Milan's Commercial Real Estate Sector: Pursuing Top-Quality Properties

In 2024, Milan's commercial real estate sector absorbed approximately 380,000 square meters , with 115,000 square meters absorbed in the last quarter. This represents a decrease of 14% compared to the prior year. According to the most recent publication by Ipi , the decrease in numbers is primarily attributed to the scarcity of top-tier (A/A+) office spaces and intricate urban regulations hindering the initiation of new projects.

High-End Office Transactions

The notable impact on transaction volumes was caused by the deficiency of premium properties, particularly in Milan's prime zones. Similar to 2023, only three transactions exceeding 10,000 square meters were finalized this year, with 72% of the total absorption occurring in class A/A+ offices .

The highly sought-after regions continue to be the CBD (Central Business District), Porta Nuova, and CityLife , where premium office spaces are swiftly occupied. Investors persist in targeting top-notch assets , while developers concentrate on rejuvenating old structures due to obstacles faced by new projects in terms of bureaucracy.

Availability Rate

Availability rates continued their descent, dropping to 9.5% citywide and 2.5% for Class A/A+ offices . Approximately 43% of the occupied space (171,000 square meters) was situated in the city center and CBD , with peripheral areas accounting for 62,000 square meters (16%) .

The diminishing availability rate signifies market steadiness , although the scarcity of top-quality properties hampers expansion. Tenants are progressively becoming more discerning , opting for edifices with high levels of environmental sustainability (ESG) and in compliance with contemporary energy efficiency standards.

Lease Rates and Market Patterns

The limited availability of top-tier offices has propelled an increase in lease rates within Milan's financial hub.

• In Q4 2024, prime office lease rates in the CBD reached €730/sqm/year , occasionally surpassing €800/sqm/year for LEED and WELL certified buildings.
• Profitability remains constant: 4.5% net for top assets and 5.9% for high-quality secondary market properties .

Projection for 2025

It is anticipated that there will be selective growth in the market in 2025:
✔️ Concentration of transactions in the high-end sector
✔️ Increased supply due to redevelopment endeavors
✔️ Emphasis on environmentally friendly and technologically advanced office spaces

Companies are inclined towards contemporary, energy-efficient offices that can adapt to hybrid work models.

Despite restricted availability and a demanding regulatory framework , Milan's commercial real estate sector continues to be one of the most vibrant in Europe , experiencing robust demand and sustained attention from institutional investors .