Italian Office Snapshot | Q1 2023

Key takeaways:

• The Italian economy is expected to grow by 0.6% in 2023 | The Italian economy contracted by -0.1% in Q4 2022. A positive contribution came from foreign trade and an acceleration in gross fixed capital formation, while consumption and inventories were the key negative drivers. This is mainly due to the impact of high inflation, which ultimately eroded households purchasing power. Having said this, latest market consensus projections indicate an average GDP growth of 0.6% in 2023.

• Investors are prudent waiting for repricing | Offices investments recorded a significant slowdown in Q1 2023, mainly due to a wait-and-see approach. Economic conditions are challenging, but Italian market fundamentals remain solid. Investment activity may recover towards the second half of the year once bid-ask spreads normalize.

• Office occupiers' demand still high in Milan and Rome | In Q1 2023 Rome reached a new record in terms of office take-up (+78% YoY), while Milan recorded a slowdown after a very good performance in 2022. Occupiers’ demand is still high in both cities with an increasing focus on sustainability.