Market Radar Europe: Office take-up on the rise amid steadying interest rates, and Starwood’s loan portfolio exit

CBD Office Rebound

The "death of the office" narrative is being officially rewritten. According to fresh data from Savills, European office take-up is projected to rise by 3% in 2026, marking the sector’s strongest performance since 2022.

However, the tide isn’t lifting all boats, and a stark flight to quality continues as occupiers hunt for sustainable, Grade-A spaces that lure employees back to their desks, leading to skyrocketing prime rents. London City leads the pack with a staggering 18% increase, followed by Frankfurt (+13%) and Munich (+7%).

With construction starts at a decade-long low, the industry is facing a chronic shortage of top-tier stock in Central Business Districts (CBDs). For landlords holding "best-in-class" assets, 2026 is quickly becoming a golden year.

The ECB’s Steady Hand

The European Central Bank (ECB) held its ground this month, maintaining the main refinancing rate at 2.15%. While some investors were holding out for a cut, the consensus among real estate leaders is widely in favour of certainty over a few basis points of movement.

This stabilisation has effectively broken the valuation deadlock and the bid-ask spread is narrowing as the cost of debt becomes predictable. 

The result? A 29% surge in pending commercial transactions year-over-year. Investors are finally stepping off the sidelines, confident that the interest rate peak is behind them and the recovery cycle has begun.

Exit Starwood

A significant chapter in European real estate finance closes this week, as Starwood European Real Estate Finance (SWEF) is set to hold an Extraordinary General Meeting (EGM) today (27th February) to approve its voluntary winding up.

This follows the successful repayment of its final loan investment, secured against a Spanish office portfolio, “concluding the orderly realisation begun in January 2023 significantly ahead of the initial guidance," announced Chairman, John Whittle.

Since then, the fund has returned GBP 376 million to shareholders. The exit of such a major legacy player signals a broader trend: the clearing out of old-cycle debt vehicles to make way for new, equity-rich recovery funds designed to capitalise on the current market bottom.

Warsaw’s Ascent

Warsaw has officially broken into the top three most attractive European investment destinations. According to the CBRE European Investor Intentions Survey 2026, the Polish capital now ranks third, trailing only London and Madrid.

Warsaw has successfully transitioned from a regional outpost to a global contender, outperforming traditional heavyweights like Paris and Berlin. This shift is fuelled by Poland's resilient GDP growth and a warehouse market that saw 6.6 million square metres under contract last year - the third-highest in history. For capital looking for yield and stability, the "Wild East" isn't so wild anymore - it’s the new core.

End of the “Golden Visa” Era 

The landscape for luxury residential investment has been permanently altered. As of February 2026, the era of "residency-by-real-estate" in Southern Europe is largely over. Portugal has definitively removed real estate as a qualifying route, steering HNWIs (High-Net-Worth Individuals) towards regulated investment funds and cultural heritage donations.

While Spain still maintains a property route, the focus has shifted toward institutional-grade luxury developments and mixed-use assets rather than individual apartments. This policy shift is filtering out passive buyers and replacing them with strategic investors, cooling the mid-market residential heat while cementing the demand for ultra-prime, managed assets.
 

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Look out for a new edition of the GRI Institute's Market Radar Europe next week!