Europe Commercial Real Estate Outlook: Real Estate Markets Head into 2022 with Optimism

Despite 2021 being punctuated by renewed Covid-19 restrictions in many European markets, increasing levels of vaccine administration and stronger economic momentum are signalling a return towards pre-pandemic sales and leasing activity levels in 2022, according to the EMEA Real Estate Market Outlook 2022, published today.

December 15, 2021

By Dragana Marina


Despite 2021 being punctuated by renewed Covid-19 restrictions in many European markets, increasing levels of vaccine administration and stronger economic momentum are signalling a return towards pre-pandemic sales and leasing activity levels in 2022, according to the EMEA Real Estate Market Outlook 2022, published today by global real estate advisor CBRE.


CBRE predicts that euro area GDP will grow by 4.7% in 2022, driven by pent-up demand in consumer spending. Inflation, which rose to 3.4% in September 2021, is expected to peak in Q4 2021 and remain elevated in the first half of 2022, before returning towards 2% in the second half of the year. The main risks to the pace of recovery and inflation will be rising Covid-19 cases due to the Omicron variant, renewed lockdown restrictions, supply chain bottlenecks and rising energy prices.  Long-term interest rates are expected to increase slightly from the very low levels seen during the height of the pandemic, but the outlook remains favourable for prime property.

Investment and ESG

CBRE forecasts aggregate European commercial real estate investment will increase by as much as 5% in 2022, marking a return to pre-pandemic levels. Demand is anticipated to remain particularly strong for residential and logistics assets, with strengthening occupier demand and limited stock for prime assets also fuelling investor demand for offices. Europe remains at the forefront of regulatory efforts to deploy capital into sustainable assets and CBRE anticipates that investment strategies will be increasingly focused on diversification across various sources of risk rather than across different asset classes. Carbon-intensive assets will see increasingly high discounts due to more stringent regulations, and investors need to ensure they are resilient to these changes. Going into 2022, markets with a focus on sustainability and climate risk-mitigation strategies are expected to be the frontrunners as investment destinations and CBRE expects to see businesses rapidly integrating ESG criteria into their decision making.


Office markets across Europe are taking positive leasing momentum into the new year and CBRE expects this to strengthen throughout 2022. This is supported by growth in office-based employment, which is forecast to rise 1-2% in 2022. Whilst markets are still expected to operate at below pre-pandemic activity levels, CBRE is forecasting aggregate leasing growth of 20-25%. Available supply of offices looks to have peaked in some European cities and CBRE expects a tightening of supply in 2022, with vacancy levels falling in many of the major markets.


Whilst footfall and retail sales have recovered in 2021, in-store sales remain below pre-pandemic levels. It remains uncertain whether they will fully recover in 2022 with downside risks including the increased cost of consumer goods caused by rising inflation, supply chain cost escalation and possible interest rate rises. CBRE believes the success of store-based retail will rely on a strong omni-channel strategy and closer integration of the online and offline experience. Retail investment activity has started to recover as investors respond to attractive pricing in the sector. This has been led by retail parks and warehouses, a trend CBRE expects to continue in 2022.


According to the report, Logistics investment volumes are likely to remain high in 2022 due to the amount of capital targeting the sector. Supported by growing occupier demand, it is expected to remain one of the preferred choices for investor portfolios. Consequently, competition to secure land and the best assets will intensify and CBRE expects rental growth to accelerate to support low yields, which could compress even further towards 3% in some markets. New speculative developments are increasingly embracing ESG standards to satisfy the demands of occupiers who want sustainable warehouses, a trend CBRE expects to continue in 2022.<


Moving into 2022, the European Multifamily sector is resilient and is expected to continue growing, both in volume and as a share of the total investment market. Lack of existing product is expected to push investors towards forward-funding purchases as well as mergers and acquisitions, which will likely result in larger deal sizes in both established and emerging markets. Secondary markets and single-family rentals in established cities are also expected to gain further momentum. Regulation will continue to be a restraining factor, especially for rental growth, but high tenant demand and an overall favourable outlook for the sector will likely outweigh these restrictions.

Richard Holberton, Senior Director, EMEA Research, CBRE commented: 

“Whilst 2021 was not dominated by the pandemic to the same extent as the previous year, the emergence of the new Omicron variant, the recent increase in Covid case numbers and the adoption of new restrictions in parts of Europe, highlight the continuing risks. That being said, there is reason to remain optimistic that the recovery will continue in 2022 with some sectors performing very strongly indeed. The coming year will also mark a step change in the role of ESG across all sectors, which will accelerate necessary data enhancements needed to strengthen the links between strategy and action.”

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our global website at

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