Office space market is holding up better than expected
The trend towards working from home has increased the supply on the office space market less than feared. Credit Suisse found this in a study. According to her, the office space market should benefit in the long term from increasing digitalization in all sectors.
The supply in the office space market rose from 5.5 to 5.8 percent year-on-year at the end of the second quarter of 2021. Thus, the coronavirus pandemic did not lead to the feared high values, writes Credit Suisse in a report on the study “ Office space market Switzerland 2022 ” by the Zurich-based bank. However, the authors of the study anticipate that the trend towards home office “will still bring some difficult quarters to the office market”.
Credit Suisse analysts explain that many inquirers were reluctant to rent new office space during the pandemic. They also expect that more and more companies will at least partially enable their employees to work from home in the long term. On the other hand, the analysts expect an increasing share of office work in the course of the digitization of the economy. In the medium term, this will result in stagnating demand for office space, according to the announcement.
The analysts currently see a connection between higher supply rates and construction activity across Switzerland. However, they have seen counterexamples in Lausanne and Geneva. While Lausanne “benefits from relatively robust demand despite higher construction activity”, weak demand in Geneva has led to an increase in the supply of space to 12.3 percent.
In the short term, the analysts expect a further increase in the supply of space, also because companies could implement existing plans to give up larger spaces. In the long term, however, they expect the average office rate to rise sharply. Over time, this will probably "overlay the trend towards home office space reducing and generate significant additional demand for office space in the long term".