Do., Feb. 1st 2024
Swiss Real Estate sector feels the pinch with a notable rise in vacant office spaces. The shift towards remote work and economic headwinds are reshaping demand.
The Swiss Real Estate market witnessed a significant uptick in vacant office spaces in the last quarter of 2023. The increasing trend towards working from home and a decelerating economy notably impacts the office real estate segment.
In Switzerland, the total available office space reached 2.28 million square meters by the end of the fourth quarter, representing 4.7% of the overall office inventory. This is a rise from 3.8% in the third quarter and a notable increase from the multi-year low of 3.2% seen in the fourth quarter of 2022, as reported by real estate service firm CBRE.
The surge in vacant office spaces is particularly evident in peripheral markets outside the significant office hubs of Zurich, Geneva, Basel, Bern, and Lausanne, including their surrounding areas. Even the suburbs of Zurich, Lausanne, and Basel saw increased available office spaces.
Notably, areas like the Zurich airport region and the Limmat Valley are experiencing unprecedented levels of office availability, with a 14.6% jump to 301,000 square meters. This rise in vacant spaces is attributed more to a decrease in demand than an oversupply of office constructions.
Throughout 2023, the uptake of office properties dipped by 27% compared to the previous year, averaging 423,000 m2 per quarter, the lowest since the 2009 financial crisis. The demand for office spaces is dwindling, influenced by the weakening economy and a shift towards remote work, leading to a rise in vacancies.
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Even prime locations are not immune to this trend, as evidenced by increasing office vacancies in Zurich city land from 2.7% to 3.5% within a year. Basel is witnessing a future letting rate of 5.4% for its office spaces. Bern, however, saw a slight decrease to 2.3%, buoyed by consistent demand from the public sector.
©Keystone/SDA
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