Milan's Office Market: In Search of High-Quality Spaces
In 2024, approximately 380,000 square meters of office space were absorbed in Milan, with 115,000 square meters absorbed in the fourth quarter. This represents a 14% decrease compared to the previous year. The latest Ipi report attributes this reduction not to a fall in demand but to the limited availability of top-tier offices (A/A+) and complicated urban regulations hindering new projects.
Premium Office Transactions
The most significant factor affecting transaction volumes was the scarcity of quality properties, particularly in Milan's premium locations. As in 2023, only three deals exceeding 10,000 square meters were completed this year, with 72% of the total absorption being in Class A/A+ offices.
The Central Business District, Porta Nuova, and CityLife remain the most desirable areas, where high-quality office spaces are quickly leased. Investors maintain their focus on premium properties, and developers prioritize renovating older buildings due to bureaucratic challenges in launching new projects.
Vacancy Rates
Vacancy rates continued to decline, reaching 9.5% across the city and 2.5% for Class A/A+ offices. Approximately 43% of the absorbed office space (171,000 square meters) was located in the city center and CBD, while peripheral areas accounted for 62,000 square meters (16%).
The decreasing vacancy rate indicates market stability, but the shortage of quality spaces is limiting growth. Tenants are becoming more selective, opting for buildings that offer high environmental sustainability (ESG) standards and modern energy efficiency compliance.
Rental Rates and Market Trends
The limited supply of premium offices has driven up rental rates in Milan's business districts.
In Q4 2024, prime office rents in the CBD rose to €730 per square meter per year, and in some instances, surpassed €800 per square meter per year for buildings with LEED and WELL certifications. Profitability remains stable, with net returns of 4.5% for prime properties and 5.9% for high-quality secondary market assets.
Forecast for 2025
Selective market growth is anticipated in 2025:
✔️ Concentration of transactions in the high-end segment
✔️ Increased supply from redevelopment projects
✔️ Focus on sustainable and tech-savvy office spaces
Companies continue to favor modern, energy-efficient offices that can support hybrid work models.
Despite limited supply and regulatory challenges, Milan's office market remains among the most vibrant in Europe, attracting solid demand and consistent interest from institutional investors.
