In Q1 2026 Rome absorbed 52% of Italian office investment volumes versus Milan's 19% — a rebalancing driven by prime product scarcity in the traditional market leader.
Q1 2026 brought a clear slowdown to the Italian office market, with investment volumes down 35% year-on-year to roughly €400 million. Within that negative aggregate figure, however, a structural shift in the geography of capital took place: for the first time in years, Rome overtook Milan as the leading destination for office investment, absorbing 52% of total volumes across five deals concentrated in the CBD, historic centre and selected peripheral areas. Milan's share fell to 19%, roughly €80 million across three transactions.
The slowdown itself stems, according to Savills, from growing selectivity among investors and occupiers combined with an increasingly limited supply of high-quality product in city centres. This scarcity is more acute in Milan, where total available office space stands at about 837,500 sqm — with a further 371,000 sqm in the pipeline — yet Grade A vacancy remains compressed at 3.7%, dropping to just 0.7% in the Porta Nuova CBD. The direct consequence is a leasing market that stalled at roughly 64,000 sqm of take-up in Q1, down 42% year-on-year.
Rome tells a different story: its take-up grew 11% in BNP Paribas RE's European comparison, while Milan fell 36% and Madrid 25% over the same period. Prime net yields held stable in both cities — 4.25% in Milan, 4.75% in Rome — but average deal size rose to €37 million from €32 million a year earlier, and domestic investors accounted for 61% of activity, suggesting international capital remains cautious amid geopolitical and rate uncertainty.
H1 2026 figures confirm the trend: office investment reached about €880 million, up 13%, concentrated on Milan and Rome. Milan continues to suffer from a shortage of prime product, with vacancy near 2% in the most sought-after areas and rents climbing to €900/sqm/year, while Rome benefits from demand for large, high-quality spaces that the market can still absorb with wider margins.
A deeper shift in demand is also at play: hybrid working models have reduced corporate appetite for large floorplates in favour of efficient, sustainable spaces, making ESG certification and energy performance decisive selection criteria rather than optional extras.
This is less a decline for Milan than a change of phase — a market where demand structurally exceeds quality supply, naturally compressing transactable volumes. Rome, historically more fragmented, is capturing the overflow with comparable space at more accessible entry pricing still being redefined. Whether this geographic rebalancing proves durable through the second half of the year, or merely reflects a temporary product shortage in Italy's traditionally dominant market, remains an open question.