Milan's Q1 2026 office take-up settled at 65,000 sqm according to JLL, but Grade A demand remains intense: vacancy stands at 3.6% versus a 9.4% citywide average, with prime rents at €820/sqm in the Duomo CBD. Quality, not quantity, now drives the office market.
Milan's office market opens 2026 with a paradox familiar to industry operators: demand remains solid, but product genuinely matching occupier expectations is increasingly scarce. According to JLL, total Q1 take-up in Milan reached around 65,000 square meters, plus roughly 4,000 sqm of sublease space. Deal count was in line with Q1 2025 and above the five-year average — yet total absorbed space fell short of the 100,000 sqm recorded a year earlier.
The apparent slowdown reflects not weaker demand but its recomposition. Average transaction size dropped from 1,200 to roughly 750 sqm, and no deals were recorded in the 5,000-10,000 sqm bracket this quarter. Companies keep moving, but through smaller, more targeted deals in a market short on quality product.
Quality is indeed the defining theme of 2026. Grade A space accounts for about 65% of Milan's total absorption, pushing vacancy for this category down to 3.6%, against a citywide average of 9.4%. The gap captures the polarization underway: modern, efficient, service-rich buildings unable to meet all demand, against an older stock struggling to find tenants. Prime rents reached €820/sqm/year in the Duomo CBD and €780 in Porta Nuova, confirming Milan among Europe's tightest markets for quality office space.
Scarce central supply is producing a notable side effect: semi-central districts gaining ground as credible CBD alternatives. City Life, Farini-Isola and Scalo Porta Romana now attract deals once concentrated almost exclusively downtown, reflecting — as JLL Italia's Marco Pancotti notes — an increasingly polycentric market.
Investment volumes tell a complementary story. According to Engel & Völkers' Office Market Report Milan 2026, offices represented 16% of Italian real estate investment in 2025, around €2 billion — a declining share, reflecting heightened risk perception tied to rising vacancy across several European markets. Idealista data put total 2025 Italian real estate investment at €12.1 billion, up 22% year-on-year, though many office-exposed investors are diversifying into other asset classes. Milan remains the top destination for office capital, followed by Rome, whose Q1 take-up of 36,000 sqm more than doubled year-on-year, driven by four deals above 5,000 sqm each, including a major public-sector letting.
Looking ahead, Engel & Völkers flags immediate Milan vacancy of around 650,000 sqm, with a further 490,000 sqm becoming available through 2028, plus 25,000 sqm already in the pipeline. On paper, ample availability — but concentrated largely in non-prime stock, leaving the Grade A shortage as the key variable to watch in coming quarters.