Cushman & Wakefield warns 76% of office stock across Europe risks falling below an acceptable condition, primarily due to incoming sustainability standards. Occupier demand is increasingly focused on flexible and sustainable workspace which supports employee health and wellbeing alongside wider corporate commitments. Landlords investing in sustainability credentials, amenities, sense of place and community engagement will benefit from this flight to quality
- Top: around 24%, built in the last decade, fits modern office usage and is in high demand
- Middle: a large proportion of 62% requires repositioning to avoid deterioration
- Bottom: 14%, ageing, non-updated stock that is in many ways already obsolete
The office sector is facing a critical chapter of necessary adaptation, evolution, and recalibration. Across Europe there is strong demand for offices, but occupiers drive the market and they are increasingly focused on the very best workplaces. For owners of older, lower quality assets, doing nothing is not a strategy. Landlords that reinvest in sustainability credentials, amenities, sense of place and community engagement to move their assets into top quality ratings will benefit from this flight to quality. Those that do not will face diminishing returns,
said James Young, Head of Investor Services EMEA & APAC, Cushman & Wakefield.
- Repositioning the asset to upgrade its amenities and sustainability, as well as its sense of place through community-oriented offerings and events.
- Repurposing all or some of the office for other uses, such as residential, industrial, life sciences or healthcare.
There is much to be gained even by those facing the stiffest of headwinds. Addressing the challenge head-on with a proactive, creative, and strategic approach will help owners and investors recover value and generate returns. It is important when doing so to assess each office individually, as well as in the context of broader portfolios. There is no ‘one size fits all solution’ but learnings from around the world can allow evolution to take place in a measured and intentional manner,
added James Young.
Report methodology
The report analysed office stock by age and grade; construction and completions (historically and estimates for future activity); and occupier demand trends and utilisation since the pandemic. This was then combined with labour market projections to assess aggregate supply and demand in the European office sector, featuring a select number of major markets. Overall, the report analyses 218 million square metres (m sqm) of office stock in 14 markets in 11 countries across Europe.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 52,000 employees in over 400 offices and approximately 60 countries. In 2022, the firm had revenue of $10.1 billion across core services of property, facilities and project management, leasing, capital markets, and valuation and other services. To learn more, visit www.cushmanwakefield.com