Relocations comprise the largest proportion of take-up, with the expansion of the IT and telecoms sectors also driving demand in some markets. The report says that prime achievable rents remain stable or have started showing an upward trend in most European capitals, with average prime rental growth standing at 0.4% a year in the second quarter of this year. This compares with 1% a year in the third quarter of 2004. However, substantial incentives are still being offered in many locations, lowering the value of effective rents. Manchester has taken over the top slot from London's West End, experiencing 18.3% prime rental growth, closely followed by Madrid, with 16.7%. Athens was bottom of the league, with a fall of 16.7%.

Investor demand across Europe remains strong, with yields hardening in most markets. Prague recorded the highest market yield of 7.7%, followed by Warsaw and Athens with 7.5%, the report finds. London's West End and Zurich reflected the lowest market yield of 4.5%, making them the expensive locations for investors. London's West End continues to be the most expensive office location, in terms of overall occupancy costs, at euro 1,670 a sm ($2,040 a sm) a year, with City of London and Docklands not far behind.

Take-up in the City of London in the first half of 2005 exceeded that in the West End, leading to a fall in the vacancy rate from 17.9% to 14.6% in the former. Both markets are expected to see an increase in rents in the second half of the year, and have enjoyed a buoyant investment market with the West End experiencing a record euro 3.4 billion ($4.3 billion) of deals in the first half o f the year.