Lisbon and Porto’s prime office rents reflect a global trend, with Savills reporting a 0.3% increase in Q4 2024 amid growing demand for quality spaces.
In the realm of global real estate, Portugal’s vibrant cities of Lisbon and Porto are not merely following the trends; they are setting the stage for a remarkable evolution in prime office rents. According to Savills’ latest “Prime Office Costs” report, the world has witnessed a modest yet significant uptick in prime office rents, rising by 0.3% globally, while installation costs have crept up by 0.2% in the final quarter of 2024. This incremental growth is a testament to the insatiable demand for high-quality office spaces that continues to burgeon across various markets.
As we delve deeper into the data, the fourth quarter of 2024 reveals a slight increase in average net effective costs, which rose by 0.1%, contributing to a moderate annual upward trajectory of 1.9%. The titans of the office rental market—London’s West End, Hong Kong, and New York’s Midtown—remain firmly entrenched at the pinnacle of the 35 markets scrutinized by Savills. However, it is noteworthy that certain markets, particularly Dubai and Los Angeles, have experienced dramatic shifts, with net effective costs soaring by 7% and 5% respectively, driven by robust demand.
In the EMEA region, a 0.7% increase in net effective costs for tenants was observed in the last quarter, signaling a broader trend of rising expenses. Portugal, with its picturesque cities of Lisbon and Porto, has not been immune to this phenomenon. Both cities have recorded a remarkable surge in office occupancy, with prime rental values reaching €29 per square meter per month in Lisbon and €21 per square meter per month in Porto. This burgeoning interest from international companies underscores Portugal’s dynamic occupational market, characterized by a vigorous take-up rate and alarmingly low vacancy levels—particularly in Grade A buildings, where a staggering 60% of the 2025/2026 pipeline has already been pre-let.
The return to office life has solidified its presence, mirroring trends observed in other Southern European nations. Savills reports an impressive 18% increase in overall leasing activity during the latter half of 2024 compared to the first half. Their companion report, “Market Makers,” which evaluates the top 10 prime office businesses by size across the same 35 cities, reveals that a commendable 54% of the analyzed deals were new leases or expansions. This reflects a buoyant sentiment among leading tenants and highlights the resilience of prime office spaces.
Interestingly, while a third of businesses opted for spaces of the same size, 13% chose to downsize, perhaps in a bid to embrace more flexible working arrangements. The financial sector has notably outperformed the technology sector in terms of both the number of deals and the area transacted during the latter half of 2024. Ultra-prime offices have emerged as a strategic asset for companies worldwide, with nearly all sectors witnessing an increase in transacted area during this period.
Looking ahead to 2025, the expectation is clear: continued growth in leasing activity and volume is on the horizon. The net effective cost growth observed globally last year is anticipated to persist, further shaping the landscape of prime office rentals. As we navigate this intricate tapestry of real estate dynamics, one thing remains certain—Portugal’s allure as a prime destination for international business is only set to intensify.
