Momentum in global property leasing markets slowed moderately in the first quarter of 2016 as occupiers carefully reconsidered relocation and expansionary plans, the latest research shows.

Overall leasing volumes were marginally lower, down one per cent on a year on year basis but volumes in both Europe and Asia Pacific held up well, increasing by 14per cent and 7 per cent respectively year on year.

The data from international real estate company JLL also show that leasing volumes in the United States fell by 10per cent year on year to the lowest level since the global financial crisis as concerns over the economy’s stability grew.

In the context of a weaker than expected first quarter, JLL has revised down its global projections for the full year and now forecast that 2016 leasing volumes will broadly match 2015 levels, with some upside potential of up to 5per cent.

Asia Pacific is projected to outperform the other regions, with volumes growing by around 10per cent to 15per cent in 2016.

The report says that a fear of a near term recession spooked many US tenants in the first quarter and, as a result, expansion plans were put on hold. Nevertheless, many corporates are still keen to move in order to accommodate record-level employment and changing workplace preferences.

Overall leasing activity across the US was dominated by technology and financial services firms in the first quarter. Tech rich markets such as Seattle, Silicon Valley and Austin saw the strongest net absorption, with many of the largest technology companies like Facebook, LinkedIn, Microsoft and Oracle moving forward with expansion plans.

Most telling of the current office market trends in the US, however, is the continued expansion of shared office space. WeWork and Regus were very active during the quarter, as were several smaller players.

The first quarter saw a continued improvement in occupier market activity across most of Europe, with office leasing volumes totalling 2.65 million square metres, up 14per cent year on year and the strongest first quarter since 2011.

Germany was again the star performer in Europe, with the combined first quarter take-up for its five largest markets 16% higher year on year and Berlin continues to be one of the key out performers with volumes more than double the 10 year average, while Frankfurt, which has so far lagged the other key cities, experienced a strong start to the year.

Leasing volumes in Paris during the first three months of the year increased by 19per cent compared with the first quarter of 2015 with the continued increase in occupier requirements and overall demand for office space pointing towards a more sustained market recovery, after a relatively lacklustre performance in 2013/2014.

Meanwhile, office take-up in London increased by 2 per cent year on year. However, there has been a dip in take-up in the City submarket, which is likely to continue into the second quarter of the year as space under offer has decreased over the last six months. London’s overall volumes for the full year 2016 are likely to be lower than the near record levels of 2015.

The report also shows that Asian markets are holding up relatively well, but Australia had a weak quarter. Overall gross leasing activity was up 7per cent year on year in the region with the strongest leasing activity found in Bengaluru, Tokyo, Delhi and Manila. Bengaluru saw the highest leasing volumes in Asia Pacific and Tokyo saw good pre-commitments on upcoming supply.

However, new leasing was down in Beijing and Shanghai, partly due to the timing of new supply and less available space. Otherwise, demand for office space in China’s Tier 1 markets was largely sustained despite slowing growth in the country’s economy.

But effects are being felt elsewhere in the region with the resources centric economies in some Australian cities suffering from China’s slowdown. Australia’s leasing volumes dropped by 24per cent year on year with all markets down except Melbourne. Demand in Sydney remained healthy, underpinned by education and IT sectors but activity by the tech sector was less than a year earlier and this contributed to lower volumes.

At a global level, 2016 is expected to represent the peak of the office development cycle with 16.8 million square metres of new deliveries anticipated. Current projections suggest that completions will then diminish to around 15.8 million square metres by 2018. JLL points out that these levels are still well below the previous development peaks of 2001 and 2008.

The global office vacancy rate has edged up slightly for the first time since 2012, rising by 10 basis points to 12.2per cent. This is largely due to marginal increases in the Americas to 14.7per cent and Asia Pacific to 10.9per cent.

Meanwhile the vacancy rate has continued its steady decline in Europe to 8.6per cent. The global office vacancy rate is expected to hover at around 12per cent for the remainder of the year, with falls in the US vacancy rate balanced by a modest rise in Asia Pacific to around 11.7per cent. Vacancy is expected to be broadly stable in Europe.

Despite a slightly more subdued picture for global office demand during the first quarter, supply shortages and limited new deliveries have kept the leasing environment highly competitive in many of the world’s dominant office markets.

Prime office rents across 26 major markets increased by 4.4per cent year on year in the first quarter of 2016, led by Dubai – DIFC, Stockholm, Sydney, Hong Kong, Los Angeles and Shanghai.

A pace of about 3per cent to 4per cent annual rental growth is expected to continue this year, led by Sydney. By contrast Singapore, Sao Paulo and Mexico City are projected to register further declines in 2016.

• Propertywire