Article | Adaptive Spaces
Unpacking leasing trends: What’s driving office occupiers’ decisions?
May 27, 2025 3 Minute Read
European office occupiers face a complex decision-making landscape, due to a combination of weak economic growth, heightened uncertainty, and the challenges of devising and implementing hybrid working strategies. This makes it more difficult to assess and provide for future space needs. As a result, occupiers are pursuing a number of separate aims and strategies for delivering effective workplaces, in many cases reducing scale to save cost, but also selecting and managing locations and buildings that meet and anticipate the needs of their employees.
But how are these aims actually affecting decision-making on the ground? Europe’s office leasing market shows a c.3% year-on-year increase to Q1 2025, but this reflects a range of individual motives and trade-offs. Our analysis of 840 occupier transactions and leads* in the second half of 2024 highlights the key transaction types and their underlying drivers.
Relocations dominate
Within-city relocations feature strongly as occupiers look to optimise portfolios
Relocations within the same city accounted for nearly half of closed deals in H2 2024 and were also the dominant transaction type for new instructions. This pattern holds true across all sectors, with particularly high proportions among legal and media occupiers (64% combined). The other major driver is renewal/regear (31%), where an occupier remains in their current building but on amended lease terms in respect of rent, size, or lease duration. Other types of transaction account for much lower proportions of activity, although it is notable that new-to-market deals, where occupiers take space in a city in which they previously had no presence, represent 11% (Figure 1).
Figure 1: Transaction types, Closed deals, H2 2024
Different types of transaction are also associated with different size and location characteristics. For instance, c.40% of relocations and new-to market deals involve an expansion in footprint, although over a quarter of relocations result in space contraction. By contrast, renewals/regears are less likely to involve any change in scale of space commitment.
Strong emphasis on quality
Quality of building and location take precedence over other factors
The quality of a building and its location are the key drivers of transactions, as they directly influence the appeal of a space and encourage office attendance. These two factors account for a combined 40% of transactions. Rightsizing, growth, and cost reduction account for a further third (Figure 2). Amid a complex mix of drivers, the benefits of building and location quality are considered paramount, despite the likely impact on running cost. For individual sectors, there is some variation in the extent to which this is true, with financial & professional services companies, for instance, retaining a greater focus on cost management.
Figure 2: Main transaction drivers, Closed deals, H2 2024
Central locations favoured
Accessibility and amenity advantages of central locations increasingly attractive
The focus on quality is also reflected in location patterns. Where transactions involve an occupier moving from one sub-market to another in the same city, these mostly involve moves from periphery or fringe CBD to more central locations. Moves from peripheral areas to either fringe or core CBD locations, or from fringe to core CBD, account for over three-quarters of closed deals (Figure 3). These transactions are heavily influenced by quality considerations.
Figure 3: Submarket movement patterns, H2 2024
Mixed trends around footprint size
Occupiers active around footprint adjustment – but not all in the same direction
While types and drivers of transactions have clear patterns, trends around changes in footprint size are more mixed. Growth is the dominant trend, but only marginally. More revealingly, two thirds of transactions have involved a change in footprint size, in one direction or the other, with only a third involving no change (Figure 4). Broadly, this pattern applies regardless of the underlying deal drivers; the same proportions of deals motivated by quality concerns result in growth or contraction as do deals driven by other factors.
Figure 4: Changes in footprint, Closed deals, H2 2024
This suggests that occupiers are paying close attention to rightsizing and overall scale, as well as to building and locational characteristics. This applies particularly to the legal and media sectors, where barely 15% of transactions involved no change in size. Along with professional services, these are the sectors most likely to be growing, with financial and professional services and life sciences more prone to contraction (Figure 5).
Figure 5: Changes in footprint by sector, Closed deals, H2 2024
Conclusion
Recent leasing transactions contain a large element of within-city relocations, with a strong directional trend towards centralisation and a desire to raise building and location quality. While not necessarily associated with an overall increase in footprint, this indicates a strong quality preference at a time when many hybrid working strategies are still evolving.
The gradual rise in office leasing levels that we are seeing across Europe is the product of increasingly multi-layered decisions by occupiers. Emerging preferences for high-quality space in central locations are clear but, equally, each decision has its own challenges requiring detailed analysis and clear assessment of priorities
