Recovery confirmed in Luxembourg's office market

Luxembourg, July 23, 2025 – After more than two years of lean times, signs of recovery are multiplying in Luxembourg's office market. The most encouraging aspect is that the recovery is being driven by the private sector. JLL analyzes the key fundamentals of the first half of 2025.

The observation is not new, but it is even more important today: project-oriented activity continues to dominate the Luxembourg office market. New buildings strongly contributed to generating robust take-up of 63,785 m² in Q2, a significant increase of 63% compared to Q1 2025 and 148% year-on-year. Take-up since the beginning of the year has thus reached 102,970 m², exceeding H1 2024 figures by 104%. The share of Grade A buildings, i.e., those less than 5 years old or under construction, reached 71% of the semester's transaction volume. For comparison, the annual average share of Grade A in total take-up is 67% over the previous 5 years.

Notable second-quarter transactions include JP Morgan securing 13,975 m² in Gio's The Waves project at Kirchberg, PwC leasing 9,500 m² in Nextensa and Grossfeld's Eosys project (Cloche d'Or), and Baker McKenzie taking 2,640 m² in Iko's Ekxo project (Cloche d'Or).

Vacancy rates remain relatively stable at 4.2%, slightly up from 4% in the previous quarter but unchanged from end-2024. In absolute terms, 194,628 m² are currently vacant, with the moderate increase mainly attributed to new deliveries in central districts. Given the good pre-leasing performance since the beginning of the year, our forecasts on vacancy evolution have become more optimistic, although we still anticipate a slight upward trend.

Construction activity amounts to 515,514 m², of which 72% is already pre-leased. Approximately 58,382 m² should be completed speculatively in H2 2025, with 29% located in central districts.

Prime rents remain stable at €54 per m² per month (excluding VAT) in the Boulevard Royal area, CBD. However, the Gare district experienced rent growth of 7.5% thanks to lettings in Iko's Unicity project. We also anticipate rent increases in Kirchberg and Cloche d'Or. Average rents city-wide nevertheless remain at €32.90 per m² per month.

Q2 investment activity included "core" transactions and purchases for own use. In a notable core segment transaction, JLL advised the sale to a family office of the renovated Vertbois building in Kirchberg (leased to Julius Baer). Earlier in the year, JLL had also advised the sale of the Charlotte building in the CBD, also to a family office. Office investment volume in H1 2025 reached approximately €274 million, substantially exceeding the €193 million recorded in H1 2024. We observe a cautious return of investors, which is already a first step toward recovery.

Prime office yields remain unchanged from Q1 at 4.50%.

Emna Rekik, Country Lead and Head of Markets at JLL Luxembourg, summarizes: "The positive momentum we observe in the first half of 2025 is a particularly encouraging signal for our Luxembourg real estate ecosystem. What pleases me is seeing the private sector resume its role as a growth driver with a doubling of take-up. The stability of vacancy rates and the gradual return of investors to core assets demonstrate tangible renewed confidence. This recovery, driven by ambitious and sustainable projects, positions Luxembourg as a resilient and attractive market in a still uncertain European context."