Robust market in Lucerne
Despite geopolitical risks, structural change and restrained construction activity, the Lucerne market for commercial space is proving robust. A recent LUKB study provides differentiated insights into the development of office, retail and industrial space - with stable prospects for Central Switzerland as a business location.
The commercial property market in the canton of Lucerne is proving resilient, even in the international context of economic uncertainty. Switzerland’s gross domestic product grew by 1.3 per cent in 2024 and is expected to rise to 1.5 per cent in 2025. The canton of Lucerne benefits from its broadly diversified economic structure with strong sectors such as construction, finance and services.
Bottleneck meets demand
Demand for office space remains high, fuelled by continued employment growth in the service sector. At the same time, the construction volume of around CHF 50 million is well below the long-term average. This reluctance to construct new buildings is further reducing supply, causing rents to rise moderately but continuously – by an average of 10 per cent since 2015.
Structural change weighs on
Despite stable consumption indicators, the market for retail space remains under pressure. Online retail, changing consumer behaviour and geopolitical uncertainties are putting pressure on even highly frequented locations. Falling asking rents point to a prolonged period of weakness – there is currently no recovery in sight.
Solid basis, new risks
At less than one per cent, the vacancy rate for industrial space is well below the national average. Demand is stable and projects such as new business parks in Lucerne and the surrounding area are signalling momentum. However, trade tensions, particularly with the USA, could slow down this trend and cause a slowdown in the medium term.
Plenty of potential, but growing pressure
The new study by Luzerner Kantonalbank and Wüest Partner paints a differentiated picture. Office and industrial space is benefiting from Lucerne’s attractiveness as a location and the strong domestic economy. Retail space, on the other hand, remains the problem child. Future developments will be largely determined by international conditions.