Lisbon Office Rents Outpace European Average with 7.1% Annual Growth in Q3 2025

Lisbon's commercial real estate sector has once again asserted its top-tier status in Europe, posting a prime office rental growth of 7.1% year-on-year in the first three quarters of 2025. This robust performance, detailed in the latest European Office Occupational report by global real estate advisor Savills, significantly outshines the European average of 4.9% and solidifies Lisbon's reputation as a resilient, high-growth market for international investors.

The Savills report paints a picture of a market defined by a classic supply-and-demand imbalance. While office take-up across Europe saw a modest 3% rise, Lisbon's narrative is centered on the value of its assets. The city's average office availability rate saw a negligible increase from 7.7% in 2024 to 7.8% in 2025. This figure, substantially lower than the 9.3% European average, reflects what the report calls "the stability and balance of the local market given the limited supply of quality product for occupation." It is this scarcity that continues to fuel intense competition for prime spaces and drive rental values upward.

This dynamic is particularly pronounced for prime assets in central business districts, where availability is below 3% in many European cities, including Lisbon. This 'flight to quality' trend, where companies are willing to pay a premium for superior, well-located, and sustainable buildings to attract talent, is a key driver of the market's performance. Investors can find more detailed analysis of this phenomenon in our market insights section.

Market Implications for Investors

The 7.1% rental growth figure is more than just a statistic; it is a clear directive for commercial real estate investors. It signals that Lisbon's office market is not only stable but is actively delivering strong returns. The growth is underpinned by solid economic fundamentals, including the city's continued success in attracting international technology and financial services companies. These sectors have a resilient demand for high-quality office environments, ensuring that rental income streams from prime assets are secure and likely to grow.

For those considering entering the market, the report suggests that the greatest opportunities lie in the development of new Grade A office space or the comprehensive refurbishment of existing stock to meet modern standards. Given the supply constraints, such projects are well-positioned to command premium rents and attract high-caliber tenants. This aligns with the growing importance of ESG credentials, making investments in green and sustainable buildings particularly strategic. Exploring options with specialized constructors is a logical next step.

Christina Sigliano, EMEA Head of Global Occupier Services at Savills, provided a forward-looking perspective, stating, "we expect a gradual increase in take-up in 2026... The scarcity of prime product supply in the main central business districts should continue to support rent growth and progressively attract interest throughout 2026." This expert forecast should give investors confidence in the market's medium-term trajectory.

Lisbon's Competitive Edge in Europe

While other major European markets like Frankfurt (+76%) and Dublin (+46%) posted higher absorption volumes, Lisbon's strength lies in its rental performance and market balance. The report notes that political and economic headwinds in France and Germany have led to a slowdown in leasing decisions there. In contrast, Lisbon's stable environment and clear growth path make it a standout safe haven for international capital seeking reliable returns in the commercial property sector.

The report also highlights a subtle but important trend: the gradual return to the office. Average physical occupancy in European offices has edged up from 60% to 61%, with a growing number of firms, particularly in finance and consulting, mandating at least four days a week in the office. This trend solidifies the long-term relevance of the office as a central pillar of corporate life and de-risks investment in the sector. For legal advice on commercial leases, consulting with real estate lawyers is recommended.

Lisbon's Prime Office Market: A Deeper Look

The current state of Lisbon's office market is the result of several converging, powerful forces that investors must understand to capitalize on the opportunity fully.

The key defining characteristics are:

• A Premium on Quality and Sustainability: Tenants are increasingly selective, prioritizing buildings with green certifications (like BREEAM or LEED), modern amenities, and advanced technological infrastructure.
• The Dominance of Centrality: The prime CBD (Central Business District) along the Avenida da Liberdade and surrounding areas, along with the Parque das Nações business district, remain the most sought-after locations.
• A Resilient Tenant Base: Unlike markets heavily reliant on a single industry, Lisbon's demand is fueled by a diverse mix of tech, finance, professional services, and pharmaceutical companies.
• A Constrained Development Pipeline: The geographic and regulatory challenges of developing new large-scale office projects in central Lisbon mean that new supply will likely remain limited, preserving the value of existing prime assets.

Understanding these dynamics is crucial for any investor looking to build a successful commercial real estate portfolio in Lisbon. Our guide to location issues provides further context on this topic.

Investment Considerations

For foreign investors, the Savills report provides a clear, data-backed thesis: invest in high-quality Lisbon office assets. The combination of outperforming rental growth, low vacancy, and strong, sustained demand creates one of the most compelling commercial real estate investment cases in Europe today. The strategy should be laser-focused on acquiring or developing prime properties that meet the exacting standards of modern corporate occupiers.

A particularly astute strategy would be to identify and acquire well-located but older office buildings that are suitable for a 'green' refurbishment. By upgrading these assets to top-tier ESG standards, investors can unlock significant rental premiums and asset value appreciation, while also contributing to the modernization of Lisbon's building stock. Calculating the potential ROI for such a project can be done using our investment analyzer tool.

Future Outlook

The forecast for Lisbon's prime office market is exceptionally positive. The fundamental imbalance between scarce supply and robust demand is a structural feature, not a temporary trend. As the global economy stabilizes and companies resume long-term strategic planning, leasing activity is expected to accelerate, further fueling rental growth. Lisbon is perfectly positioned to capture a growing share of the foreign direct investment flowing into Europe.

The market's proven resilience and strong growth prospects make it an essential component of any diversified European property portfolio. For bespoke advice and access to exclusive opportunities in Lisbon's thriving commercial real estate market, we invite you to contact the expert team at realestate-lisbon.com.