Importance of Quality Supply on the Office Markets of Milan and Rome

Based on JLL data, the start of 2026 saw differing trends in the Italian office rental sector in two major cities: Milan and Rome. In Q1, total uptake slightly exceeded 100,000 sq. m, with around 65,000 sq. m in Milan and 36,000 sq. m in Rome.

Overall, the figures indicate a shift towards quality in the market: demand is becoming more refined and discerning, while the supply of top-tier properties remains scarce, especially in central zones.

Milan: Stable Demand Amid Shrinking Space

Milan witnessed an uptake of around 65,000 sq. m, with an additional 4,000 sq. m of sublease. This data highlights sustained activity levels, similar to 2025 but slightly lower than the previous year's nearly 100,000 sq. m, indicating a mild deceleration.

This slowdown is attributed to fewer large deals and a notable drop in average office size leased - from 1,200 sq. m to 750 sq. m - reflecting companies' cautious approaches and space optimization efforts.

Demand is increasingly focused on prime properties: approximately 65% of the space taken up is in class A buildings. This trend aligns with stricter selection criteria encompassing build quality, sustainability, and prime locations.

The scarcity of premium properties continues to impact the market: the average vacancy rate stands at 9.4%, dropping to 3.6% for high-end properties. Consequently, rent prices are on the rise, reaching 820 euros per sq. m annually in the historic center and 780 euros in modern business districts. Transactions above 600 euros/sq.m. annually are also growing, constituting about 30% of total activity.

Around 40% of demand clusters in central zones, especially the historic center, while semi-peripheral areas like Farini-Isola and Porta Romana are gaining transaction traction. Key demand drivers include professional services such as law firms, financial institutions, and tech companies.

Rome: Expansion Fueled by Major Deals

Rome's office real estate market experienced notable growth, with an uptake of about 36,000 sq m, more than double compared to Q1 2025. This surge was propelled by four significant transactions exceeding 5,000 sq m each, notably involving the public sector.

Similar to Milan, Rome sees persistent demand for quality properties, with Class A buildings representing 57% of total uptake. This underscores tenants' increasing selectivity amidst limited premium office offerings.

The central business district remains pivotal, accounting for roughly 40% of transactions, with the EUR district standing out for the quarter's largest pre-let deal.

In terms of sectors, the services industry, especially legal firms, and public institutions play significant roles in Rome's office market. Vacancy rates remain low, under 7% overall and about 1.5% for high-end properties. Premium rents are at €610 per sq m per year, with potential growth in the near future.