Europe’s real estate market is undergoing “a significant transformation, driven by unprecedented growth in data centres, the urgent imperative of decarbonisation and evolving office dynamics”, analysis by a real estate adviser reveals.
JLL’s Global Real Estate Mid-Year Update report provides an assessment of the market’s performance in the first half of the year.
Findings include:
- Europe’s Data Centre Boom: EMEA (including Europe) forecasts 23% capacity growth in 2025. Southern European markets like Madrid and Milan lead (35%+ CAGR), but power constraints are a major issue, potentially lasting 5-6 years in some European metros.
- Decarbonisation & Obsolescence: Europe holds 34% of global office obsolescence risk, requiring significant capital expenditure for retrofits. This makes decarbonisation “a critical value-creation driver”, states JLL.
- Industrial Reshaping: Central and Eastern Europe are seeing increased manufacturing demand due to re-shoring and lower costs, which is “transforming the industrial landscape”.
- Supply Shortages: The European supply pipeline is falling, intensifying competition for assets, driving focus on brownfield sites, and leading to rising renewal rates, JLL has added.
- Office Evolution: The 3-4 day office week is becoming the norm in Europe, which is “pushing corporate real estate towards efficiency and portfolio optimisation”.
The first half of 2025 was more disrupted and less predictable “than anyone anticipated despite our expectations of heightened uncertainty at the start of the year”, the report concludes.
Changes to US trade and tariff policy have dominated the global economic and geopolitical narrative, while regulatory, fiscal and tax policies have also shifted rapidly.
Additionally, there remain ongoing and potential conflicts around the world. Despite this, real estate markets have proved resilient, albeit with a diverse range of impacts and effects across geographies, markets and asset types, adds the report.