- The RETHINKING European Offices 2030 report by Cushman & Wakefield analyses the risk of obsolescence in 16 European cities
- In Greater Lisbon, it is estimated that by 2030, 2.86 million m² of office space will be at risk of becoming obsolete.
The risk of office buildings becoming obsolete due to various factors, including climate legislation, is increasing, with assets in several major Western European cities facing significant challenges in the next five years, according to a new study by Cushman & Wakefield.
The RETHINKING European Offices 2030 report analyses the age of office stock in 16 major European cities and the opportunities for owners to reposition or repurpose their spaces. By 2030, Cushman & Wakefield estimates that over 170 million m² of office buildings, constructed before 2004 and with no significant intervention since then, will be at risk of obsolescence in 16 European cities.
Among the 16 cities analysed, there is a distinction between Eastern Europe, with newer stock, and Western Europe, with a higher risk of obsolescence. Nevertheless, in the top 7 cities (Milan, Barcelona, Stockholm, Paris, Madrid, Amsterdam, and London), the risk of stock becoming obsolete is about 80%, while in Munich (60%), Dublin (64%), Lisbon (64%), and Berlin (65%), the stock presents relatively lower risks, reflecting a higher proportion of park developed in the last two decades.
In Eastern Europe (Budapest, Prague, and Warsaw), the share of office stock at risk is lower, averaging only 43%, meaning much of the built heritage in this region was constructed in the last two decades, in contrast to Western markets, where less than one-fifth of the stock was developed during this period.
In Greater Lisbon, it is estimated that by 2030, 2.86 million m² of office space will be at risk of becoming obsolete. The CBD (zone 2) and New Office Zones (zone 3) are under the most pressure, followed by Prime CBD (zone 1). Additionally, the increased demand for higher-quality office buildings continues to drive development activity. The future supply under construction is currently 234,400 m², with an additional 195,000 m² expected to be completed by 2028. Overall, this means that in the next four years, there will be 429,000 m² of new office space entering the market.
“The influx of new projects represents an increased risk for older office buildings, which may struggle to compete. The strong demand for the best spaces and the prime rents these spaces can achieve are key factors contributing to this trend,” comments Pedro Salema Garção, Head of Offices at Cushman & Wakefield in Portugal. “Prime rents have reached the highest levels in the last 30 years, while the vacancy rate has been gradually increasing, currently standing at 7.2%. As more lease agreements are renewed and companies reassess their needs, we will continue to see changes throughout this decade and beyond, many of which are already being felt,” he adds.
Isabel Simões Correia, RETHINKING Portugal Lead, Head of Business Development, adds, “Repositioning is probably the best solution for central city locations. As for repurposing, hospitality and residential tend to be the predominant alternative uses in these areas. As we move from central to peripheral locations, the range of alternative uses increases, including areas such as healthcare, medical facilities, laboratory spaces, or data centres, depending on local dynamics. Lower office rents compared to these options and higher vacancy rates may make repurposing assets in these locations the winning strategy.”
The report also highlights that Europe is relatively well-positioned in effectively managing risks through changing occupational demand, with the availability rate in monitored cities increasing to a lesser extent than in other cities and regions worldwide.
Click on this link to access the full report: https://www.cushmanwakefield.com/en/insights/rethinking-european-offices