billion euros.