JLL Office Property Clock Q2 2021
European office take-up records recovery in H1 2021 as sentiment improves
The second quarter looks likely to mark a turning point with mass vaccination programmes achieving critical mass, and pandemic restrictions starting to be eased once more. The renewed outbreak and economic contraction in Q1 gave way to declining case numbers and renewed activity, movement and spending in Q2, despite the continued application of many restrictions. Consumer confidence rebounded – achieving its pre-pandemic level by quarter-end - and fear of catching the virus eased in line with rising inoculation. Whilst the manufacturing sector had seen buoyant activity since the middle of last year, the harder-hit services sector executed the first stages of a strong rebound over the last few months. Support from loose monetary conditions and government spending programmes largely remained in place. Combined with the strengthening recovery, there is optimism that further economic scarring – such as delayed unemployment and business insolvency – will be avoided. Many European countries are forecast to recover their pre-pandemic GDP level before the end of this year. One chink in the recovery story is inflation concerns, exasperated by global supply shortages and bottleneck, commodity price speculation, and labour market shortages. Inflation will rise, exceeding central banks targets in many countries (albeit not excessively), and unless there is greater scarring than anticipated, the rise will be short-lived, and inflation will come back to normal levels within the upcoming year.