And the short term outlook remains bleak, according to CBRE. Rents are expected to continue to fall until at least the end of 2003. Although demand should start to recover earlier than this, the build up in vacancy will take some time to bring the balance back in favour of rental growth.

The picture is no brighter outside the EU, with both Zurich and Geneva in Switzerland registering falls over the last six months, with a similar pattern in Central Europe, the Middle East and Southern Africa.

Michael Haddock, CB Richard Ellis' Associate Director responsible for EMEA market analysis said: "It is a tenant's market and will remain so for some time. We expect rents to continue falling for about the next eighteen months, but at a slower rate."

However, many European markets experienced a slight recovery in leasing activity, and this was particularly true in Madrid, where take-up in the latest quarter was the highest since the end of 2000. And development activity is continuing to slow as existing schemes are completed and speculative schemes are put on ice. CBRE notes that the flow of development finance has been shut off much more quickly in this cycle than was the case in the previous cycle in the late 80s and early 90s.