Estimating the natural vacancy rate in European offices

Given that the natural vacancy rate (NVR) provides a better gauge of office market conditions than the absolute vacancy rate, we set out to estimate the NVR across European office markets. Future market conditions implied by our NVR estimates are broadly in line with our rental growth forecasts for the next five years. But given the limitations of the NVR, we think that it is unlikely to become a fundamental part of our forecasting process.