It is no secret that office real estate has suffered particularly badly as a result of the coronavirus pandemic and its consequences. Employers have been forced to rethink their approach, as it has become clear that many tasks can be performed from home. As a result, demand for office real estate and space has fallen steadily in recent years. However, the weakening economy is also having an impact on the office market, resulting in a 30% decline in rental performance compared to the previous year.
New requirements for office space
The existing office space does not meet tenants’ requirements. Climate change, the desire for hybrid working models, and modular uses are having a significant impact on demand. The office market is essentially driven by three factors that strongly influence each other:
1. Battle for workers
Various methods are used in the battle for employees, especially skilled workers. The company should strive to become as attractive an employer as possible, which includes providing a well-equipped workplace and appropriate leisure activities.
2. ESG and sustainability
Ideally, offices should also be accessible without a car. As a good employer, the company ensures that sustainability standards are met in and around the building. For example, car-sharing models can be an option for making better use of cars, or building equipment that makes optimal use of light and sun to work more energy-efficiently.
3. Home Office
A trend that is here to stay. The demand for office space is declining, particularly due to the increased demand for home office and mobile working concepts. Around 84% of companies in Germany want to stick to their home office policies. This is also a result of the previous factors, the battle for employees and sustainability. Employees increasingly want mobile working concepts, and a home office workplace is also significantly more sustainable than an office workplace.
Future prospects for the office market
The outlook for the office market does not appear to be particularly positive. What needs to be done to make office space attractive again? First and foremost, it should be noted that space continues to be leased. Medium-sized office spaces are particularly popular in prime locations. Various measures are being taken to make them attractive to both the new and old generations of employees. These include creating modular and multi-purpose spaces for office use. Where intensive workshop work was still going on at 9 a.m., a yoga class to improve body awareness takes place at 2:30 p.m. What was a conference room for 100 employees in the morning is converted into a catwalk for a charity event in the evening. Permanent offerings are also becoming more popular. Various cafés or leisure activities, such as a cinema or gym, are also a welcome alternative to plastic plants and coffee cups with “funny” sayings.
Conclusion: The current office market in 2024
Ultimately, the question is not whether the office will continue to exist in its current form, but rather what it will look like in the future. It remains to be seen what requirements will develop over the next year. After all, 20 years ago, no one would have thought that setting up a catwalk would bring employees back to the office.
Contact the real estate team at i-strategy
Dirk Seikowsky
Lena Schulz
