SUSTAINABLE OFFICE
leases in office facilities that may seem spartan, but which are also positioned in central locations. Leasing prices are still one of the top five conditions in the list of “hard” factors shaping companies’ choices, but this cost item is continuously becoming less important. Since 2009, new leases have been falling across Europe, with no sector being so markedly affected as financial services. This is a clear expression of the ongoing structural realignment, and FinTech firms and start-ups have so far not compensated for it.
We will have “less room” for our work in the future
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(“landscapes”) in the form of shared and co working spaces, will become increasingly attractive. Growing investor interest: investors will strive for greater participation in repurposing projects as well as new builds.
Over the past 15 years, vacancy levels have seen a substantial increase in towns and cities across Europe. The sole city to buck this trend is Berlin. The reason is, we believe, as follows: the German capital exhibits high demand for office space due to a combination of positive predictions regarding its economic future, low prices, and the prevalence of start-ups basing their operations there. On average, vacancy rates in the European cities under investigation rose by 6.3 %. Office space usage (office building stock minus vacant properties) saw strong, parallel growth of 17.9 % on average. Luxembourg and Madrid saw the highest levels of growth, while Copenhagen, Paris and London returned the lowest. The reason for this is more efficient usage in London and Paris, coupled with the general absence of available, unused space. Prices and vacancy rates are very high when compared with other European cities. What does this mean for the future? If revenues generated by office space (usage) and vacancy levels both continue their upward trend, the obvious result will be tremendous compression within
the continent’s business districts. This may even already be underway in certain locations.
The increase in unoccupied offices is the outcome of a fundamental structural transformation.
Our society is changing from one focused on providing services into one based on knowledge and information. New forms of communication are taking shape, and companies are harnessing these for temporary new processes and organisational structures. Offices are losing their traditional divisions between functions and are instead becoming open landscapes consisting of different zones with a temporary character. With regard to planning, this results in a complex situation: the classic office is no longer the central focus, having been replaced by different zones for communication, interaction, cooperation, concentration, isolation, relaxation or contemplation. Increasingly, companies use these new office space strategies to attract and retain employees and promote their corporate culture. In Europe, we have embarked on a process which will see the professional and personal merge to an ever greater degree, and those leasing and selling office space will have to react to this transformation with flexibility. If we were to describe the typical young company’s expectations, it would be this: temporary
Rising leases and the demands of digitalisation will mean that companies will occupy less floorspace in an effort to keep costs low, so space per employee is likely to fall in Europe’s major business centres. This generalisation does not apply to all markets: per-employee floorspace is rising in Frankfurt, Madrid, Barcelona and Lyon. The probable reason is that demand is outpaced by the number of attractive office complexes, so companies can afford to occupy more space. Overall, however, the number of people working in office jobs has grown by an average of 19.3 % across our selected markets in the past 15 years. The related demand for office space is countered by the proportional increase in office facilities. The concentrated use of this space is the result of unrelenting price pressures: many businesses cut back on their office capacities to save money. At the same time, they are trying to increase productivity per workstation. Less room for employees – is this the next trend? An analysis of the figures shows a clear: “Yes”. Innovations (“new strategies”) and behavioural changes (“the human factor”) will amplify this development, which will have major structural implications.
Catella is a leading financial advisor across Europe and asset manager for the areas of property, fixed-income and equity. We occupy a leading position in the real estate sector, with a strong local presence in Europe with around 500 employees across 12 countries.
www.catella.com
PSS MAGAZINE • NOVEMBER/DECEMBER 2015
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