Key Takeaways
- • Large office transactions over €50 million in Europe surged 43 percent year-over-year in Q3 2025, signaling a significant return of institutional capital to the sector after prolonged market weakness.
- • Average European office transaction lot size expanded to €30 million—the highest level in three years—demonstrating renewed investor appetite for larger positions and prime stock.
- • Cross-border investment into European offices rose 46 percent year-over-year, with increased competition evidenced by rising numbers of underbidders for prime assets, indicating broadened buyer participation.
- • Savills forecasts 7 percent year-over-year growth in total European office investment volumes for 2025, with acceleration to 16 percent growth projected for 2026, reflecting institutional confidence in market stabilization.
- • Prime European office yields remain stable at an average of 4.87 percent, providing consistent income-generating opportunities alongside expectations of a constrained supply environment.
Summary
Large-scale office investment activity has returned to Europe in 2025, according to Savills' European Office Investment report for Q3, marking a reversal of market weakness that characterized the prior two years. The number of transactions exceeding €50 million jumped 43 percent year-over-year, demonstrating renewed willingness among institutional investors to commit capital to larger lot sizes in the office sector. This represents a meaningful inflection point for real estate allocators after an extended period of market contraction and repricing.
Metrics indicate substantial broadening of investor participation across European office markets. The average transaction lot size expanded to €30 million—the highest level since 2022—while cross-border investment flows increased 46 percent year-over-year, suggesting that international capital is actively redeploying into European office assets. Savills notes an uptick in the quantum and breadth of buyers, evidenced by increased numbers of underbidders competing for prime stock, signaling genuine demand rather than isolated transactions.
Central London data illustrates the intensity of this recovery. Large transactions now account for 53 percent of total sales in the market, a dramatic increase from 27 percent a year prior. In 2025, central London registered 21 deals worth £100 million or more—nearly double the previous year's volume—underscoring institutional appetite for scale transactions in prime European office markets.
Valuation levels have stabilized throughout this recovery. Prime European office properties maintain yields at an average of 4.87 percent, providing consistent cash-on-cash returns for core institutional allocations. This stability, coupled with expectations of a constrained supply environment going forward, has strengthened the investment thesis for large-lot acquisitions.
Looking ahead, Savills projects 7 percent year-over-year growth in total European office investment volumes for the full year 2025, with acceleration to 16 percent growth anticipated for 2026. These forecasts reflect institutional confidence that the supply-demand dynamics and pricing reset have created a favorable entry environment for long-term hold strategies in European office real estate.
Metrics indicate substantial broadening of investor participation across European office markets. The average transaction lot size expanded to €30 million—the highest level since 2022—while cross-border investment flows increased 46 percent year-over-year, suggesting that international capital is actively redeploying into European office assets. Savills notes an uptick in the quantum and breadth of buyers, evidenced by increased numbers of underbidders competing for prime stock, signaling genuine demand rather than isolated transactions.
Central London data illustrates the intensity of this recovery. Large transactions now account for 53 percent of total sales in the market, a dramatic increase from 27 percent a year prior. In 2025, central London registered 21 deals worth £100 million or more—nearly double the previous year's volume—underscoring institutional appetite for scale transactions in prime European office markets.
Valuation levels have stabilized throughout this recovery. Prime European office properties maintain yields at an average of 4.87 percent, providing consistent cash-on-cash returns for core institutional allocations. This stability, coupled with expectations of a constrained supply environment going forward, has strengthened the investment thesis for large-lot acquisitions.
Looking ahead, Savills projects 7 percent year-over-year growth in total European office investment volumes for the full year 2025, with acceleration to 16 percent growth anticipated for 2026. These forecasts reflect institutional confidence that the supply-demand dynamics and pricing reset have created a favorable entry environment for long-term hold strategies in European office real estate.
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