Italian Office Snapshot | H1 2022
The Italian Office Market Performance in 2022 first semester
- Francesca Fantuzzi
- Carlo Cocuzzo
- Claudia Solarino
- Maria Artusa
- The Italian economy is now facing headwinds
The Italian economy decelerated sharply in Q1 2022 amid higher geopolitical uncertainty stemming from the war in Ukraine, but the latest GDP growth numbers came in higher than expected, largely supported by investment.
- A Hybrid working model is the key to success
Our JLL EMEA Workforce Preferences Barometer reveals that the hybrid working model is becoming very popular: 60% of office workers would like to go full hybrid today while 55% are doing so already.
- Investors remain prudent but rents may rise further
Looking ahead, risks to GDP growth are skewed to the downside because of rising inflation and tightening financial conditions. Although investors remain cautious, properties are now more institutionalised, and this should increase broader market liquidity. Additionally, the occupiers' market is recovering from the pandemic lows, with Milan already at a higher level than 2019. This should continue to drive profitability and push rents further over the coming months.
The Italian economy decelerated sharply in 2022 amid higher geopolitical uncertainty, but GDP growth in Q1 surprised on the upside, largely supported by investments.
The office sector confirmed to be the first asset class for Capital Markets investors and the most dynamic in H1 2022, representing the 40% of the investments. Volumes show a steady pickup compared to one year ago, along with the number of deals (+15 YoY), testifying the solid attractiveness of this sector. Milan continues to drive the volumes, representing the 54% of the total.
Office leasing side increased in take-up both in Milan and Rome: corporate occupiers will continue to seek to ensure flexibility within new leases, while employees will also seek a measure of flexibility in their working lives. Takeup in Milan is up by +39% YoY in H1 2022, with the demand of office space dominated by deals below 500 sqm and by grade A office spaces. Around 38% of the demand targeted offices in the central submarkets (CBD, Historic Centre, Centre), 27% in the Hinterland area, 22% in the Periphery and 14% in the Semi-centre. Take-up in Rome increased too (+18% YoY), with a demand mainly focused on the E.U.R. submarket (33%), CBD (27%) and Centre-Semicentre (25%); due to the general buildings’ state in the capital, grade B spaces still represent the majority (61%).