Office space market in Switzerland in balance
Published: Thursday, Oct 24th 2024, 17:20
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Swiss investors put significantly less money into the construction of office space in 2024. According to a study published by Wüest Partner on Thursday, the investment volume for new building permits in the 3rd quarter was around 40 percent below the average of the last 10 years.
According to the report, this trend already began in the pandemic years 2020/21, as developers became more cautious due to the structural changes in the office space market and the associated risks. Increased financing and construction costs are also currently influencing the decline in construction activity in the office space sector.
The experts at Wüest Partner also anticipate a further sharp decline of 14.5 percent in new builds in the commercial space segment in the coming year. However, an increase in conversions is expected. Last but not least, companies want to achieve their sustainability goals with energy-efficient renovations, for example.
Development "robust" thanks to decline in construction activity
According to Wüest Partner, the fact that fewer offices are being built in Switzerland should have a "stabilizing effect on the office space market, as oversupply due to additional new buildings is largely prevented". As a result, the market is surprisingly robust, the experts write.
According to the report, the number of office spaces advertised in the year to date was 11% below the 2019 level, i.e. before the pandemic. The authors of the study see the stabilization of home office rates as the first reason for this development. Many employers are bringing their employees back to the office or have introduced in-person days. They are also increasingly promoting the attractiveness of working in the office, for example through social events, better infrastructure or new IT.
According to Wüest Partner, employment growth is also contributing to the continued stable demand for offices. However, less space is required per position today because partial absence from the home office is already taken into account. According to the study, two out of five companies are aiming for a desk-sharing model.
In addition to Switzerland, vacancy rates in countries such as Denmark and the Netherlands, where wages are also high, are lower than elsewhere. "This suggests that companies in these countries have fewer financial incentives to reduce office space, as rental costs are less of a factor in the overall budget," say the authors of the study.
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