Luxembourg’s office market picked up in the final quarter of 2025 to mark a year characterized by renewed dynamism in both occupier activity and investment sentiment. Take-up was supported by a return of confidence among major occupiers and the appeal of high quality developments in key submarkets. The Airport district and Cloche d’Or stood out as the most active areas, benefiting from a concentration of large transactions in strategic markets. Pre letting again played a major role, underscoring the scarcity of immediately available modern space and the willingness of tenants to secure future-proof premises.
Vacancy remained remarkably stable and low, reflecting the structural tightness of the Luxembourg market. While a few submarkets saw fluctuations due to new deliveries, the broader picture is one of constrained supply. Even with a sizable development pipeline scheduled over the next two years, most upcoming projects are already committed, leaving relatively little space to satisfy ongoing demand. This imbalance continues to shape market behaviour, encouraging early decision-making and reinforcing competition for top tier buildings.
Rental trends remained firmly upward. Prime rents held steady in the CBD but continued to rise across other major submarkets. This evolution is closely linked to the growing importance of ESG compliant buildings, limited current availabilities and persistent construction cost pressures, all of which bolster the premium attached to high specification office space. Overall, average rents also moved higher, in line with a multi year trend.
The investment market staged a meaningful rebound as 2025 progressed, with a marked increase in deal volume and a diversification of buyers targeting smaller and mid cap assets. Notable acquisitions of well let properties signaled greater clarity in pricing and a gradual narrowing of bid ask spreads. Collectively, these dynamics point to a market that is re finding its footing, supported by solid occupier fundamentals and renewed investor engagement.
