According to the latest DNA of Real Estate report by international real estate advisory firm Cushman & Wakefield, European property markets remained broadly stable in the second quarter of 2026. Rents increased across the key office, logistics and retail sectors despite the first signs of yield decompression in two years. In Poland, the strongest rental growth was recorded in the office market, where prime rents increased by more than 8.5% year on year.
The second quarter was marked by geopolitical volatility related to persistent tensions in the Middle East. Bond yields remained elevated during the period, easing slightly towards the end of the quarter amid hopes of a peace agreement. Combined with interest rate increases by the European Central Bank (ECB), this weakened the prospects for further yield compression and placed additional pressure on property valuations.
Despite the challenging environment, yields remained unchanged in more than three-quarters of the markets analysed, although increases are now being recorded across a growing number of European locations. Overall, yields rose across Europe in both the office and logistics sectors.
Rental markets, however, continued to improve, with rents increasing both quarter on quarter and year on year, particularly in the office sector. Taken together, these trends continue to support moderate property value growth across Europe as a whole and in most individual regions.
Office real estate
Rental growth in the office sector was driven primarily by the most attractive central business district locations, where rents increased by 1.2% quarter on quarter and 4.5% year on year, extending the trend seen over recent quarters.
The strongest quarterly increases were recorded in the Benelux countries, at 2.6%, Germany at 1.9%, and the United Kingdom and Ireland at 1.6%.
Rotterdam stood out in particular, with prime office rents rising by 13.2% quarter on quarter to almost EUR 385 per sq m per year. The increase reflected recently completed transactions as well as high asking rents in newly developed schemes.
In Edinburgh and Manchester, two of the UK’s key regional office markets, rents increased by 7.6% and 6.7%, respectively. Strong demand and limited availability of high-quality space have pushed up rental levels in projects currently being developed.
Office yields increased in seven markets, the highest number since the second quarter of 2024, while yield compression was recorded in only two. As a result, prime office yields across Europe increased by three basis points during the second quarter to 5.39%.
Retail real estate
Rents for space on Europe’s leading high streets remained broadly stable, increasing by just 0.2% during the quarter and by 3% year on year.
Rental growth slowed noticeably in the second quarter, with rates remaining unchanged across most markets. The strongest increases were recorded in Stockholm, at 2.3%, and Madrid, at 2.0%. None of the markets analysed recorded a decline in rents.
Prime high-street retail yields across Europe remained unchanged from the previous quarter at 4.77%, while falling by four basis points year on year.
In Rome and Milan, yields declined to 3.5%, down 25 basis points quarter on quarter, while Lyon and Oslo recorded increases of 25 basis points.
Logistics real estate
Logistics rents increased by 0.6% compared with the first quarter, continuing the upward trend recorded over the previous four quarters.
As a result, annual rental growth reached 2.4%, compared with 3.1% in the previous quarter.
Southern Europe and Central and Eastern Europe performed particularly strongly, posting quarterly rental growth of 2.4% and 1.5%, respectively. Rents increased by 4.8% in Warsaw and by 2.9% in both Milan and Rome.
At the same time, prime logistics yields increased by two basis points to 5.23%, following yield decompression of between five and ten basis points across nine markets. Several locations, including Prague and Copenhagen, continued to record further yield compression.
Regional performance
Southern Europe and Central and Eastern Europe retained their position as the most resilient regions, combining relatively strong rental growth with stable or slightly declining yields.
On both a quarterly and annual basis, yields in the two regions either remained unchanged or edged lower, while rents were stable or increased.
Poland
Among the sectors analysed in Poland, the office market recorded the strongest rental growth.
Prime office rents increased by EUR 0.25 per sq m per month during the second quarter and by EUR 2.25 per sq m per month year on year, representing an annual increase of more than 8.5%.
At the same time, prime office yields compressed by 25 basis points quarter on quarter, returning to the level recorded a year earlier.
“Rental growth in the Warsaw office market is concentrated primarily in the best buildings located in the city centre, both existing properties and projects currently under construction. This is a consequence of the limited availability of high-quality office space as well as persistently high construction and financing costs for new developments. Outside the city centre, upward pressure is significantly weaker and more closely reflects the level of inflation. For older office buildings, the key factor is their ability to compete for tenants through quality, location and the standard of the space they offer,” comments Vitalii Arkhypenko, Research Analyst at Cushman & Wakefield.
The Polish logistics market recorded moderate rental growth, while yields remained stable on a quarterly basis.
“The stability of rents in the logistics market is primarily the result of persistently strong occupier demand, which supports rental levels in the best locations. Another important factor is developers’ cautious approach to new investment and the limited scale of speculative development, which helps maintain a balance between supply and demand. At the same time, the final terms of lease agreements continue to be influenced by the level of incentives offered to tenants,” comments Szczepan Gowin, Head of Industrial & Logistics Agency at Cushman & Wakefield.
In the retail sector, both prime high-street rents and yields remained broadly stable.
Source: CEO.com.pl
