Luxembourg's office real estate market, after nearly two years of deceleration, is exhibiting robust signs of recovery.

 

A recent analysis by JLL highlights a pivotal shift, with growth now predominantly propelled by the private sector, moving beyond previous state-led initiatives.

 

This signals a vibrant and self-sustaining market environment for businesses seeking prime locations.

 

Strong occupancy and surging transaction volumes

 

The first half of 2025 witnessed remarkable activity. JLL’s data reveals a substantial office occupancy uptake of 63,785 m² in Q2 2025 alone, marking a significant 63% increase over Q1 2025 and a staggering 148% year-on-year rise. Year-to-date occupancy reached an impressive 102,970 m², surpassing H1 2024 figures by 104%.

 

This demand is heavily concentrated on high-quality spaces, with new 'Grade A' buildings (less than 5 years old or under construction) accounting for a dominant 71% of the semester's transactional volume. The office investment volume also saw healthy growth, reaching 274 million euros in H1 2025, up from 193 million euros the previous year, indicating strong investor confidence.

 

Major leases underline market confidence

 

Illustrating this renewed vigor, several significant transactions occurred in Q2 2025. PwC notably leased 9,500 m² in the 'Eosys' project in Cloche d’Or (delivery 2027), while JP Morgan secured a substantial 13,975 m² in 'The Waves' project in Kirchberg.

 

Baker McKenzie also expanded its footprint, taking 2,640 m² in the 'Ekxo' project in Cloche d’Or, a pioneering wooden-structured office building set for a June 2027 move. These high-profile leases by leading firms underscore the market's attractiveness and the availability of premium spaces.

 

Stable vacancy rates amid new deliveries

 

Despite the influx of new developments, Luxembourg’s office market maintains a contained vacancy rate of 4.2%. While a slight increase from the previous quarter, it remains stable year-on-year, primarily due to recent deliveries in central districts. JLL's forecasts suggest a more optimistic outlook for vacancy evolution, although a modest upward trend is still anticipated.

 

A significant portion of the 515,514 m² currently under construction – 72% – is already pre-leased, with approximately 58,000 m² expected for speculative delivery in the second half of the year, nearly a third of which is strategically located in central areas.

 

Rental market: stability with targeted increases

 

The rental market exhibits a pattern of stability, with prime rents in the prestigious Boulevard Royal area holding steady at 54€/m² per month. The Gare district, however, recorded a notable 7.5% increase, largely propelled by the 'Unicity' project. Anticipated rent increases are also on the horizon for key areas like Kirchberg and Cloche d’Or, reflecting the escalating demand in these sought-after business hubs.

 

The city's average rent currently stands at 32.90€/m² per month. The current landscape in Luxembourg presents a compelling opportunity for businesses looking to secure high-quality office space in a thriving economic environment. With strong demand, stable rents in key areas, and a pipeline of modern developments, the market is poised for continued growth.

 

Source: luxembourgrealestatenews.com