"The situation is very different in each European country due to their economic development," says Paul Kleijne, area director of the Netherlands Foreign Investment Agency.

Eastern Europe is home to a high level of development activity. Yet, in other parts of Europe, property is stagnant.

The Summer 1998 Survey of Property Trends by GVA Grimley, international property advisers in London, indicates that during the first half of 1998, property holdings saw an overall net decrease in value. Executives believe Europe's property market appears to be at a turning point with businesses less enthusiastic about the future despite high output.

"A significant proportion of the largest companies, and those in certain parts of the service and manufacturing sectors, however, have undertaken or are planning major refurbishments or moves to alternative premises of similar size," says Stuart Morley, head of research at GVA Grimley.

Driving these companies is a need for more efficient space.

The problem facing much of Europe today is a need for suitable property, particularly for the manufacturing sector. According to Morley, this is the sector in which analysts expect the most growth.

Showing growth
The United Kingdom is showing the largest growth for real estate. Tenant demand for office space in London and the Southeast is strong. GVA Grimley reports that the rental growth for office space in London has been comparable to that seen in the late 1980s.

Peter Craig, a GVA Grimley executive, points out that while property demand in the UK has increased, investment by U.S. corporations is static.

"A lot of American firms are put off by the fact the UK is not going with the Euro dollar," he says.

Its first investment is Akeler Developments PLC. The transaction will position Akeler to become the largest provider of office space in suburban and business park locations across Continental Europe. Among its many projects in the UK are speculative office space in Doxford, and several headquarters developments in Slough. The company has also made strategic investments in London's West End.

Two other major developments in London include Covent Garden and Canary Wharf, a huge project in London's Docklands developed by Olympia & York of Toronto, Canada.

Extending over 86 acres, the project involves approximately 4.5 million square feet. A new 560,000 square foot UK corporate front office building is being constructed there for Citibank. Scheduled for completion in the fourth quarter of 1999, the building will be occupied by approximately 2,500 Citibank employees.

Credit Suisse First Boston is also expanding its London-based operations there by acquiring a 275,000 square foot building adjoining its current Canary Wharf premises.

"The plan to build this additional space is a direct result of Credit Suisse First Boston's continued success and our strong commitment to further developing the European business," says Hans-Ulrich Doerig, CEO.

The Commission for the New Towns is Great Britain's largest property owner with approximately 18,000 acres of developable land and two million square feet of space in England's New Towns. The New Towns have been planned with modern technical infrastructure to meet the needs of industry and commerce.

"Added advantages of the New Towns are their younger-than-average populations and their strong business support networks," says Tom Barry, Logistics partner, Andersen Consulting.

U.S. companies that have located in the English New Towns include Mobil, Ford, Coca-Cola, Unisys, Rockwell, ITT Canon, Honeywell, DuPont, Rank Xerox, and Nike International.

Other developers such as John Laing Group and Eurotunnel Developments Ltd. are committed to the UK's Private Finance Initiative for developing a new partnership between public and private sectors.

Tunnel spurs development

"With the tunnel, we can service the European market from the UK, thus retaining all the UK business benefits but with the ability to provide the sort of customer service that is required in the modern competitive environment," says Nigel Ladkin of Eurotunnel Developments Ltd.

He sees the Channel Tunnel as the single most important element of private infrastructure investment made in the last decade.

"This new infrastructure means that Kent now becomes the key location for those who wish to service their European market as a single entity," Ladkin says.

Innovative projects
The French economy is growing at a rate that is stronger and quicker than expected.

GV Grimley projects that rents, in Paris at least, are already increasing. The market for industrial/distribution space is becoming increasingly polarized between modern and older space, with modern space making up only a small proportion of the total stock.

Several noteworthy developments underway include construction near Paris' airports by the Aeroports de Paris RealEstate Department and projects downtown and at the airport in Marseilles by the Euromediterranee Urban Development Agency.

Driving growth in Marseille is that between now and the year 2010, the Mediterranean basin will become a free trade area, representing a potential market of 450 million.

Euromediterranee covers 782 acres at the heart of the city of Marseilles. It is also an urban renewal operation that aims to requalify and improve the area by developing infrastructure, housing, hotels and the launching of a large-scale real estate program.

Economic resurgence
After a recession, the Austrian economy is on a comeback, and along with it the real estate market, according to Dr. Max Huber, who owns Max Huber Real Estate in Vienna.

"Demand is growing, and prices are at the bottom but they are heading back up," Huber said. "There is a feeling that the bad times are behind us and the market is on its way back."

The German economy is making a strong rebound with exports leading manufacturing orders and increasing industrial production.

According to GVA Grimley, the Berlin market continues to be dominated by the oversupply of new office space constructed immediately after German reunification and in anticipation of the relocation of the federal government.

"It has finally been announced that the relocation will take place in 1999 and this may help stabilize rents," says Morley.

Tight market
Since the Netherlands managed to escape the recession that has been inflicted on the rest of Europe, stable growth there has resulted in an extremely tight real estate market.

"Our supply is not as great as demand," says Kleijne, of the Netherlands Foreign Investment Agency. "With so many companies looking for real estate, supplying this demand is becoming even harder."

The market is the tightest for industrial space. GV Grimley points out that the stock of available industrial and distributionproperties declined to around 3.5 million square meters in 1997.

"And developers, who are risk adverse, are still hesitant to build," Kleijne says.

One exception may be Schiphol Real Estate, which is developing turnkey projects in close cooperation with future office and warehouse users. One of its recent projects was the expansion of the World Trade Center Amsterdam Airport.

Amsterdam Westpoint, located at Amsterdam International Airport, still offers space to companies that want to expand their warehousing and logistics activities.

"On top of that, Westpoint has its own seaport facilities, its own railway terminal, and is only minutes away from Amsterdam International Airport," says Ralph Panhuyzen, managing director of Amsterdam Westpoint.

Scandinavian success
In Central Stockholm new development is taking on exciting dimensions with the development of Stockholm City West, said Ann Wiberg of SJ Real Estate Division.

Located in the country's political and commercial heart, the new development will take form as a conference center and an exclusive international hotel.

The project will entail renovating the railroad's Central Station and building new office space above it.

Stockholm City West is expected to link different parts of the city and create a lively urban center.

The project is the second development following the successful construction of the City Terminal and the World Trade Center a few years ago.

Eastern Europe

The list includes two office projects and two industrial sites in Warsaw, Poland, an office project in Budapest, Hungary, a ware-house/distribution facility in Lodz, Poland, and a distribution center in Prague, in the Czech Republic. Combined, the projects add up to almost one million square feet.